New-York tribune., 1920-12-28
Cost of Bonus
ls Estimated at
s2,3OO,OOO,OOO
Secretary Houston Tells
Senator's if All Take
Insurance the Total Will
Reach $4,534,OOO,OOO
Fayors Levy on Sales
lRecommends Abolition of
Excess Profits Tax and
Reduction of Surtaxes

WASHINGTON, Dec. 27.-Secrctarv
| aorston to-day told the Senate Com
.istee on Finance that the soldier
bonus bill passed by the House would
.ost the nation $4,000, 100000 if it be-
.sms law. He urged upon the COM
lui.tee members the serious necessity
vi economy in national finances, and
tod them frankly when questioned by
Senator McCumber, acting chairman
4 u the committee, that he did not know
ybcre the additional money would
eome from to pay the bonus if the
Hill were passed. He said he had not
siven the subject the requisite amount
Of study to make a definite recommen-
dation of means for raising the re-
CURED s2,Ooo.ooo,ooo.
The Secretary's statement undoubt-
edly hurt the chances for the adop-
ton of cash bonus plan at this
I session. He presented several sets of
figures showing how much each of
the four optional provisions OF the
bonus bill would cost the country if
al soldiers took any one of them. He
estimated that if all soldiers took Il
cash bonus it would cost the govern
,'ment 100000, while if all took
| the insurance offer the cost would
| mount to s4,534. 100000.
Cost of Other Provisions
For the other optional provisions
| tie Secretary estimated the cost as
Vocational trimming aid, 81 $50 0CO, 900.
Farm and home development, ST.
| AO.oO0,oOo.
He said that as the plans were op-
tional the choice of the men would
! not be confined to any single one of
| them, and. allowing for the various
selsctives, he reached his estimate of
| $500, 100000.
| In urging economy and the reduc-
ton of the tax burden on the coun-
| try the Secretary advocated the aboli-
| ton Of the excess profits tax because,
he said, 1t was losing its productivity
| he recommended that it be replaced
BY tax on corporation income or
profits of simpler kind. He rec
| ommended also the reduction of tho
| extreme income surtaxes
Secretary Houston in summarizing
bis recommendation on taxation to
| the committee said:
u. have recommended that the
ieYenue from taxation be maintained
after the fiscal year and until the
:ose OF the fiscal year 1923, on a level
af at least s4000.00O 900. This repre-
j substantial reduction of ag-
sregate taxes collected from the peo-
pie. During the fiscal year 1920 the
/ Internal tax receipts amounted to $5,
iW,o00,000. and it is estimated that
for the fiscal year 1921 they will
amount to s4,7O0,OOO 900. The proposed
9oe,o00,000 levy, therefore. repre-
Hnts reduction o. $1,4OO,0OO 900
from the level of 1919 and q reduc-
non Of s?00,000,000 from the level Of
lszl. What it means in brief is that
re system of taxation based upon the
income tax-adjusted to ability to pay
bears less heavily upon the taxpayer
and yields less revenue, as it must,
xnen the income of the country de-
tlncs.
Would Tax Wealthy
z. | recommend the reduction of the
Extreme income surfaces not to ex-
snpt the rich but to tax the rich. At
present, by investing in tax-free secur-
!les and by the use of other devices.
rae very wealthy can and do avoid
axatlon. The taxable income of tax
payers having net incomes over $780,
WO a year fell from 1892 ,972,9S5 in
1916 to 1892, ,247, 1929 in 1918. This con-
etlon, have suggested, may be met
either by reducing the upper surtaxes
lower general level or by reduc-
ing the upper surtaxes with respect
!" that part of the income which is
@sed and reinvested in taxable prop
sty or business, leaving the present
n'es, Il necessary, upon income which
wasted or used in ostentatious and
Unnecessary consumption.
.. The excess-profts tax should be
1 sspisced, primarily because it is los
ss i's productivity and promises in
ne near future to become statute Of
s1emptions rather than an effective
AZ Moreover, the tax is so compli-
aNd that it imposes upon both tax
I
s'saens too difficult to be carried per
sanently recommend that il be re-
/ plseed'-not merely repealed-with a
/ SIMPLER and more certain tax upon cor
| R'sation income or profits. I suggest
~ snis connection for the considera
.n .on OF the Congress either a fat ad
s.nonai tax on corporation profits
y Ss.sn s. as has recently been adopted in
~. United Kingdom, or tax upon me
sa1lstnouted profits of corporations
saosr which, if adopted, corporation
,aoaio De expressly authorized to pay
1ss tArough their stockholders, as
1 i...Haelhnips are now taxed through
~.is members. By either of these
t.y'sais the income tax on corpora.
.sHs could be made fair equivalent
.s.h me income tax as now applied ir
.set 70 individuals. partnerships anc
".s"naI service corporations.
! - recommend the retention of =
.Mpie system Of specific sales. or con,
np'icn taxes, desigf7ed TO collect 8
..as'a'e proportion Of the aggregate
-. 'eYy from few highly productive
az on non -essentials Miscellaneous
= or excise taxes shifted in mair
~ consumer supplied in the last
80 year about 20 per cent Of the
ea&ez, or about 25 per cent il
\ s,,ss.< duties are counted ~ con.
.i,I .iIp.ion taxes. In view of the Gnan.
,ra,.eds needs OF the government thcs.
nv",uons 49, may properly be main
or even Increased TO perhap;
MI ~ % per cent, but no radical in
ass a'., sucn az doubling the consump
I ,zss;s .aIes. would in my opinion b,
d, aere acre must be fair balance In tn,
~ systen AZ whole between taxe
,s,sa n' consumption Of the snasxes an,
On wealth, income and business