New-York tribune., 1918-08-31
Ways and Means Commit.
tee Makes Six Important
Changes
Measure $3.50, 100000
Shy Of So, 900, 900, 900
Discrimination Between
Earned and Unearned
Incomes Eliminated
BY Theodore M. knappen

WASHINGTON, Aug. 30.-Aftcr max
ing six important changes in the dra #
the Ways and Means Committee an
nounced today that except for the in
corporation of the changes agreed
upon, the addition of some minor pro
VISIONS and some teXtual changes the
$4,000, 600 revenue bill was com
p!ete and would be given to the public
Monday or Tuesday morning, according
10 whether the House is in session
Monday Labor Day) or not.
The six charges are:
first-~-Eliminatins all discrimination
between earned and uncarncd income
and dxing the normal income tax rate
at per cent for portions OF incomes
''et~e'n exemption .rnits ard $4,000
ana "a per cent fo, portions above
$4,000 Cinstead of 10 per cent, as nrst
decided. and then at 10 and 13 per cent
on earned and uncar~ed income. re-
spcctvcly).
Sccond-Providing that tn, add.
tlonal tax Of g per cent on undis
trlbuted profits and surplus shall not
appiy to such portions OF profits and
surplus as are devoted to debt paving
Third-Decreasin the surtax rate
IN the higher grades Of income CORE
spondingly to the increase in the nor
NAL rate.
Not to Tax State Bonds
Fourth-Abandonmc OF .he tenta
1--WE declslon 20 lax the securities of
states and other political subdivisions.
fifth--Enlargeme Of the Vreasur,
Departments discretionary powers in
dealing with the determination of tax
aple income III cases where the appl-
catlon of the ordinary definition Of in
vested capital would work NANTES t
hardship.
ixth-Excision of the 10 per cent
/ catch clause intended for all corpora
'lohs having a capital Of $1,000 900 or
more that might not be reached prop
crly by the excess profits or war profits
method -
Chairman Kitchin announced a vir-
tual conclusion of the committee's es-
sentlal work following a conference be-
tween sub-commttce headed by him
self with Secretary McAdoo and other
treasury officials at the Secrctary's Of
| fees "
Two Chief Topics
-, The two chief topics considered a.
.hls conference were the proposed diff
/ ierential between earned and unearned
income and the additional per cent
TAX On surplus and undivided profit
As 20 inc forn er 1t was decided that
"l,h the com olications caused by q
! split normal tax, that is 6 per cent
under $4,000 and ~ per cent above
and the abandonment of a dfferentia'
above $4,000 or $4,000 the problem
OF al'ocat'ng and determining the diff
I ierences between earned and unearncC
income would be too difficult.
80 fiat normal rate Of 12 C pei
cent under $4,000 was determined
upon. This fiat rate, however, remove:
'he dlscrlmlnation against earned in
come IN the present law, where it i.
taxed ~ per cent above $4,000
which per cent is incom tax and
per cent excess profits. On the 18 pel
cent tax on undstributed profits ant
surplus OF corporations, Secretary Nc
Adoo held that there should be no sucl
TAX The committee, however, was no
able TO agree with him in full on thi
point.
The conference was represented O,
both sides as being harmonious, ant
io Hchtlon was made OF the heav,
excess profits rates to which the Sec
retary remains opposed lie present
ed very clearly and conclusvcly tn,
need of wide discre' ionary powers i,
applying the war profits and exces
profits taxes, but did not insist OF
greater latitude than the last draft O
the bill gives, which IS very consid
cradle.
IT is understood that the Trcasur,
viii make no effort to change the bill
while it is before the House, but tn,
Senate will be relied upon to pare i
to Treasury pattern
Present Draft of Bill
AS the bill now stands in ts fna
state its salient features, as compare.
with the present laws, which it re
places with single statute, are:
Personal incomes: Normal taxi
per cent on income over $4,000, and
per cent on income bclow that fgur
down TO the exemptions, which renal,
the same as at present, as against
and per cent Under the present lay
Personal incomes. surfaces -Greatl
increased, doubled and trebled in lowe
and middle grades. but not yet pre-
ciycly determined
Corporation incomes Normal IL pc