Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1918-06-07
WcADOO URGES BILL
FOR SS.OOO,OOO,OOO TAX REVENUE
Continued from Page One

Continued from PAGE One
encourage investment in Government
loans and discourage the wealthy from
buying stocks and producing high re-
turns.
1t also would serve to hold the pre-
sent Liberty bond rate at ~ per cent
which McAdoo desires and would in
crease the number of bond buyers from
1000, 900 in the last loan campaign to
25. OOO, 900 in the October campaign,
treasury officials declared today.
Kitchin today laid McAdoo's letter
before the Ways and Means Committee,
which opened hearings on the new war
tax law. At the same time the SEN
ate was awaiting information from Nc
Adoo upon which to base criminal laws
to reach profiteers.
McAdoo's Suggestions
In his letter to Chairman Kitchn, Sec
rotary McAdoo says:
I'm the fiscal year ending June 30,
1918. our cash disbursements will amount
to between Sl2,500, 100000 and S13,-
OOO, ,O00, 900. OF this amount about one
third will have been raiGed by taxes
I and two-thirds by loans, all of which
will be represented by longtime obliga-
! tions, that is, bonds of the first, second
and third Liberty Loans and war-savings
/
| pleted fifteen months of the war with
a financial record unequaled, l believe,
by that of any other nation.
1--WE cannot wisely contemplate nearly
doubling our cash disbursements in
/ the fiscal year 1919 without provid-
/ ing additional revenue. We cannot af-
! ford to rely upon $4,000, 100000 only
! from taxation. because we shall then
have to rely on raising 100000, 600, 900 by
loans. This would be surrender to
the policy of high interest rates and
| imitation. with all the evil consequences
which would flow inevitably therefrom,
and which would, 1 firmly believe,
bring ultimate disaster to the country.
We cannot afford to base our future
! financing upon the quicksands Of infla-
ton or unhealthy credit expansion. If
we are to preserve the financial strength
of the nation we must do sound and safe
things, no matter whether they hurt our
rockets or involve sacrifices-sacrifices
of a relatively insignificant sort as COM
pared with the sacrifices our soldiers and
sailors are making to save the life of
the nation The sound thing to do is
unuuestionably to increase taxation, and
the increases should be determined upon
promptly and made effective at the
earliest possible moment.
II doubt seriously II the Government
can be financed with only $4,000, 900, 900
derived from taxation, because with a
tax bill no larger than this, sufficient
economies will not be enforced upon
the people of America, and without sush
economies l see no way in which the
great financial operations of the Govern
ment can be safely conducted.
"On the basis of the present revenue
laws we should have to raise in the
fiscal year of 1919 100000. 1000, 900 by the
sale of Liberty Bonds or by loans of one
sort or another. I believe that il we
are to preserve the soundness and sta
bility of our financial structure we
should raise by taxation not less than
one third of the estimated expenditures
for the fiscal year 1919, or $4,000, 900,
600
"The existing excess-profits tax does
not always reach war profits. The rates
| of excess-profts taxation are gradu.
, ated and the maximum Is 60 per cent
In Great Britain there is a fiat rate
of 80 per cent on all war profits. The
} Government departments. under great
pressure as they are to get necessary wal
materials and supplies with the utmos,
expedition, cannot In the nature OF
, things fix their prices nor guard theil
, contracts in such way as to avoit
, the possibility Of proflteering. The one
sure way Is to tax away the excessive
profits when they have been realized
/ do not say this in spirit of criticism
, Of the corporations or business men o.
, the country, who have for the most par
loyally supported the Government. II
entering into war contracts they TAXI
: grave risks They are called upon Il
make vast expenditures of capital fo
purposes which may prove unproductiV'
after the war. They are not to be blamed
In these circumstances for asking TO
prices and terms which cover thos
risks, on the other nand, when th
risk has been liquidated by proper al
lowances and the contract has prove'
profitable the Government should TAX
back in taxes all profits above reason
able reward Under existing law thS
does not happen, because the tax rate
n are not high enough and cannot safel
be made high enough, since the ties
= now Is not how much of the profits ar
n due to the war, but what relation tn
4 profits bear to the capital invested.
t. company with a swollen capital an
= huge war profits escapes.
Il "Of course no one objects to reason
able profits: on the contrary, every on
o should want. and | am sure does war
r business and enterprise to be rewarde
II with reasonable, or even liberal, profit
Prosperity should he preserved and ca
It be preserved, ! believe. on the basis {
o reasonable hS PiopieHi
craftsmanship is to establish just r,
h lation between necessary taxation an
the earning power of the nation.
= Wants Loan Rate Kept Down
q This brings me to another considers
II ton of great moment In the Cover
s ment's financial plans. / hope tnat
ie will not be necessary further to increa!
r the interest rate on Government bond
The number of subscribers to the thr'
D. Liberty Loans aggregated 100000
"a The people who subscribed are impatie
10 Of those who have not. Various plai
es have been urged upon me for forcing Il
~ people to buy Liberty Bonds. The ms
~ of small means who buys SlOO boz
"a wants his neighbor to do so too. The
H. IL a popular demand also for high tax
&c upon war profits. There is also pop
Il, lar demand that all the people shou
or contribute to financing the war. The
a. should, therefore. be substantial
or crease in the normal income tax ra
or and a higher tax should be levied up
H. so-called unearned than on earned
nd comes.
rd .Income derived from Liberty Bon
would he exempt from this taxation a
,e. the relation between income from Ii
n erty Bonds and income from other
At. curities would be readJusted without
lss crea sing ths rate Of interest on LibeI
1onds Il would rot tax ths patrto