The sun., 1918-08-22
2 EXCESS PROFITS
TAX PLANS WEIGHED
Rates Likely to Win Are IS
and so Per Cent. Over
Exemption.
KITCHIN WANTS MORE
First $1,000 and 8 Per Cent.
of Capital to Escape Levy
in Both.
KITCHIN WANTS MORE
Sp,cfaI Despatch to The Sux.

WASHINGTON, Aug. 21.-The Ways
and Means Committee to-day narrowed
sovn TO two the plans for an excess
rrchts tax, and one Of the two sugges-
lions will be written into the new rev.
enue law. The two proposals, both
q, which the exemption of tax free in
come will be $4,000 plus s per cent. OF
the invested capital, are:
Plan I. On income exceeding the ex-
emptions and not exceeding Is per
cent. OF invested capital a tax of IS
per cent.
on income exceeding Is per cent
and not exceeding 20 per cent OF
invested capital a tax OF SO per cent.
On income exceeding 20 per cent.
OF invested capital tax OF 10 per
cit.
Plan >. On income exceeding the ex-
emp,lons and not exceeding 20 per
cent. Of invested capital 40 per cent.
On income exceeding 20 per cent.
OF invested capital a tax of 70 per
cent
First Likely to he Adopted.
While Chairman Kitchin prefers the
second plan the first plan evidently Is
favored by a majority Of the commit
tee and probably will be adopted. The
two plans will be drawn up by Mr..
Ki,chin tomorrow and Friday. when
there will be no meetings of the COM
mlttee. The plan to be finally adopted
ms part of the bill will be voted on Sat-
urday.
As a result Of the necessity Of draft
ing this portion of the bill which has
been held up by the squabble between
the committee and the Treasury De-
partment, Mr.. Ktchin estimated to-
night that the bill would not be ready
for the house before the middle of next
week instead of August IS. as has been
the plan.
Either OF the excess profits plans will
yield from 5000 100000 to $3o0,000.000
more than the present scale of excess
profits taxes, said Mr.. Kitchin. In COM
bination with the war profits tax be-
tween $3.50. 100000 and $4,000, 100000
in revenue will be realized, he estimated.
HIS estimate, he said, allows for
diminution in corporate earnings for
1918 as compared with 1917.
The committee finally Strengthened
out the war proflts tax to-day. The
exemption agreed upon provides that
for all classes OF business the pre-war
earnings. based on the years 1911 to
1918 inclusive. shall be deducted and
that earnings amounting to 10 per cent.
Of the capital added since then may be
deducted. 1t is provided, though. that
the deduction shall not be less than 10
~ he tnfa aA al
In order that large corporations shall
not escape payment under either the
excess profits tax or the war profits
tax provision was added that all cor
porations having an invested capital
Of as much as 81 900 900 shall be taxed
al least 10 per cent OF their net in
come as excess profits.
Small Corporations Protected.
To take care of the smaller corpora
tons, provisions were added SO that on
corporations whose invested capital is
not in excess of $4,000 the excess
profits or war profits tax imposed shall
not amount in all to more than 50 per
cent OF the net income. and that on
corporations whose invested capital is
not in excess Of 100000 this tax shall
rot amount in all to more than 40 per
cent of the net income. Mr.. Kitchin
explained why this was done.
''Nineteen-twentieths OF the corpora
tons in this country whose net income is
over so per cent. of their capital" he
said ARE corporations whose capital is
$4,000 or under. and of the corpora
tons whose net income amounts to 100
per cent. of their invested capital nearly
all Of them are capitalized at $4,000 or
under.
Their apparently enormous profits are
due 10 personal efforts Of the few peo-
pie who own the stock
The provisions that for corporations
whose capital stock amounts to a million
ir over shall pay at least 10 per cent.
of their net income as excess profits
taxes will cover all the corpora tons
which Chairman Kitchin was fearful
would escape under the Treasury De-
partment war profits tax plan, which has
been adopted.
Income Rates stiII Haxy.
The committee did not reach final
determination on the individual income
normal tax rates 1t is practically GER
tain there will be differential Of per
cent in favor OF earned incomes, but
whether the rates will be 10 per cent.
on earned income and 10 per cent. on
uhearned income, or IL per cent. on
earned and 10 per cent on unearned in
come, has yet to be finally decided The
treasury Department experts are now
engaged in estimating how much each
FAX would raise and will submit these
hgures when the committee next meets.
New neutrality-suspicious. or
canned since l913-will have to pay
,axes under the war profits section of
tne new law instead Of under the excess
pfohts provisions. This the committee
mas decided upon. Under the war profits
,Aey Will be allowed to deduct from their
"et income an amount equal to 10 per
cent OF their net income and pay a tax
ol 90 per cent. on the balance of their
corporations will have no discretion
'o'It which tax they should pay-the
rN'ess profits tax or the war profits tax.
ne one yielding the greater revenue,
ven II It be a question of only a few
meut