The Washington herald., 1918-07-27
TOGIVE
sf,69O,OO0,0O0
'WARREVENUES
Ways and Means Adopts
Schedule Of Profits
Taxes for Bill.
OTHER RATES MONDAY
Committee Must Find 3d.
100000, 900 from I'm.
touched Sources.

The Ways and Means Committee
yesterday formally adopted for the
new revenue bill a schedule Of excess
profits taxes estimated TO yield 81 60
600 900 during the next fiscal year. II
was also decided that in levying these
taxes prewar profits of the corpora-
tions will be entirely ignored and the
revenue will be collected solely upon
the net income for the taxable year,
The new rates viii be as follows: 30
per cent upon the net income In ex-
cess of exemptions and not IN excess
of % per cent Of the net Income; 80
per cent in excess of 20 per cent Of the
net income and mot In excess of 3
per cent; 80 per cent on the net ia
come in excess of Is per cent
The exemptions win be 800 plus 10
per cent on the amount of invested
capital
Not to Disrupt Business.
Although It was admitted by mem
bers of the committee that the new
excess profits rates would leave the
committee short by 81. 5eo. .ooo.0o Of the
total amount which was expected to
be raised on income and excess profits
taxes, the general feeling among the
members was that II would be unsafe
to go higher in taxing the profits Of
business, and that higher rates would
merely mean the disruption Of or.
ganized industry.
I This was the more readily seen when
calculations were submitted TO The
committee showing how the tax win
work out. For example, q cotps-a-
ton organized with 100000 capital
making a profit Of 100 per cent. or
$4,000, would pay under the excess
profits rate agreed to ssi.sob Under
the income tax rate previously
adopted by the committee, of Is per
cent on undistributed profits and u
per cent on profits distributed to
shareholders. II one-half of the profits
were distributed. the corporation
would pay as income tax. Ass. This
makes total Of 1885. leaving to
the corporation s3o.13s, or 90 per cent
Of its net income.
Under the same method, q corpora
ton making Is per cent would have
about 13 per cent left: one making 3
per cent would have is per cent left.
and one making 50 per cent would have
20 per cent left.
. Applies Only to Corporations
An import:,n. feature of. the new
excess profits section is that IT ap-
plies only to corporations. thereby
virtually repeaiiH,; Section zoe Of the
present law, which imposed an ex-
cess profits tax upon incomes de-
rived in professions. Many members
CT Congress regarded this section as
cbEoxious, constituting 1t as a tax
on intelligence and learning. The re-
zeal of the sectica goes a long way
toward acco=,o.isking the desired end
of differentiating between earned
and unearned income. Large in
comes derived through the profess
SONS will be reached through higher
normal and supertaxes on individual
income.
The committee Is hopeful that the
excess profits taxes agreed upon will
yield the sum Of N.6S0. 10000. The
committees experts have advised that
IL the present law brangs return
Of sl,2o0, 900, 900, the new rates will
produce the sum mentioned. II the
yield from the present rates Is not
over 1900, 10000. as is more gener-
ally believed. in view of the effects
of price-f1xing and the higher cost
of labor and materials, the new
rates will then produce not more than
81, ,4s0, ,0oo, 200, the experts report
The committee adjourned yester-
day until Monday. when 1t will delve
into the question OF luxury taxes
Practically Ss.5oo. .ooo,o 900 will have to
be raised from taxes other than the
income and excess profits schedules.