Evening star., 1920-11-16
F0RDNEY T0CA[L
HOUSE COMMITTEE
TOCONS|DER TAXES
Whether to Attempt Read
justment at Once or Await
Extra Session.
RECOMMENDATION MADE
BY SECRETARY HOUSTON
Believes Burden Can Be Lightened
for 1922 if Provision Be Made
Promptly for Readjustment.

for 1922 if Provision Be Made
Promptly for Readjustment.
BY n. o. MESSENGER.
Chairman Fordney of the ways and
,means committee will call that COM
,nittee together as soon as Congress
reassembIes to decide, in conjunction
with the steering committee OF the
House and the republican leaders
whether to attempt readJustment OF
income and excess profits taxes at this
session or await the expected eAtraoi
binary session of the new Congress III
the spring.
Secretary Houston of the Treasury
in the meantime will have sent to the
President and through him TO Con
gress his annual report in Wnlcn ne
will offer suggestions upon the SUI
iect of revision of the taxes Secre-
tary Houston is depended upon 10 re-
new the earnest suggestions ne ha>
beretofore made for early simpllfica-
tion Of the tax law, regarded ny Hill
as vital.
Secretary HOuston's Recommendation
In previous communicatlons u
Chairman Fordney. Secretary Houso
nostponed until the autumn or WIN
ter of 1921. income and pront taxes
must continue to be collected on tne
basis Of the present law um.ai una lhs
close of the calendar year 1877, ano
in the case of some taxpayers on the
so-called fiscal-year basis, until the
early months of the calendar year
1879 He added that he could not
contemplate such delay without the
gravest apprehension
One significant paragrapn "a ms
letter to the ways and means COM
mittee chairman. which is OF fsame-
date interest to taxpayers. was TINS:
1T would be manifeetly unsafe to
reduce now the income and proht
taxes to be collected in the calendar
nothing in the financial prospects for
the year 1922 and thereafter which
would make impossible or unwise the
very modest reduction involved in the
plan of simplidcation hereinafter pre-
sented."
While deprecating the wisdom Of
attempting to reduce now the income
and profit taxes to be collected In
the current year and in 1891. the Sec
retary wanted provision made at once
modification or repealan -ths-ss
profits tax sat the. earliest possible
future date" which apparently he
sets as for the calendar year 1922.
He pointed out that it would be un-
wise and costly to make beneficent
modification Of the tax law retro
active, or even to delay its adoption
and announcement until the time it
is to take effect.
No Instant Relief Seen.
The conclusion drawn by congress-
men from the Secretary's previous
no instant or near-future relief can
be expected. but that the business
world ought to know as soon as pos
sible when it may be looked for and
its character.
II Secretary Houston has found any,
thing in prospective revenue condi-
tions and necessary outlay to war
rant modifying his opinion. he will
communicate it in his message, and
upon the members of the ways and
means committee will devolve the re-
sponsibility of acceding to or going
beyond his recommendations.
conservative men in Congress do
not see hope for material relief from
the burden OF excess profit taxes al
once. owing to the state Of the rev.
enues and the demands of admins
tration of government, but concur
with Secretary Houston that business
ought to know when 1t can hope for a
partial lifting of the burdens and how
IL is to be done.
Two Facts to Be Gonsidered.
Secretary Houston has therefore di-
rected the attention Of the ways and
means committee. in a letter to Chair
man Fordney. which partakes of off.
ciai character to two facts classed as
lndisputable. as follows:
First. the application or calcuIa.
zion OF the excess profits tax is so com.
pick tnat II has proved impossible tt
Keep up to date the administrative
work of audit and assessment.
second the profits tax is confined
70 -mail fraction Tin number) of the
business interests of the country Per.
sonal service corporations. partner.
ships, sole proprfetors and most forms
or trust ORGANIZATIONS are exempt from
the tax If the principle be sound. i,
should De extended TO all forms of bust
ness ORGANIZATIONS, proposal which
administrative considerations alone
stamp as impracticable either in tht
present or any future period near
enough to be worth considering"
One System Demanded.
POINTING out that the outstandins
feature of the present system of tax
alton of business income is the fact
that two systems of taxation are EN-
ployed, Secretary Houston directed
attention to the fact that corporatfor,
pay the profits tax and normal incom,
tax. while their stockholders nav sur.
taaes on dividends or distributed prof
Its. but nothing in respect to the un
distributed profits
There should be one system and no
two systems of income taxation an
plicable to persons engaged in bust
ness, Secretary Houston conteuded
The essential thing is to simplify th
excess profits tax and grasp a uniouel,
opportune moment to remedy a deepl,
rooted defect in our system of incom
taxation by providing for the Just tax
auon OF the undstributed profits O.
corporations at time when such tax
ation represents simplification and re
1"f, not further complexity and heav
Ier burdens"