The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-07-27
EXCESS TAX RANGE
10 TO 10 PER CENT.


tax. Under the proposed rates the total
tax would be $3.50. In other words. the
Government, which now takes 81 per
cent of such an income, would take s.3
per cent. This percentage would In
crease with the higher incomes How
ever, II the committee carries through It's
plan for attachments OF the tax on
smaller incomes this percentage will be
lowered.
The suggestion that the scale Of ex-
cess profits tax rates established yester-
day was conservative met no favor in
the committee and the consensus of the
majority of the committee was that the
imposition of the 80. so and so per cent.
taxes was "all the traffic would bear"
Capital Definition Stands.
The committee reached the definition
Of capital to-day upon which the cor
poration income tax and the excess
profits tax are necessarily based and
made no change in It OF consequence,
Only a few regulatory changes which
will not affect the definition were made,
it was said. There is to be no more
consideration OF pre-war earnings as
basis OF determining taxable earnings
under the new law.
The committee received more discour-
aging news to-day from the estimates of
Treasury experts, who are now ''prac-
tically certain" that the present excess
profits taxes will yield only about
81, 600, 000.0 instead OF the $l.2Oo.-
OOO,0 recently anticipated or the
S1.400,0 900 900 originally expected. This
will mean that under the new rates ten
tatlvely agreed upon for excess profits
tax In the law now being drawn only
about $500, 100000 will be raised In
stead of $3.50, 100000, the first esti-
mate of revenue from the new rates.
Exclamation was made to-day of the
reason for making wide dinerentlal
between the corporate normal tax on
distributed net income and net income
not distributed. On the first class OF IN
come the tentatively agreed upon rate Is
IS per cent. while the tax on distributed
income would be only IL per cent.
One of the committee pointed out that
the lower rate was intended by the COM
mtttee as an inducement to distribute cor
norats earnings and not as penalty on
the retention of earnings in business
II very strong objection was made TO the
tentative plan the only change the COM
rnittee would make would be to make
both rates uniform at IS per cent.
would Encourage Distribution.
The fact that undistributed earnings
are not subject to the excess pronts
tar. It was explained. made 1t neces-
gary TO give some inducement to cor
norations to distribute at least part OF
their earnings which when distributed
are affected by the income supertaxes'
That the IS per cent. and IL per cent:
taxes on the two forms or net income OF
cprnorations are not unreasonable was
Io
a corporation making a very h!gh net
Income subject to tax was given:
corporation having capital OF
q m 400 and making net pront OF
400. 900. The excess profit tax as no"
nroposed would take these amounts:
Action in the committee to-day MADE
/, clear that the famous section 200 OF
the nregent revenue law inserted by the
conference committee. and which fas
been SO greatly criticised as "a tax on
brains' will not be resnacted, though
defended at the time by Chairman
Kitchin.
This section imposes an per cent
tax on the parts of earned incomes aDoVe
SO, 900 a year. leaving unearned incomes
absolutely free from this kind OF tax.
This caused a fight in the last Congress.
particularly when II was discovered that
through a Joker members or Congress
had relieved themselves OF paying such
A tax. This exemption OF members OF
Congress was subsequently removed. but
me fight carried on by Representative
Ioneworth (Ohio) to repeal the tax It.
self because Of It's glazing injustice was
defeated on the floor by Chairman
Kltchin.
Representative Longworth (ohio) has
continued his fight on this tax with the
result, as was plainly indicated to-day,
that II is to 20 out Of the bill.
Will Not Penalise Farmers.
The higher supertaxes on all incomes
will Yield the income the Government
needs without penalizing the man who
an rms his income and discriminating In
favor of incomes received from invest
ments.
The committee expects to return to the
income tax on Monday when an effort
will be made to include some sort OF
abatement for tho lower classes OF
earned incomes from the 10 per cent
normal tax. TIE difiiculty of allocatins
che parts Of some incomes which are