Connecticut western news., 1918-10-03
AN UNFAIR TAX
Representative McFadden Points Out
 Defect in Bill

Declaring that the House revenue bill, a democratic administration measure, assesses property under the guise of taxing incomes, Representa- tive Louis T. McFadden, of Pennsyl- vania, in the following statement today pointed outh this defect in the bill:
 'The revenue bill contains a pro- vision for taxation which amounts to an assessment against property and not tax n incomes.
 F. 'I refer to Section POI which pro- yides that for the purpose of ascer- taining the gain derived from the sale of real or personal property the basis shall be the fair market price or value of such property in the case of property acquired before March 1 |, | 1913, the price or value on that date | (March l, 1913) and in the case of property acquired on or after that date, the cost thereof, or inventory value
 i 'tThis section declares that any gain in sale of property over the pur- chase pprice or if the property was bought before March l, 1913, the value on that date shall be considered income for 1918 and subject to the almost confscatory taxes to be levied under this bill. An. example will clearly illustrate my statement. A farmer buys a farm for $2,500 on March l, 1913. Five years later, on March l, 1918, he sells this farm for $5000. MT. Kitchin says that the difference between $5000 the sale price, and $2,50O, the purchase price, which is $2,500, is income profit and shall be added to the income of the farmer and taxed.
 "This is levy against property and not a tax on income. The ex- change or commodity value of the dllar has shrunk 50 per cent in five years. In 1913 a dollar would pur- chase a smuch as $2.0O will buy to- day. This is the same thing as say ing prices have risen 100 per cent since 1913 which of course, we all realize to be true. Now, when the farmer wishes to sell the farm which he bought in 1913 for $2,500 he must receive $5000 as the selling price in order to be able to use this money (if he wishes to spend it) in securing the same amount of com modities now which he could have bought for $2,500 in 1913.
 "The revenue bill is fatally defec- tive in not recognizing the great in crease in prices of everything dur ing the last five years. No income tax should be levied on the proceeds of sales of property held over a peri cd of years until an increase over the purchase price is estimated, cores bonding to the decrease year by year in the value of the dollar.
 So, too, in estimating war profits in taxing the income of corporations the selection of the years 1911-1912 and 1913 to ascertain average pre- war earnings and comparing such average earnings with the earnings in 1918, the Kitchin bill ignores the fact that corporation must earn twice the number of dollars this year in order to make the same amount of profit on capital invested as was earned in the pre-war period on the same amount of capital.
 "The plant today, machinery, stock, buildings, real estate and oth- CT assets must be estimated to be worth double the number of dollars the plant was worth in 1911, 1912, 1913, to account for the deprecia- tion in the purchasing power of the dollar in five years. Of course it may well be that certain plants have in creased three or four fold due to To- cation and special market conditions and war demands, and after allow ance has been made for the shrinkage in the value of the dollar such appre- citation in value can justly be con- sidered as war profits.
 The bill as it stands now amounts to levy on capital in many in stances where an attempt is made to tax income.