The Washington herald., 1921-08-16
Party Insurg ents Kill
Plan of Retroactive Cut
For Wealthy.
MOVE CARRIED OUT
BY VOTE IN CAUCUS
Excess Profits Levy to
Stay in Force for Rest
Of Year.


ranks of House Republicans yester-
day.
A party caucus turned down the
recommendations of President Hard
ing, Secretary of the Treasury Mel
lon and the majority of the Repub-
!Ican members of the House Ways
and Means Committee. that reduc-
tion of the taxes on rich corpora
tIons and wealthy individuals be
made retroactive to January l, last
The Republicans voted 90 to 81
that the excess profits levy on cor.
porations shall not he repealed and
The surtaXes on persons with large
incomes shall not be reduced until
January /. 1922. The effective dat,
rf the increase in the corpora tior
income tax from 10 to Is, per cent
AZ a partial substitute for the eN-
cess profits. also was postponed
until next January, but the Ways
and Means Committee. after the
caucus, cut the increase to 121= per
cent.
Means More Revenue.
The action of the caucus means
increased revenue during the cur,
rent wear OF about $3.50, 100000. II
cuts the next tax reductions to only
rates. As it now stands the tax bill
Will raise about s3.35o,OOO.O 900. This
is about $35O.Oo0.OOO more than is
estimated as necessary.
Mann. of Illinois, former Republi-
can leader of the House, led the in
surEents. Back of him were nearly
Ali Of the Western and Middle West
er1 Republicans.
He argued that the retroactive
reduction and repeal of these taxes
would enable the corporations to
pocket hundreds of millions which
they had collected from the peU-
pie for the government. All busi-
ness concerns paying the excess
profits, already have tackled on their
products enough to pay this levy
he said.
Only One Retroactive.
Republican Leader Mondell and
Chairman Fordney of the Ways and
Means Committee argued that the
Republican platform called for
carly repeal of the excess profits
and reduction Of the high sur
taxes.
The House probably will approve
the delay. Democrats are solid fol
il, and can control the vote by com
bining with the insurgent Repub'
leans
Following the caucus. Chairman
Fordney introduced the revenue
bill, after stating that a reduction
from 10 cents gallon to 6 cents
In the levy on near-beer and other
cereal beverages had beer. ap-
proved
Other important tax changes, re-
vealed in the text of the bill and
not heretofore made public. follow:
A virtual tax on undistributed
earnings of corporations was put in
the bill. The rate is 25 per cent in
addition to other corporation taxes,
with the provision that it shall ap-
ply only when corporations inbound
earnings with the intent of enabling
their stockholders to escape the
surtax on dividends that would
otherwise be paid.
Tax on Liquor.
All liquor which is used in any
way for beverage purposes would
pay a tax OF $3.50 gallon under the
bill. At present nOnbeveraSe liquor.
much of which, il is claimed, is be-
ing diverted to beverage purposes.
pays a tax of only $2.20 gallon.
This will enable the government to
collect about three times as much
in taxes from bootleggers when they
are caught.
All allotments of the veterans
bureau to former soldiers or their
dependents are tax exempt
The present tax on new insurance,
amounting to s cents for each 500
is repealed
A provision provides that when
taxpayer sustains a net loss during
one year, this loss may be deducted
from the net income the following
year.
Flat Tax Imposed
\ flat tax of Is cents is imposed
upon the profits derived from the
sale of capital assets if the tax
payers net income and capital as
sets gain together exceed $4,000.
Travelling statesmen will be allow
ed a deduction in their income tax
for all travelling expenses, includ-
ing. the entire amount expended for
meals and lodging while away from
home in pursuit of trade or busi-
ness"
In anticipation of a Supreme Court
decision holding unconstitutional
the present taxes on personal SER
vice corporations the committee pro-
vided that. in the event of such a
decree, these corporations should be
subject to the income and profits
taxes now in effect for the years
I9lS, 1918 and 1920 and thereafter
the flat corporation income tax.
Tax Board Provided.
A tax simpIification board to be
composed of three members appoint
ed by the President and three treas
ury officials Is provided for the pur-
pose of recommending further sim
plifications during the next three
years
Hereafter. tax disputes must be
settled within three wears. although
i've years are now allowed for cases
now pending.
To meet possible deficits the au-
thorizations for short-term indebt-
sdness are increased from a total
OF seven billion to seven billion. five
hundred miIlioa-