Evening star., 1921-05-16
URGES RETENTION
Of PROFITS TAX
Exemption of Corporation
Dividends Asked Before
Senate Committee.

Tax revision discussions were given
a new twist before the Senate finance
committee today by II. Archibal3
Harris of Chicago. who took posi-
tive stand for continuation of the ex-
cess profits tax and urged exemption
of corporation dividends from sur
taxes He was the first witness be-
fore any congressional committee at
this session to propose retention Of
the excess profits tax provisions OF
the present revenue laws.
The witness gave broad view OF
the tax situation, discussing also its
relation to present business cond-
in his opinion. it should direct ef-
forts toward reduction of taX-free
securities. He believed that il means
were found to throttle the flotation of
tax-exempt obligations by federal.
state and local governments. a long
step would be taken toward drawing
capital back into productive enter
prlSeS.
Against Individual Tax.
In addition to the elimination Of
surtaxes on the dividends OF corpora
tions Mr. Harris suggested a reduc-
ton of the higher surtax rates on
personal incomes and a dfferentiatl N
in tax rates on active and passive"
investments He argued that there
should be no tax on dividends. but
that corporate earnings should ba
made to bear sufficiently high levies
to provide the federal needs from that
source.
Release the tax on individuals,
even though YOU do strike Tho cor
porations more heavily" tho witness
urged. Then tax the interest on
bonds and preferred stocks and other
issues of a passive income nature. Ry
relieving the tax on dividends We are
going to have a great rlamor for
stocks of all kinds, and tho present
bonds and preferred stocks viii i'a
converted into common stocks ali "f
which will be active capital"
the changes proposed. Mr. Harris
believed. would make active capital
UP in tay-frec bonds. He added that
he felt the excess-profits tax had not
lost its productivity. and believed
strongly that the suggested c'lmiha-
ton of corporation dividends from
surtaxes would aid materially m -
storing the countrys Industrial
health.
Fears Of the Treasurv that it = orlt
not be able ~ meet its r"qulrer''ittS
If some suhsti'ut" for the profits *
were NOT found were declared h% me-
witness to he unfoundrd He a@."ri'd
that the auditing Of tiX r'turi- '"r
the las thret. yea"s ould bring nfr'h
more money INTO The fcd9rs 'll =
ihan the most enthusiastic otiiClnis ..Di
hoped.
Py sitting the l9I1 returns. 80
Treasury is shaking ouf around 81
200 600 a month i" extra faNeS. NJ
Harris said and predicted thar whom
examination Of the 1915 returns get
under WAY the income from back
taxes will iup,p To between $4,000. 400
and SO Aan.nuh month
This will mean" lac added. "thSt
between 81 500 nnn. nnn and s.. go. non nne
in additional taNss Viii be assessed in
the next three years.
Estimates Large Returns.
Mr.. Harris believed il inposSi bic for
the Treasury TO complete the auditing
of the 1918 returns under three years.
His personal estimate Of the added
revenue from back taxes was higher
than the Treasury figures. the wit
ness said for he held that penalties
TO he assessed would average 80 per
cent In the next three years. he said,
the government should receive be-
tween s2.34n. .n0O.0 900 and s3276. 600 0n8
from 1918 which Trea sury officials
have not counted on as yet in any of
their computations
Widespread or radical changes in
the revenue laws were opposed by
Mr. Harris. who told the committee :