El Paso herald. (El Paso, Tex.) 1901-1931, 1920-03-19

II IASE14NNrLgAs -. L. 4laEcu "
Z w Taxation may not be az intel
ligible to the average man as
the stories Of eLtraTa giant eNpenul-
ture and Incompetence during the
war, which have heaped up a big
I debt, but the Republican majority in
congress is face 10 face with the
most troublesome turn OF luck that
ever hit a Political party IN cam
/ paign year For the decision OF the
supreme court Of the United States
tracted from the revenue that had
been expected. but unlecs remedied
] By act OF congress. hundreds OF mill
l lions OF dollars viii be lost and the
can be reduced VIII have been post
The ways and means committee
I knows a.. Republicans as well as
] technical letter from secretary Hous-
ton. Of the treasury department.
ELECTED by congress, suggests sew
eral remedies, none OF which is par
taxpayers who would be affected by
amendments 10 the present law.
Many Plans Suggested
Every suggestion. from q flat tax
that would virtually compel business
concerns 70 distribute their profits
instead OF holding such profits to-
gether as -undescribed' or IN the
form Of stock dividends" TO the
novel idea of q one percent tax on
sales Of all kinds in every day BUSH
ness, has been made. Some Of the
proposals. backed by business organ
iZatiOns OF many kinds, are nebulous
as to their application. Some favor
one percent tax on every article sold
retailer or the middleman- This
might mean a one percent tax all
along the line and II is defended on
the ground that even il collected four
OF five times it would still be less
Of a burden on initiative than the
present excess profits tax
Congress Must Do Something.
But congress is compelled TO do
something 20 recoup the loss by the
stock dividend decision Chairman
Fordney, Republican leader. openly
promised action in reply TO an in
quiry from representative Champ
Clark. the Democratic leader 4
asked representative Cordeu Hull of
Tennessee who wrote the original /
income tax law. TO give his view OF
the situation" he said The Demo-
Gratis foresaw the demand for a re-
ductiOn Of taxes and promptly cut {
down S2,o0Q,0oo-9O0 in possible reve-
nue.. This was done over the pro-
test Of the Republicans in 1913, for
they would have liked 10 do IL them
elves when they came in power. The
Democrats, moreover. reduced the eN-
penditures from about Sl5.0oo.000,000
70 s6.000.000,oQo as soon as the war
was over.
ssNoTr the Republicans have
actually cut down the eUpendi-
lures by SI.O00.OOO. 900. but with
S2-0OQ.0 900 cut in revenue
by the Democrats they are still
confronted with the necessity OF
cutting down expenditures m
other $1,000, 100000 before there
can be any reduction in taxes
As a matter OF fact, whether Il |
"a nautical q
reduction in taxes should have been l
made at exactly the time it was. /
Nevertheless, with the increased loss ,
OF revenue, which results from the 1
supreme courts decision. It puts the 1
Republicans right up against it"
Such view. even though expressed ]
by a Democratic member Of the ways
and means committee. IS concurred in Z
privately by many Republicans, ex-
cept that they naturally argue that I
the debt created by the war IS some
thing which might never have accu- /
mulated under competent manage /
ment. all OF which viii be difficult /
TO settle even on the political stump. |
For the fact is. the country can e1- I
pect no reduction in taxes for three !
years unless some amendments are 4
made TO the present tax law which ]
viii bring in more revenue and esti- 4
mates are aDpreciably cut. They
have already been ruthlessly reduced. Z
What Democrats WIN Do.
pairing 70 80 10 the country with /
the record OF president wilson's mes
sage urging a repeal OF excess 1
profits tax and more sci entific ar
recomme ndauons OF secretary Nc !
Adoo and secretary Glass as proof !
Of Democratic activity on the sub /
jet And they will point to the in
actlon OF the republican congress as
the responsible cause Of the con-
tinued iuequities Of taxation
On the other hand, the Republicans
may surprise their Democratic J
friends By tackling the tax question.
figuring that they viii be
able TO capture the next congress on I
other counts Of Democratic record !
and considering. moreover. that a re-
vision OF the tax laws would please
business men, Whichever way they
approach the subject. there is trouble !
in store, but 1t begins TO look as IL
congress will pass some amendment
which VIII get at the stock diTi-
dend' decision.
England is having her troubles
with the same phase Of her income
tax law and IL is estimated that bill
lions OF dollars have been lost and
viii be lost by the evasion accom-
plished in falling to distribute actual
cash on earnings and putting them i
In the form Of stock dividends that ]
can be held for a decade or so until /
the taxation burdens are eased off 1
and then sold at a handsome profit. /
Solution Now Aimed At.
The solution which many members
OF congress seem to be aiming at is
one that would put a tax on a cor
poration as a unit III il failed 70 dis
tribute its profits. II would stiI be
optional with the corporation
whether Il distributed or not. but
business would have to pay virtually
a penalty for the method Of handling
its profits. The penalty might be
10 percent one year. 10 percent the
next, 5 percent the third year. and