Vilas County news. [volume] (Eagle River, Vilas County, Wis.) 1896-1927, 1920-03-24
ASSERTS TAX CUT
WOULD BE PERIL.
Secretary of Treasury Makes
Recommendations to House.
ANY REDUCTION is UNSAFE
Declares 1t Would Be Risky to Reduce
Levy for 192o-21-SimpIification
and Change in Excess Profits
Tax Urged.

and Change IN Excess FrontS
Tax Urged.
Washington, March 1S.-Any reduc-
ton of income and excess profits taxes
| to be collected in the calendar years
| 1920 and 1921 would be "manifestly ua-
SAFE" Secretary Houston declared in
a letter to the house ways and means
committee. Simplifcation of those
taxes was urged, however.
Unless action is taken at the pres
ent session of congress, Mr.. Houston
said these taxes must be continued
to be collected on the basis of the pres
ent law until the close of the calen-
dar year 1922" He added that he
could not contemplate such delay
without the gravest apprehension"
For the simplifcation of the taxes
with a resultant modest reduction"
the secretary first recommended enact
| ment of an amendment authorizing the
internal revenue bureau to make
final determination and settlement Of
any tax claim or assessment which
shall not thereafter be reOpened or
| modified by the government except on
a showing of fraud.
The particular importance of this
charge, the secretary said, was that if
the present levies continue and all
back taxes along with the current
taxes are collected in the same year,
'the result may be highly disastrous
to business" lin case of industrial de-
preston.
Would Extend Limitations.
Other recommendations included:
Extension to all income and profit
tax laws of the fve-year limitation
contained only in the 1918 law, on the
time for bringing suits for collection of
taxes.
Consolidation of the varying exemp-
tions on the Liberty bond issues so as
to strengthen the market standing Of
those securities.
Extraordinary income as cOmpenSa-
ton from personal service and gains
from sales or dealings in property for
a period of years be deemed to have
accrued or been received ratably dur
ing the years in which the service
was rendered or the property held,
and the amount of extraordinary in
come so assigned to any one year be
subjected to the surtax rates pre-
scribed by law for that year.
Provision for simplification and fun
damental modification, or repeal of the
excess profits tax at the earliest pos
sible future date.
Mr. Houston said the change In or
repeal of the excess profits tax should
be made now and urged substitution
of fiat tax on profits in excess of the
distributed earnings instead of the
present levy.
He suggested that this fat rate be
% per cent for 1921, 20 per cent for
1922 and 10 per cent for 1923, stating
il would raise virtually as much as the
present excess profits taxes.
"The first object" he said, sis ac-
complished by substituting for the
present graduated rates of 20 and 40
per cent a fiat tax on profits in excess
of the distributed earnings. The Sec
ond object could be accomplished by
making it explicit in the law that cor
perations have the right to pay div
idends on bonds or promises to pay
bearing a fair rate of interest which
are taxable to the stockholders as or
binary dividends, or by authorizing
corporations to receive back from their
stockholders as paid in surplus cash
or other dividends recently distributed
Would Become Flat Tax.
"Under these or analogous proceed
ures q corporation could retain its
profits for use in the business and yet
convert the profits tax into a genuine
income tax. The excess profits tax
would thus become fiat tax on I'M
distributed earnings: Invested capt.
| tai would practically disappear; and
the corporation, if it desired, could
place itself on substantially the same
basis as the partnership, the personal
service corporation, and the sole pro-
prietor."
| The total loss to the government as
result of the Supreme courts deci-
| sion that stock dividends are not tax
able will not exceed S25.000,000 in the
opinion of most treasury experts.
| Secretary Houston wrote the house
ways and means committee today that
the Immediate" loss in uncollected
takes and refunds would approximate
s1O5. 900. 900 for 1918 and 1919. but
that much of this would be regained
through the sale of stocks and suisse
uuent taxes on them.
| NEWBERRY DEFENSE CLOSES