The Washington herald., 1918-10-23
REVENUE BILL
REVISED TOHIT
BIG PR0FITTERS
War Profits Section Is Entire
ly Rewritten by Senate
Committee.
THE RATES ARE LOWER
New Measure Puts Tax Burden
on Incomes Over
Million.
THE RATES ARE LOWER

The war profits and excess prof
its section of the revenue bill was
entirely rewritten by the Senate
Finance Committee YESTERDAY ana
new rates which may yield slightly
less income. but which are caIcu-
lated to reach more of the strictly
war profits were adopted.
The alternative method, hermit
ting the Treasury Department to
collect the tax under whichever
rate would produce the largest
amount of revnnue. was stricken
out at the suggestion OF lawyers
That such a provision would be un-
constitutional.
An entirely new set OF surtaxes
for individual income taxes was
adopted. These rates will make
little difference In the amount TO
be paid on incomes up to $4,000:
on incomes between $4,000 and
l.o00.O00 the amount of tax will
be considerably lower, but on in
comes above s1.OOO.OOO a year the
tax viii be higher than it would be
under the rates which the House
adopted.
The adoption of these changes
combined to make il one of thee
most important sessions the COM
mtttee has held since tht revenue
bill came from the House. Il
brlgs the work of the committee
near to completion. and it is the
expectation of the committet that
the measure will be in final shape
to report to the Senate next week.
The new war profits and excess
profits section adopted by the COM
mittee is a combination Of the two
methods put into the bill by the House
ways and means committee with some
|, marked changes. The House bill fixed
the war profits tax at 80 per cent
upon the amount of net income after
specific exemption of 5000 and the
average of its pre-war earnings for
1911. 1912 and 1913. The excess profits
tax allowed an exemption OF 5000,
plus s per cent of the invested cap
| ital for the taxable year, and rates
of taxation as follows: IS per cent of
the income in excess of these credits
and not in excess OF 10 per cent and
% per cent of the invested capital, and
70 per cent of the amount Of income
in excess of 20 per cent OF the i'll
vested capital
Exemptions are Same.
Inc SOlIlDl1dllOn OF tneSe TWO SNS-
TENS of rates which the senate COM
mittee adopted is as follows:
Section 3O1-That the tax shall be
the sum of the amounts computed un-
der the following brackets:
First bracket-Thfrt< per cent of
the amount of the net income in ex-
cess of the excess profits credit and
not in excess of 20 per cent of the in
vested capital.
Second bracket-6O per cent Of the
net income in excess OF 20 per cent of
the invested capital.
Third bracket-The amount by
which so per cent of the net income
in excess of the war profits credit
exceeds the tax as computed under
the first and second brackets.
"In any case where the full amount
of the excess profits credit Is not al
lowed under the first bracket, the
part not so allowed shall be deducted
from the amount in the second
bracketp
The exemptions remain practically
the same.
Rates More Equitable.
The committee contends that the
method adopted is much simpler than
that put In the Dill by the House
committee. and that by combining
the two methods of computing the
tax all question as to the constitu-
tionality of the alternative system
which the House proposed is evaded.
It is not believed that the new rates
will produce as much revenue as was
estimated for the double system in
the House bill. which was 81, 10. Goo
900. On the other hand, members of
the Senate committee say that the
rates will be more equitable, that
they will bear less heavily upon busi-
ness which has not reaped exorbi-
tant profits from the war contra acts.
and that it will deal more harshly by
those who are the real profiteers of
the war.
The new surtaxes are estima, ed to
produce a total of 81, 459 ,O69 600 as
against an estimate yield of $780,
600. COG under the rates which The
House adopted. The Senate's plan is
to add l per cent to the surtax for
every additional 5000 of income above
s6 coo. so that the completed system
of rates, together with the amount
of revenue which 1t is estimated will
be produced from each classic cation
of income is as follows:
Surtax Rate. Amount
Income Per Cent Tax
5000 to $500 100000
4, nnn - Q oo0 7 aOn nl0