The Washington herald., 1920-12-11
MAKES PLEA FOR
EXCESS PROFITS
TAX SUBSTITUTE
Bacharach of New Jersey
Advocates Change
In Law.
LAW NOW RETARDS
First Hearings on Proposed
Changes Will Be Held
Next Monday.

The substitution of a tax on gross
sales, bearing out the principle Of q
consumption tax. as the best sub
stitute for the excess prohts TAX
was advocated in a statement made
last night by Isaac Bacharach, of
New Jersey, a member of the House
Ways and Means Committee. The
view expressed by Mr.. Bacharach
was that the present lay retards
business.
The first hearings by the House
Ways and Means Committee, in
which Mr.. Bacharach will partici-
Bate. on the proposed revision OF
the war tax laws will be held on
. Monday, according to an announce
ment here yesterday. At that time
Thomas s. Adams, tax expert of the
Treasury Department, is scheduled
to appear in order to elucidate the
recommendations made in the re-
port Of David F. Houston. Secretary
of the Treasury.
Immediate reforms in our Fed
eral tax laws are necessary if busi-
ness is to progress and expand"
Mr.. Bacharach said, adding that
the present law is both "unsatisfac-
tory and unscientific." He charac-
terized the excess profits tax as the
worst feature of the present reve-
nue. law"
Claims Tax Hurts Industry.
1T has worked the greatest havoc
in industry and added the most to
the cost of living" he said De
signed as a direct tax on profits,
and aimed particularly at those VINO
were engaged in war contracts and
who were supposed to be making
enormous profits therefrom, 1t has
proven to be Just the opposite. Un-
der the excess profits tax plan the
bulk of the revenue to be raised is
based upon profits and income, and
/ believe that any tax which is based
upon so intangible a thing as prof
its is fundamentally wrong in prin-
ciple, for there can be no gttaran-
tee that there will be profits to
tax l believe that this contention
Is well demonstrated in the fact that
the revenue derived from the excess
!. profits tax has steadily dwindled
( each year since this tax became ef-
fectiye in proportion to the depres-
sion in the business of the country.
Mr.. Bach&rach pointed out that
the Secretary of the Treasury has
stated that revenue from taxation
must be maintained after this fiscal
year on a level not less than s4,-
0O0, 200. 900 to the end, at least, Of
the fiscal year 1923 From this he
argued that a System of taxation
which will give US sufficient rev.
enue yield and at the same time
spread out the tax over so large a
mass of people that it will not be
f.Uf in hn
consumer"
He pointed out that the plan for
a sale tax now commanding the
greatest consideration of business
men were as follows:
Il. A tax on every sale or a turn
over tax, limited to commodities.
20. A tax on every sale or turn
over, including services, real prop
erty. capital assets, etc.
-. A gross sales tax-but not a
turnover tax
"4. A tax on retail sales to the
ultimate consumer to be paid by
the consumer at the time of pur-
chase.
Consumption taxes have always
been the 'bugbear' to the man in
,Solitical life" he said. Moreover,
personally, I am convinced that the
. ultimate consumer now knows well
Bthat. no matter at what point n
tax is levied, in the end the indi-
vidual will pay that tax. 1t is
therefore infinitely better for the
consumer to know-that under the
law only one tax can be placed on
a purchase and that that tax can
not be pyramided.
The psychology of the situation
has therefore convinced me that
greater success would be had in the
advocacy of a straight gross sales
tax-that is a tax of certain
amount levied upon the gross sales
of the retailer as shown by his rec
ord of sales, payable either month
1y or quarterly as deemed best. /
would apply such a tax to services.
real property, capital assets, the
professions. hotels, stock and bonds,
and all other forms of business al
lowing specific exemptions in spe-
ciic eases where wisdom and fair
ness dictated such should be done.'
HIS calculations. he said, lead him
to believe that on a gross sales tax
Of 1 per cent the revenue would be
approximately $500. LOOT. 900.