Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-12-13
CONGRESS BEGINS
HEARINGS ON TAXES
Lively Committee Debate as
Nations Revenue Needs
Are Taken Up.

Congress took the initial step to-
ward framing new revenue legisla-
tion today. when the ways and means
committee opened hearings on tax
questions and the nations revenue
needs.
AT the outset. the committee was
informed of the Treasurys attitude
and views by DR.. Thomas S. Adams,
tax expert and economist. who de-
clared the first problem for the COM
mittee to decide was the deter
mination whether the level of taxes
should he retained at $4,000. 900 900
annually. Although he avoided say
ing so. the Treasury representative
Indicated this decision hinged on
whether a reduction in tax rates was
possible. He himself believed no re-
duction could or should be considered.
Lively Tilt Opens Session.
Before DR.. Adams began his testi-
mony a lively tilt ensued between
Chairman F'ordney and Representa-
tive Garner, democrat. Texas, who
demanded that statement roe in
cluded in the record showing the
exact purpose of the hearings.
After several exchanges MIR. FORD
ney announced that the committee
proposed to gather information on
which to base, contemplated revision
of tax laws. He said he planned
to continue the hearings to December
z3 and then to adjourn to January
s. when tariff questions would be
taken up.
Mr.. Garner objected to the plan be-
cause, he said. five of the minority
members of the committee would not
be members after March 4. He be-
lieved it unfair to place tax questions
before the new members. WHO had had
no opportunity to cross-examine wit
nesses. His pleas, however. failed to
change Mr.. FOrdney's program
Explains Treasury Report.
DR.. Adams in beginning his testi-
mony plunged Immediately into an ex-
planation of the Treasury report, TAX
ing up first the question of reaching
the greater incomes of the country,
which. he said. have been steadily
driven into tax-exempt securities.
His statement brought from Repre-
sentative Green. republican. Iowa,
that he saw no solution to the prob
lem except by amending the Constitu-
tion to permit taxation of state and
local issues of securities.
In the discussion of income taxes
Mr. Fordney said he believed pos
sible means of raising more revenue
lay in establishing a fiat income tax
on corporations to replace the excess
profits tax which it is proposed to re-
peal. He suggested rate of 16 per
cent, which was estimated to yield
more than the present profits tax.
Under the present law, Mr.. Fordney
said. there were about 10000 cor
porations in the country which had not
been compelleS to pay tax in the last
year. He thought this.SSowed an in
equitable distribution of the tax bur-
den.
An Unpleasant Feature.
But you may as we'll face the un-
pleasant feature of that plan. too
DR.. Adams interrupted. "A corpora
ton just established or just getting
on a paying basis may. for the pur-
pose of argument, be earning only 2
per cent on its capital stock. Sixteen
per cent of that as an income tax is
pretty heavy drag. Yet it is the
simplest method know of and brings
YOU and the committee to the point
where il is necessary to determine
your policy regarding progressive
income tax as the principal source OF
revenue
The committee. Mr.. Fordney said
was not at this time going further
than to obtain all pros and cons OF
the revenue questions. Throughout
DR.. Adams testimony he strongly in
dicated that the Treasury desired for
the committee to lead the way and
that it hoped only to aid in supplying
the committee with such information
as it had available. AS reply to
these suggestions Mr.. Fordney told
DR.. Adams that when the committee
gets down tc the work of drafting
a bilr' il desired to have him assist