The Washington herald., 1920-12-14
EXPERT SCORES
SALES TAX PLAN
REVENUE Aid
Various Propositions Out
lined by Yale Professor
Before House Body.

The first hearings of the House
Ways and Means Committee on the
revision of the revenue laws contem-
plated by the Republicans brought
forth yesterday vigorous opposition
to the substitution OF a sales tax
for the excess profits tax The in
ssitution of a sales tax, DR.. Thomas
S. Adams. professor of political
economy at Yale University and tax
expert OF the Treasury Department.
told the committee would threaten
the administration machinery for
the enforcement of the revenue laws
The hearings developed not only
opposition to a sales tax. but sup
port fiat tax on corporations as a
substitute for the excess profits tax
Joseph W. Fordney. Of Michigan,
! chairman of the committee, made
known during the course of the
Z hearings that he favored a nat tax
of about 16 per cent on corporation
earnings, both as a substitute for
the excess profits tax and the
present normal tax of 10 per cent
Excess Profits Tax Falling.
Appearing for the express pur-
pose of explaining the report of Da-
Vid F. Houston, Secretary of the
Treasury. Adams told the committee
that the excess profits tax was
reaching the point where it would
not yield much money. He added
that another serious objection to
this tax was the burdens involved
in enforcement.
The report of the Secretary of the
Treasury, according to DR.. Adams,
was misrepresented in the interpre-
tation that Houston was urging an
increase in taxation. He said that
the Secretary of the Treasury was
impressing the committee with the
necessity of providing proper means
for Sufficient revenue during the
fiscal years of 1892 and 1928.
says surtaIes should BE Cut.
The view of the Treasury Depart
ment as related to the present rev.
enue laws. as explained by DR..
Adams. was that the surtaxes now
yielding S23O.O0O.OOO should be re-
duced; that the excess profits tax
now yielding s45o.Ooo.0o0 should be
repealed, and that several obnox-
ious consumption taxes yielding lit
tie less than s5O.O0O,000 should be
repealed. The ensuing discussion
bore upon what should be subst-
tuted to produce the 700-odd million
thus eliminated from the national
income
Throughout this discussion the
necessity for simplifying the pres
ent tax laws with special considera-
tion Of the administration of the
laws was impressed upon the COM
mittee by DR.. Adams.
The progressive income tax was
the key to the revision of the rev.
enue laws. in the opinion expressed
by DR.. Adams. He emphasized that
such a tax could be enforced with
the existing machinery, while the
institution of a sales tax would ne
cessitate extending present admins
tration machinery. He further de-
veloped the point that a sales tax.
following the repeal of the excess
profits tax would work unfairly to
individuals outside of corporations
In explaining the proposed tax of
90 per cent on the undivided profits
Of corporations, DR.. Adams pointed
out that such a tax would be equiv
2lent to a tax of per cent on the
income OF corporations
Claims Burden Unfair.
The view was expressed by Prof.
Adams that a 16 per cent tax might
prove burdensome on struggling
corporations which are making a
return of not more than 1 or per
cent on their capital stock.
Fordney expressed the belief that
the maturing obligations of the
government should be refunded over
a long period and that too great a
tax burden would be imposed II the
entire floating debt of s2.345. 900. 900
including $500. 900, 900 of war saw
ings securities. and s1.25o. 900, 900 of
Victory notes, are retired by May.
1928. On the other hand, DR..
Adams said, the whole Treasury
program was predicated first upon
the belief that the floating debt
should be paid off not later than
1922. and. second. that therefore
corporations should be subject to
some tax besides the normal tax TO
put them on equality with indi-
vidual6