Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1920-12-22
.EXCESS PROFIT TAX
MUST Be DROPPED,
CONGRESS IS TOLD
New York Banker Tells
House Committee That
Change Is Needed.
SUGGESTS SALES TAX AND
FLAT LEVY ON PROFITS
Declares Corporation Tax Is
Causing Many Firms to
Proftecr.
LEY Assnc;nrcdprcss.l


WASHINGTON, Dec. 2i.--Establish-
ment OF a sales tan. repeal of the tax
on excess profits. reduction OF the
higher rates on income sur;aNcs. up
ward revision of the tariff and the
levyinG of a Hat tax on net profits OF
corporations were advocated before
the House Ways and Means Commit
tee today by Otto H. Kahn. New York
banker, IN discussion of tax revision
legislation.
Mr. Kahn. one Of the few witnesses
invited by the committee TO appear
before il, dwelt al length on the ques-
ton OF Il sales tax, partly in response
to indications in tho committee that
this sort OF tax is gaining in favor.
Chairman Fordncy. before Mr.. Kahn
was called. said he and several other
members believed some sort OF sales
tax would result. but were seeking
methods by which the tax would not
be multiplied and the consumer un-
justly taxed In the final purchase.
AS result of the chairman's state
mcnt. Mr.. Kahn discussed that phase
of the problem. advocating legislative
provisions which would require the
/. -. tax to he made known in each sale
md added to the selling price rs n
separate item. Such cn arrangement,
lie said. in his opinion. would check
the prohtecring which has resulted"
from the excess profits tax.
Hctnrdx business Growth.
In his discussion of the need for 4
revised taxation program, Mr.. Kahn
) declared that American business could
! not experience healthy growth If
the government continued ION 4 road
OF
TO absorb the life blood of business
+ through concentration of taxes on
incomes and capital" lie added that
"thc tax burden" had already actually
stopped commercial Development;
What has happened in the past"
> he continued, can reasonably he cx-
!. pected to happen again In the future
. We have seen the end OF this tax plan
: and have seen its disastrous results
!, 1t has forced every business house TO
run TO banks for credit to conduct
business. but finally the banks ran out
and the Federal Reserve Board had 10
call 4 halt.
!. After this came the collapse in
S markets. II hit farmers first, but none
have been spared and all business has
fel, the effects. The retailer has not
!. been struck TO the extent that l fear
lie viii.
You can see from that what will
!, happen unless the principles is
!. changed"
Would Fund Victory Notes.
One OF the means suggested by
Ar. Kahn FOR lifting the present tax
burden Of the Victory notes and war
saving securities. He urged payment
out OF taxes OF the Treasury certin-
Gates OF Indebtedness however. say
Ing It appeared that this could he
done without Inconvenience before
they fell due
Discussing the sales tax, Mr.. Kahn
said he had "wavcrcd and wobbled"
on the proposition for some months.
not feeling sure that he had q right
to suggest its use. >;
'I think q man. onGE,.tu lean back
wards the witness continued. when
he proposes an Arrangement by which
be Will benefit peculiarly, as | will
benefit by the sales tax. Nevertheless.
believe sincerely the consumer in
the final analysis will not suffer the
burden under a sales tax that he now
suffers under the excess profits TAX.
Every manufacturer and every
business man has added more 10 the
prices o: his commodities in anticipa-
ton OF the profits lax than he had n
right to add 1t has started at the
very beginning OF the life of a manu-
featured article and continued on
through 10 the retailer The con
sumner paid il all l submit the sales
tax would he lighter burden at
least"
Sales Tax Experimental.
The witness said Ae was not pre-
pared 10 say q Gales tax would be a
success. lie said, however. that he
believed !, woula work successfully.
but because it was In the nature OF
an experiment, he wonld propose a
low tx rat" for the Initial test.
he suggested rake of one-,hird OF
per cent estimating ;nat such q
levy would produce approximately
sSoOoco.Goo year. THIS yield. Mr.
Kahn eaid. wac based on the assump-
tion that conditions would be norma,
when the tax would become effective
in 193l-22
Mr.. Kahn also proposed lax OF
10 per cent on the net profits Of
corporations. tax which. he said.
he was confident would produce a,
least $1,000 00G 600
The tariff revision when he mo.
posed, the witness said ough, 10 add
approximately $4,000 600 to the i'm
port revenues now obtained annu
ally, making tina, source yield nearly
STo0,Oo0.0o0
Under the revised income sur,a,
schedule proposed Mr.. Kahn est.
mated tho government would derive
between ssoc,ooJOe9 aad $loOO.0oo.
oDe.
Exempt Securities Popular.
Questioned ~ 10 rates FOR the re-
duced surtaH Mr Kahn said That
present suriax ratcs were cr;vInr
rich investors to place their money
In tax exempt securities, mo., OF
which. he declared. were sold on n
basis 10 yield J1-2 per cent. II was
therefore his belief! he sad. that bv
hxing the surtax charge 1T or near
3aI-3 per cent as n maximum. the
Treasury would receive as great a
yield. IL not greater, than under the
q, present tax.
a. T.