New-York tribune., 1921-05-17
Excess Profits
lax Upheld at
Senate Hearing.
aS
Chicago Witness Springs
Surprise ON Committee:
Pians for Assessments
Revision Swamp Board
Business Men Make Pleas
Removal of Consumption,
transportation, Luxury
and Excise Imports Urged

WASHINGTON, May 16.-The Senate
Finance Committee was swamped n,
hearings to-day with suggestions for
revision of the Federal tax laws. I.
heard for tho first time vigorous de-
tense of the excess profits tax as we'll
as pleas for reduced taxes and elimina-
tion of alleged discriminatory provi.
sions against business.
Z. e. Hanch, of Indianapolis. and
George M. Graham. of Buffalo. speak
ing for the National Automobile Cham
ber OF Commerce, were the chief wit
nesses from the Industrial ranks and
urged removal of the excess profits.
luxury, excise, transportation and con-
sumption taxes.
H. Archibald, Of Chicago, a certified
public accountant, was the champion
OF the excess profits tax, and his stand
proved a surprise to committee mem
bers, several of whom said they had
felt the sentiment throughout the
country was practically unit for re-
peal of that section Of the laws. Mr..
Harris also urged exemption for corpo-
ration dividends from personal income
surtaXes.
Would Tax Undistributed Earnings
Frank E. Seidman. of Grand Rapids,
Mich, took still another tack on the
profits tax uestion, suggesting 8 tax
on undistributed earnings of corpora
tions to make good losses caused by
repeal of the profits taxes. He pro-
posed taxes similar TO the graduated
rates on personal incomes as the proper
method of dealing with undistributed
earnings.
Attempts of officials during the war
to ditferentiate between essential and
non n-essential industries have left bad
spots in the nations commercial life,
Mr.. Graham said.
I'VE cannot feel" he added. Chat
the motor cars and motor truck in
dustry and many lines carrying stigma a.
taxes can be fittingly rated in any
classification whose value to the pub
lie is questioned"
Mr.. Hanch stressed the need of the
country for an equilibrium between
supply and demand. He declared in
creaslng the tax burden would make
more remote restoration of the busi-
ness balance. which. he said. was nee
essary for an early revival of com
merce and industry.
Both Mr.. Hanch and Mr.. Graham,
while contending that the govern
ments spending should be brought
within its revenue, declared that if
duuIIlohaL taxes were necessary the
sales tax should be employed
La Toilette Takes Part in Debate
The subject of high taxes also got
onto the Senate floor during the day
Senator La Toilette, Republican, Of
Wisconsin, member of the commit
tee, charged that there was a very def
mite trend among members of the
Finance Committee to shift the tax
burden from the rich to the great
common people"
that repeal of the excess profits tax
would be recommended by the commit
tee and that it would go @even further"
and reduce the higher rates of sur
taxes so that the possessors of 'fabu-
lous incomes" will not have to pay so
much into the Federal Treasury.
In addition to the elimination OF sur
taxes on the dividends of corporations,
Mr.. Harris suggested a reduction of
incomes and q differentiation in tax
rates on "active and passive" invest
ments. He argued that there should
be no tax on dividends, but that cor
porate earnings should be made to bear
sufficiently high levies to provide the
Federal needs from that source.
Would Release Tax on individuals.
Release the tax on individuals even
though you do strike the corporations
more heavily the witness urged.
Then tax the interest on bonds and
preferred stocks and other issues of
passive income nature. By relieving
the tax on dividends we are going to
have great clamor for stocks Of all
kinds, and the present bonds and pre-
ferred stocks will be converted into
common stocks, all Of which will be
active capital"
The changes proposed, Mr.. Harris
believed would make active capital a
better investment than tying money
up in tax free bonds. He added that
he felt the excess profits tax had not
lost its productivity and believed
strongly that the suggested elirnina-
ton of corporation dividends from sur
taxes would aid materially in restor-
ing the country's industrial health.
Fears Of the Treasury that it would
not be able to meet its requirements
if some substitute for the profits tax
were not found we're declared by the
witness to be unfounded. He as
serted that the auditing of tax returns
for the last three years would bring
much more money into the Federal
chest than the most enthusiastic of
hcials had hODad