The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1921-03-30
LEADERS FEEL
THEIR WAY IN
TAX REVISION
Majority Think Excess Profits
Tax Should Be Abolished
Difference of Opinion on
Small Incomes.
CONSIDER SALES TAX
BY MARK SULLIVAN

BY MARK SULLIVAN
WASHINGTON, D. c., March So
What is said here aims to be sum-
mary of impressions received from a |
considerable number of the men who
will have part in rewriting the tax
laws in the coming congress. 1t omits |
going into the great mass of dispute |
about the merit of expediency of pro-
posed changes and confines itself to
the effort to describe what may be
termed the collective state of mind OF
these men. -...
The first impression is that the |,
minds of the leaders are much less |
crystalized than might be expected. 1t
frequently occurs that you will ask a
number of the finance committee of
senate or of the ways and means COM !
Elittee of the house how he feels |
about reducing the income tax or
about adopting the direct sales tax
and he will reply in terms that indi-
cate he is still feeling his way and
has hardly begun yet even to acquire
the information upon which his judg
ment will later be formed.
Feel Out Country.
There is an attitude of waiting not
ouIy anu ldClS VIII
be developed at the hearings soon to
begin, there is also an attitude of
waiting to learn the state of feeling of
the country. On this point the con-
gressmen and senators who are now
at their homes are expected to report
as soon as they return for the open
ing of the new session.
There is a preponderance of feeling
on the part of these leaders that the
excess profits tax should be abolished.
The reason for this is that it is prac
tically agreed that this form of tax has
now ceased to be revenue producer
The excess profits tax was effective
and yielded large income during the
period of Initiation.
The excess profits tax, so-called.
consisted less of profits in the true
sense of the rapid expansion in the
price valuation of materials due to
wartime initiation. During the pres
ent and coming period of depression
the rule will work the other way, and
tax will produce any considerable
amount of revenue during the present
year or in the near future.
Favor Repeal.
The disposition of the leaders to re-
peal this tax is general The excep-
tions are those who think it would be
bad politics to repeal it. The theory
is that repeating the excess profits
tax looks too much, like letting the
large corporations off. The politicians
who take this view say it would be
better to let it stand even though it
produces little or no revenue, or else
to reduce the tax rather than abolish
it entirely.
the leaders agree that the very rich
people of the country who are taxed
at present from 40 to 10 per cent of
their incomes are seeking refuge by
taking their money out of ordinary in
vestments and putting it into govern
ment, state or municipal bonds which
are exempt from taxation. This being
so it is argued that it will be wiser to
remove this temptation by lowering
the taxes on very large incomes to
maximum of not over 40 percent
One Move Certain.
The leaders agree that to the por-
tion of the public which does not un-
derstand economics this would have
the appearance of making things
easier for the rich. without doing any
thing to help people of smaller in
comes But in spite of this unfor-
tuuate appearance, from a political
point of view. it is practically certain
it will be done.
AS to the income tax on smaller in.
comes. incomes of from $4,000 to
S$8O,000 a year. there is marked diff
ference of opinion among the leaders.
Some concede that the present income
taxes in comparatively small incomes,
are jntolerable and believe that they
should be drastically reduced On the
other hand, some very important
leaders believe that the government
is so much in need of money. that it
will not be possible to make any
changes in the present taxes on in
comes of from 81 900 to $4,000. The
net impression that on the smaller
incomes there is little likelihood Of
reduction.
Seek Substitute.
What can be done about reducing
the income taxes depends largely, of
course, on what other form of taxa
tion can be found as substitute for
them, the one new form of taxation
that is universally discussed is the
direct sales" tax, occasionally known
as the turnover" and this project
purposes a tax of a fixed percentage
on everything that is bought or sold
The proposal as a whole can not be
readily discussed in a small space be-
cause it taxes SO many forms. In its
broadcast form it would be universal
direct tax of one person on every
thing goods sold by retail stores, by
wholesalers, by manufacturers. sala
ries. wages. the sales land houses
shares of stock, bonds, and every
thing Some would make the rate
not over one half of one per cent, 9th
ers would exempt farm products and
wages.
Without attempting to describe tho
variations of this proposal, it can be
said that there is difference of opin
ion among the leaders as to whether
the idea of sale tax in any one
form should be adopted at all; Sen
ator Smoot of the finance committee
and chairman Fordney of the ways
and means committee are believed te
be in favor of some form of this di