The sun., 1918-12-17
Senate Favors Permitting In
come Deductions for Pre-
vious Years Losses.
LENROOT MAKES ATTACK
Saws Clause Penalties Skilled
Business Men for IncOm-
petents' Errors.
ss.c,oi pesretcA "a Tas srN.

the revenue bill in the Senate to-day
when by a vote Of 30 to 1e the commit
tees amenment providing that de-
duction shall be made for net losses
suffered In 1917 in calculating the in
come taxes Of individuals, business
firms and corporations for the ensuing
taxable year was upheld. The COM
mitteers provision was criticised by
Senator Lenroot (Wis), whose argyll
ment was supported by Senator Ia
Toilette (wis.).
The opposition TO the committees
amendment included theee Senators:
Borah (Idaho), Frelin9huysen IN. j.,
Gronna IN. d., Harding (ohio). Jones
tWash.), Kenyon (Ia.). La Toilette
ana Lenroot (Wis.), Nelson tMinn')'
Norris (Neb.), Poindexter (Wash.),
Sterling Is. d.. Republicans, and
King (Utah), Kirby (Ark.), Nugent
(Idaho) and Vardaman MISSY, Demo
Gratis.
Calls Direct Loss e1oo.0oo.ooo.
Senator Lenroot attacked the COM
mittee's amendment. saying that II
was unfair to demand of a business
which is properly managed that IT
should pay money into the Treasury
to be paid to other corporations which
had been mismanged or which had
suffered losses through taking specu-
lative chances. Said he:
IF man in business made loss in
-. II. l.
provision to have paid him out of the
Treasury the amount OF loss from his
profit OF 1918, and II that 10 not SUI
flcient he would be entitled to carry
the loss over into 1920 and receive an
additional refund. 1t Is unfair to this
business and industry OF the country
and will cost the Government mill
ions"
At this point Senator La Toilette in
terrupted to say that it was estimated
that the direct loss to the Government
through this abatement provision
would be 500. ooo, 900.
Senator Jones Cwash) interrupted
Senator Lenroot long enough to ask
Chairman Simmons IN. c. II he con-
sidered Senator Lenroot's statement a
fair one. Senator Simmons saiA he
did and Senator Lenroot continued:
IF 100000. 900 Is the estimate OF
the amount OF loss in the revenue to
the Government OH the assumption
that business goes on as usual It is
fair to assume that IL business and
industrial depression does come il will
cost tho Government 81 ,0o0, 0O0, 900 in
stead Of 500, 100000,
Sees Tax Theory Overturned.
THE whole theory OF the income
tax is that a man shall be taxed ac-
cording to his income made each year
and this provision would nullify that
completely by permitting a deduction
for losses over the three year period"
Rising to defend the committee s
provision, Senator Jones IN. M said
the theory Of the bill is that the taxes
should he levied according TO the abil-
tty OF the taxpayer to meet them.
Where then" retortei Senator Lon
root, "a man has made very large
profit, an excessive profit, it IL not
just TO allow him a deduction for
losses OF two or three years back when
in the very same enactment you i'm
pose taxes which are not levied ac-
cording to the ability OF the man who
pays but must be paid whether the
taxpayer is able to afford it or not"
Senator Smoot (Utah). who com
pleted to-day his speech on the gen
eral terms of tho bill, told the Senate
that the next Congress would have to
deal with the tariff question il Amer
ica's markets were not to be flooded
with foreign made goods once Europe
settled down TO conditions approx
mating normal.
Objects to Discriminatory Tax.
II can only say that l believe IL will
have to come UP very soon in Con-
81 ess.' said Senator Smoot. We may
have TO do it at an extra session. Ger
tainly It cannot wait long"
Senator Smoot said that American
business men do not object to paving
taxes but that they do object to having
a discriminatory tax imposed THE
American business man." he said, will
pay taxes whether the country is al
war or not and he wants to pay his
GAR share
But when it comes to an unjust. a
discriminatory tax that imposes one
tax on one concern and a different tax
on another concern in identlcally the
same business and making the same
profits the business man has the right
tn object. In some instances concerns
have TO pay four and Ave times as
much az others in exactly the same
business and with like profits.
1T is impossible to impose an excess
profits tax or a war profits tax on the
business organizations OF the country
without discriminating against some OF
them.
straiRht War Fronts Tax.
Tho only way out OF the problem is
20 have a straight war profits tax on
the gain made through war work. This
tax ought to be assessed only against
contracts or work still going on. The
character OF tax that believe would
be acceptable 10 all business is a nor
NAL tax that would reach all concerns
making over per cent. profit"
Senator Smoot spoke OF the esti-
mated expenditures for the fiscal year
ending June so, 1920, as 5000, 900 ,o0C
and declared that to mcet this the ma
jority of the Senate Finance Commit
tee had put a stipulation in the wal
revenue bill for a maximum tax OF
81 900 100000. How is that going &c
suffice? The only way cut OF 1t will he
for the Government to issue bonds
The people might as we'll know the