Evening journal., 1918-10-04
RADICAL Change IN
WAR REVENUE BILL
arbitrary Date Set for Valu-
ing Mineral Oil and Tim
Der Properties
BEGIN ATTACKS
ON THE MEASURE

WASHINGTON. Oct. I.-The Senate
Finance Committee is engaged in ham
mering its way through the most te-
dious portion Of the war revenue bill,
that devoted 90 exemptions 10 be al
lowed individuals and corporations in
regard TO the income tax applicability.
The work involves the closest appll-
cation OF the legal knowledge of the
committee members and STAFF OF ex-
perts on revenue law. Yesterdays grist
was redrsft OF the paragraph Of the
measure dealing with allowance for de-
pletiOn and amortization in mines. oil
aud gas wells. timber reserves and other
natural resources.
The committee ratified an amendment
which reads:
IN the case Of mines, oil and gas
wells, other natural deposits and tim
Der. a reasonable allowance (shall be
made) for depreciation and for depre-
citation OF improvements, according TO
the peculiar conditions Of each case,
based upon cost plus costs OF develop
ment. provided that in the case Of such
properties acquired prior 10 March !,
1913. the fair market value Of the prop
eriy (or Of the taxpayers interest
therein) on that date shall be taken in
lieu Of the cost; such reasonable al
lowance in all Of the above cases TO be
made under rules and regulations TO
be prescribed by the commissioner,
with tile approval Of the secretary. In
the case Of a nonresident allen indi-
yidual deduction under this paragraph
shall be allowed only as TO property
within the United States.
The radical change in the bill made
by the Finance Committee IL the set
ting Of an arbitrary date for the es-
tablishment Of the market value Of min
Ing oil and timber properties as the
basis Of calculation Of values rather
han the cost Of such properties.
sharp criticism OF the revenue bill
Nas voiced by Representative McFad-
fen, Republican Pennsylvania, who
,harged In a public statement that the
Democratic Administration was seeking
% tax property directly under the
zuise Of applying the income tax. He
said the bill in this respect was highly
defective
- II refer" said Mr.. McFadden. TO
Section 20l. which provides that for
the purpose Of ascertaining the gain
derived from the sale Of real or per-
sonal property. the basis shall be the
fair market price Of value of such prop
erty In the cost Of property acquired
before March 4. 1919. the price or value
on that date March 4, 1919, and in
case OF property acquired on or after
that date. the cost thereof or inventory
value.
This section declares that any gain
IN the sale OF property over the pur-
chase price or II the property was
bought before March 4. 1913. the value
on that date shall be considered in
come for 1918 and subject to the almost
,onflscstory taxes TO be levied under
his bill.
"As an example, will clearly illustrate
my statement. A farmer buys a farm
for $500 on March 4. 1913 Five years
later. on March 4. 1918. he sells this
farm for 5000 Mr.. Kitchin says That
the difference between 5000, the sale
price. and $500. the purchase price, /
which is $500, is income profit and
shall be added TO the income OF the far
mer and taxed. -.
''This is a levy against property and
not a tax on income. The exchange or I
commodity value Of the dollar has
shrunk so per cent. in five yeras. In 1
1918 a dollar would purchase as much I
as 81 will buy today. This is the same /
thing as saying prices have risen 100
per cent. since 1913. which Of course. we /
an realize 10 be true. Now, when the /
farmer wishes to sell the farm, which I
he bought in 1918 for $500 he must /
receive 5000 as the selling price. in (
order to be able TO use this money lif I
he wishes TO spend it, in securing the
same amount Of commodities now /
which he could have bought for $500 /
in 1913.
1.-The revenue bill is fatally defec- /
tive in not recognizing the great in /
crease in prices OF everything during /