Omaha daily bee., 1920-12-27
R';,;;s |;;is eal Of.
sAS y 4
Profit Tax
Prob able.
Rejection Of Sales Revenues
And Increased Burden on
Net Earnings of Corpora
Z tiors Contemplated.
No Refunding Act Likely
By ARTHUR SEARS HENNING.
Chicago Tribune Omaha Bee Leased Nire

BY ARTHUR SEARS HENNING.
Chicago Tribune Omaha Bee Leased Wire.
Washington, Dec. 26-Sentiment in
the ways and means committee of
the house following the hearings of
the last fortnight indicates the fol-
lowing line of action on tax revision
in the next congress:
l. Repeal of the excess profits
taxes.
2. Rejection of sales tax because
OF its unpopularity with consumers.
s. Increase in present 10 per cent
tax on corporation net earnings and
moderate, possibley graduated, tax
on undlstributed earnings.
4. No increase in normal tax on
individual incomes, but reduction
OF surtaxes on large incomes and in
crease in the amount Of income ex-
empted from taxation.
5. New exise taxes and increase
in the tax on such ARTICLES as to-
bacco..
No Refunding Operations.
There will be no refunding op-
erations during the coming year
Congress will make evident its deter
mination that the burden of the war
Gebt shall be passed, along to fu-
ture generations and that the float
ing debt shall not be retired from
the proceeds of taxation as rapidly
as contemplated by the Treasury
department, simply by keeping the
revenue down to so low a point
that no funds will be available for
this purpose.
Extensive refunding operations
will be undertaken in 1928, when
the Victory notes mature, the re-
publican program being to extend
the payment of the war debt over
a period of from 40 to 60 years in
stead of paying it up in Is years as
contemplated by the secretary of
the Treasury department.
The belief that the substitute for
the excess profits tax will be a
fiat tax on net earnings of corpora
tions, plus moderate tax on undis-
tributed earnings is gaining strength
among a number of influential men,
bers of the committee.
Two Taxes Likely.
1t has been estimated by the
Treasury department that l6 per
cent fiat tax on net earnings of
corporations would produce as much
revenue as the present normal tax
of 10 per cent plus the present ex-
cess profits tax.
In order, however. that the un-
distributed earnings may not escape
taxation entirely. the probable out
come is that there will be both a
fiat tax and a tax on undmtributed
earnings. The present 10 per cent
normal tax on corporation earnings
probably will be increased, possibly
to as much as IS per cent and a
moderate tax on undistributed earn
ings added. A tax of 20.per cent on
undistributed earnings has been
under discussion.
There is not the slightest chance
of any increase in the normal tax on
incomes of individuals, apparently.
Action of this sort would not be re-
lished by the general public and the
political effect would be injurious
to the republican party. There is con-
siderable sentiment for an increase
in the present exemptions of ST 600
for single persons and $1,000 for
these who are married.
The present surtaxes on large in
comes have been generally criticized.
1t is probable that the entire Scale
of surtaxes will be revised. If this
is done there may be increases in
the lower brackets of the surtax
rates