Evening star. [volume] (Washington, D.C.) 1854-1972, 1918-01-06
.SMOOT MEASURES
CHANGE TAX LAWS
Senator Would Revise income
and Excess Profits
Provisions.
HAS OTHER AMENDMENTS

HAS OTHER AMENDMENTS
Proposing to revise the income taxes
and the excess profits taxes of existing
laws and 10 repeal the munition manu-
facturers' tax and the increases IN the
second-class postal rates along with the
zone system. Senator Smoot Of Utah,
& member of the finance committee, yester-
/. day introduced amendments 10 the joint
resolution which has passed the House
providing that the members of Congress
and other government officials shall pay
1he excess profits tax.
Issues Statement.
senator Srnoot issued statement in
regard to his amendments. in which he
said.
Il haven't yet been able to find two
persons who interpret the revenue acts
alike | am positive there are but lew
who win not freely state that the act OF
october ;. 1917. should be amended Not
only is ii unworkable. but il is unscien-
: tific and discriminatory.
The amendment provides 4 taxing syS-
ten that any ordinary business man or
individual can understand. All individuals
whether in business as such or as mem
beers of partnerships. are treated alike
p basis. and the question of capital invested,
watered stock and bonded Indebtedness
do not enter into the question of the
amount or the tax to be imposed.
"Subnornal businesses during the
5Jrew4r period are treated on the same
basis as normal business OF like and
similar character.
Consolidates Surtax Rates.
THE amendment makes no changes in
a
net incomes of individuals. but it con-
solidates the surtaX rates imposed by
the acts OF September 5, 1916. and octo-
Der s, 1917. IL does away with the two
different amounts of exemption on IN
dividual net incomes as provided under
existing laws and allows the sum OF
$1,000 exemption. plus $1,000 additional
il the person making the return be the
head Of il family or married man or
woman with wife or husband living
with him her. there shall be an ad-
ditional exemption of $500 for each
dependent child if under eighteen years
OF age.
; 1T also adds a provision allowing
deduction for amounts paid to indl-
yiduai partners as reasonable salaries
or compensation for personal services &C
tuaiIy rendered during the taxable year.
hut in no case shall such salaries or
. compensation be in excess of the COM
pensation customarily paid for similar
services under like responsibilities by
Ought to Be Passed Soon.
4 1T does not provide a higher rate of
taxation upon unearned income than
upon the earned income, as l do not
. think il wise to inject this question
into the legislation at this time, as the
amendment ought to be passed at as
early date possible, and could he
passed before the end of this month if
: the administration would approve it
believe in the principle of taxing I'M
earned income at higher rate than
q earned income.
Instead of the different normal taxes
Imposed under existing revenue acts.
amounting TO per cent upon the total
net income of all corporations. the
amendment leyies a straight tax of
IS per cent upon the net income of all
corporations except those whose net
: income is less than $4,000
This per cent tax is not imposed
upon individuals or partnerships. thus
equaizing the income tax required to
: te paid by an individual or an indiyid-
& nal partner engaged in business as
compared with the income tax impos-
ed upon the stockholders of corpora
tion
This per cent rate on corporations
will raise sls0.o0a.00o over the amount
that the per cent rate yields; or, in !
other words the amendment viii pro-
vide a revenue TO the government of
SIS .o00. 900 on corporation incomes in
place OF s535.oo0, 600
War Excess Profits Tax.
s The greatest changes are made in the
war excess profits tax Of existing law
by the Smoot amendments.
Under this title" said Senator
Smoot the amendment only taxes the
war profits and at graduated rates
Under this title the pre-war period
81 . 1, ..t..,.
1910. 1911. 1912 and 1918. remaining
after the Exclusion OF the two calendar
wears in which the net income Of the
/. business was respectively the greatest
and the least. These five years taken
as the pre-war period Will result in a
; much fairer normal income. Of all
; classes of business. than the three
years 1911, fsf2 and 1919 provided in
: the existing laws.
IF corporation or partnership was
not in existence or an individual was
rot enRa ged in business during the
whole OF each OF these years, but was
: In existence engaged in business
during the whole Of four Of such years
the term means the two Of such four
wears remaining after a like exclusion:
3 and II u corporation or partnership
was not in existence or individual
was not engaged in trade OF business
during the whole IL each of four Of
such calendar years the term means
the numb OF such cafendar wears d,lr-
ing the whole If which tho corpora
ton or partnership WAS in existence OF
the individual was engaged IN business
Cases Of Exemption.
THE war profits tax as provided inI
the amendment does not apply to cor
poraticus which are exempt from in
come taxes.
Nor does It apply to an office or
employment agriculture, i trade or
business substantially all the net in
come Of which i derived from per-