The Washington herald., 1920-12-28
HOUSTON AGAINST
PROPOSED BONUS
BILL FOR SOLDIERS
Treasury Secretary Testi-
fies Before Senate Finance
. Committee.
SUMSUP ADDED COST
To Develop Additional Reve-
nues at This Time Practically
Impossible, He Asserts.

OpposltlOn TO the proposed sOldler
bonus upon the ground that it
would cost the United States ap-
proximateiy $4,000. 100000 was ex-
pressed yesterday by Secretary of
the Treasury Houston in a state
ment before the Senate Finance
Committee. now considering the bo-
nus bill passed by the House.
Secretary Houston furnished the
committee with a compilation of the
amounts which might have to be
paid under the alternative plans of
soldier relief contained in the bill.
He estimated that the adjusted
service pay would cost s1.342. .000.-
\ 600. the insurance provisions s4,-
1884, ,000.0 900. vocational training ST.
Ss0.e00.000 and farm and home de-
velopment S1,ss0. 900. 900.
Because many of the features in
the bill contain many uncertainties.
the Secretary said, he was unable
to estimate accurately what the
measure would cost, but believed
the figure of s2.30O.0Oo.OOO was
about right.
Replying to various Senators who
inquired where this amount of rev.
enue might be obtained, the Secre-
tary said he was up against a
wall" on that subject. He pointed
out that he has recommended that
revenue from taxation be main
tanned at $4,000, 100000 until the
close of the fiscal year 1928. To de-
Velop additional sources of revenue,
he declared, was practically impos-
sible. The system of taxation pro-
posed by him would bear less heav-
lily of the taxpayer and yield less
revenue. he said. when the income
of the country declines.
Recommends Cut I'm Income Surtax.
Il recommend the reduction of
the extreme income surtax, not to
exempt the rich, but to tax the
rich," Secretary Houston told the
committee. AT present. by invest
ing in taxfree securities and by the
use of other devices the very veal
thy can and do avoid taxation. The
taxable income of taxpayers having
net incomes over $500, 900 a year fell
from s9s.972.sS5 in 1916 to $685.
} 247.329 in 1918.
This condition. 1 have suggested.
may be met either by reducing the
upper surtaxes to a lower general
level or by reducing the upper sur
taxes with respect to income saved
and reinvested in taxable property
or business. leaving the present
rates, il necessary, upon income
which is wasted or used in osten-
tatious and unnecessary consump-
. tion."
The excess profits tax should be
replaced primarily because 1t is
losing its productivity" Mr.. Hous-
ton said at promises in the near
future to be pointed out as a stat
ute of exemption rather than an
effective tax"
Substitute Recommended.
As a substitute for this tax Sec
retary Houston recommended "a
simpler and more direct tax upon
corporation income or profits" He
proposed either a fiat additional
tax on corporation profits, such as
recently adopted in the United
Kingdom. or a tax upon undistrib-
uted profits. II the latter were
adopted, he said, it should be ar
ranged so that corporations are ex-
pressly authorized to pay taxes
through stockholders as partner
ships are now taxed-through their
members.
by either of these proposals, the
income tax on corporations could
be made a fair equivalent for the
income tax as now applied in eject
to individuals, partnerships and
persoal service corporations" Sec
retary Houston said.
The retention of a simple sales
tax or consumption tax was rec
commended by the Secretary, who
pointed out that miscellaneous sales
taxes during the past fiscal year
produced about 20 per cent of the
total revenues He declared him
self opposed, however, to increas-
ing the sales taxes above IS per
cent of the total taxation, as such
an arrangement would violate all
the recognized principles of Justice
m the division of distribution of
the tax burden"
Secretary Houston told the COM
mittee that unless every unneces-
sary expenditure, such as the pro-
posed appropriation for the pay
ment of soldiers bonus; unless
every Official or other estimate or
request for appropriations be re-
duced to a minimum, no sound plan
Of tax revision can be carried out
and the successful conduct of the
government during the next three
years will be- seriously imperiled."