The Brattleboro daily reformer. (Brattleboro, Vt.) 1913-1955, 1920-03-20
TAXATION
PROBLEM PUZZLES
Republican, Congress Faces
Big Expenses With Re-
duced Revenues
COURT DECISION
HAS BAD EFFECT
Some Talk of Imposing One Per Cent
Tax on All Sales-Democrats Will
Champion Presidents Recommends
tons During the Campaign.
BY DAVID LAWRENCE
Copyright by The Reformer)


WASHINGTON, d. c.. March 2O.-i
Taxation may not be as ineligible to
the average man as the stories of ex-
travagant expenditure and incompe-
tence during the war which heaped
big debt but the Republican majority
in congress is face to face with the most
troublesome turn of luck that ever hit
political party in campaign year
For the decision of the supreme court |
of the United States on stock dividends |
has not only subtraeted from the re- |
venue that had been expected but un-
less remedied by act of congress hum |
dreds of millions will be lost and the |
eagerly looked for day when taxes can
be reduced will have been postponed. !
The ways and means committee knows
it-Republicans as well as Democrats
The long and highly technical letter
from Secretary Houston of the treas
ury department elected by congress
suggests several remedies none of
which is particularly palatable to the
group of tax payers who would be af
| fccted by amendments to the present
law. Every suggestion from a fiat tax
| that would virtually compel business
concerns to distribute their profits in
stead of holding such profits together
as "undistributed or in the form of
'sstock dividends to the novel idea
of one per cent tax on sales of all
kinds in every -dav business has been
made. Some of the proposals, backed
| by business organizations of many
kinds. are nebulous as to their appli
| cation Some favor one per cent tax
on every article sold whether by the
| wholesaler or the retailer or the middle
| man. This might mean one per cent
all along the line and it is defended
on the ground that even if collected
four or five times it would still be less
of a burden on initiative than the pre-
sent excess profits tax.
But congress as compelled to do some
thing to recoup the loss by the stock
dividend decision Chairman Fordney
; Republican leader, openly promised ac-
tion in reply to an inquiry from re-
preventative Champ Clark, the Demo
cratic leader. [ asked Representa-
tive Cordell Hull, of Tennessee, who
wrote the original income tax law to
give his view of the situation. He said:
1.-The Democrats foresaw the demand
for reduction of taxes and promptly
cut down two billions of dollars il
] possible revenue. This was done over
the protest of the Republicans in 1915
for they would have liked to do il
themselves when they came in power
The Democrats moreover. reduced the
| expenditures from about fifteen to 81,
billions of dollars as soon as the wal
! was over.
Now the Republicans have actual
" cut down the expenditures by bill
ion dollars but with a two billion dol
lars cut in revenue made by the Demo
Gratis. they are still confronted with tn
= necessity of cutting down expcndi
lures another billion dollars befor
: there can be any reduction in taxes
As a matter of fact whether it had bee
n political wear or not, the reduction
! in taxes should have been made N ex
= actlv the time that it was. Neverthe
, less with the increased loss of revenu
: which results from the supreme court
;; decision. it puts the Republicans RICH
: up against it.
Il Such view even though expressed by
a Democratic member of the ways an
= means committee Is concurred in pr
! vately by many Republicans except tina
= thew naturally argue that the deb
created bv war is something whic
= might never have accumulated undo
= competent management, all of whic
= will be difficult to settle even on til
political stump. For the fact is tn
, country can expect no reduction
= taxes for three years unless som
. amendments are made 60 the preseI
tax law which will bring in more n
Venue and estimates are appreciate
- cut. They have already been ruthlessl
:, ;, reduced.
The Democrats are, of course, pr,
pairing to go to the country with I'll
record of President Wilson'S messas
"i urging repeal of excess profits taxes,
more scientific arrangement of take
:, with the various recommendations
~ Secretary McAdoo, and Secretary ella.
~ as proof of Democratic activity on tt
III subject. And they will point to Il
Republican congress as the responsib
= cause of the continued inequities
taxation
az On the. other hand, the Republican
Of may surhise their Democratic frien,
~ bv tackling the tax question anywa
= figuring that they will be able to eal
~ ture the next congress on other conn
in the Democratic record, and conside
ing moreover that a revision of the tt
y laws would please business men. Whic
40 ever way they approach the subiec
= there is trouble in store. But it b
&c gins to look as if congress viii pa
some amendment which viii get at Il
- "stock dividend .iecision. Englar
is having her troubles with the san
phase of her income tax law and it
estimated that billions of dollars ha'
been lost and will be lost by Il
evasion accomplished in failing to di
tribute actual cash or earnings al
putting them in the form of stot
dividends that can be held for a deca,
Tor so until the taxation burdens a