The Washington herald., 1920-12-22
N. Y. Financier Urges
Repeal of Excess
Profits Tax.
SALES TAX PLANNED
Suggests Tryout on Scale
Small Enough to Ease Bur-
den on Taxpayer.

reduction OF surtaxes, repeal OF OBJ
noxious consumption taxes with the
substitution of a tax per gross
sales and an increased tax on cor
porations from 10 to is per cent
was outlined by Otto H. Kahn,
New York fnaneier. to the House
Ways and Means committee yester-
day. Appearing before the commit
tee both during the morning and
afternoon. Mr.. Kahn presented a
program of taxation probably more
comprehensive than has been so
. far given the committee.
The discussion of the sales tax.
occupying the greater part of the
afternoon session. developed the
fact that Joseph w. Fordney.
chairman of the committee. and
other members are seriously con-
templating a sales tax OF some
sort as part of the new revenue
law. Although doubtful about the
feasibility of a sales tax on gross
sales. Mr.. Kahn expressed the
opinion that there was so much to
be said in favor of such a tax that
it should be tried out.
Sales Tax Suggestions
We could justly and wisely ex-
pertinent and see what is the best
system of taxation that we could
adopt" Mr.. Kahn said. "On such
an experiment we could arrive at a
conclusion as to what the perma-
nent revenue raising system of the
government should be. The opinion
on this question is about equally
divided.
IF we are to experiment, 1t
should be on a scale so small as to
in no way appreciably increase the
burden on the taxpayer. ] would
suggest that a tax of one-third of
one per cent on. gross sales would
be the best basis upon which to
start
In explaining the operation of the
tax, Mr.. Kahn said that upon the
assumption that the tax on each sale
should be passed onto the consumer,
II would ultimately amount to prob
ably one per cent Of the final sale.
He estimated that such a tax would
yield in the next fiscal year be-
tween $3.50, 900. 900 and $500. .0O0, 900.
The proposal of Meyer d. Roths-
child. representing the Business
mems National Tax Committee, of a
turnover sales tax was character
lied as "unthinkable" by Mr.. Kahn.
In a similar manner he disposed of
the proposed tax on bank deposits
as "calamitous" The other two
forms of sales tax proposed. he
pointed out, were a tax on ultimate
consumption and a one per cent tax
on the turnover of commodities.
Mr.. Kahn proposed that the s4.-
600, ,000. 900 needed by the Treasury
Department. be met In the following
way:
A Is per cent corporation laa.
l,000, 900 900: income and surtaxes,
Ss0e, 900, 900; one-third oof 1 per cent
tax on gross sales, ss00,0oo. 900;
customs anticipating increased
tariff, $500, 200. 900; internal reve-
nue.. s1.ooo.ooo.ooo; total. s4.2oo.-
100000. ..
Against Excess Proats Tax.
His testimony revealed that he
was opposed to the excess profits
tax on the grounds that its opera
tion interfered with the enterprise
necessary to the existence and
progress OF business and that it
fostered profiteering and extrava-
!. gance. He said he held to the theory
with respect to the. ability to pay
and therefore advised against elm
mating entirely surtaxes. Similar
ly, he favored increasing from 10
per cent to Is per cent the tax on
corporations.
He spoke slightly on the tariff,
stating only that IL the Republicans
enacted a tariff law in keeping with
their tradition II was estimated IL
would yield about $500, O,000, 900. He
proposed the elimination of those
sources of internal revenue which
were Unnecessarily irksome" and
"unproductive." He favored, among
others, a tax on checks, an inheri-
tsnee tax, tobacco tax, and estate
tax. several OF those proposed to
add to the internal revenue.
The members of the committee
conducted a thorough inquiry into
Mr.. Kahn's views of the tax situa-
tion, particularly as it relates to
present business conditions. Mr..
Kahn's statements covered world
wide conditions.
Financial Denation Not started.
He expressed the opinion that
financial defiation" has not started
in the world. although liquidation
was going on. The depression which
has struck the farmer, he predicted,
has yet to be seriously felt by the
retailer.
The present business conditions of
this country, he said. were similar
20 those in England and France
These he attributed to a "devastat-
ing war followed by a devastating
peace" tremendous demands and ex-
travagance which followed the war,
imitation and faulty taxation.
The Industrial efficiency of Ger
many was steadily increasing and
the German workmen were getting
farther and farther away from the
Utopian precepts Of the bolsheviki,
he told the committee he had re-
Gently been informed by one in au-
thority while in Paris.
He said he, against refundinc
the floating debt Of the nation over
a period Of many years. His posi-
tion was that the government
should proceed on The same basis
as a business firm in meeting its
obligations as soon as possible, and
that IL IL were unable to meet them,
to meet them as far as possible and
obtain an extension of its notes as
evidence of good faith.
His discussion of conditions led
him into the operation of tax laws
in other countries. He pointed out
that the sales tax had operated very
successfully in the Philippines and
was not inclined to view unfavor-
ably this tax because the estimates
of France from this source had
fallen off 40 per cent in the last
Swo months.