The Birmingham age-herald., 1922-02-05
SALES TAX PLAN
 ID RAISE BONUS
 FUNDSABANDONED
Opposition in House From Middle West Too Strong for Passage of
 Measure
Rx AenocLated Pre.,

Washington, February 4.-Republi- can House leaders are understood virtually to have abandoned the idea of financing the soldiers bonus by means of general sales tax, a pro- gram which has been freely dis cussed with more or less favor at the two ends of the capitol.
 Opposition among the majority members, mostly from the midle and far west, to a sales tax. Is said to be So strong as to threaten defeat of such program. The alignment against it is understood to be practi- cally that which forced acceptance Of the 50 per cent income surtax voted into the revenue bill by the Senate.
 Developments at further hearings today before the House ways and means committee disclosed that in spite of Secretary Melons opposition to the plan a number of the majority favor the use of part of the proceeds from the refunded British debt In helping to finance the adjusted com pensation. They believe that this would meet with greater measure of public approval than would pro gram involving the raising of the en- tire amount by means of special taxes.
 Hear Roth Sides.
 Arguments on both sides of the question were heard by the com mittee, Representatives Ramseyer, republican, Iowa, opposed the propo- sal, arguing that such use of the money would be a breach of con- tract with the holders of Liberty bonds who. he said, had been told ,n the law adopted by Congress that the proceeds from the foreign debt would be used to retire the Liberty bonds issued to raise the money advanced to the debtor nations. Chairman McFadden. of the banking and currency committee. favored the financing of the bonus through the sale in this country of the refunded British bonds, with the principal and interest guaranteed by the American government as well as the British government. He contended that with this double guarantee the bonds would bring a higher price than
 
 ties sold for the same purpose.
 Another Means Advocated.
 Increased inheritance taxes as an other means of financing the bonus, were advocated by Mfr. Ramseyer, who said such taxes could not be passed on and would not be a penalty on Initiative and enterprise. He thought the present return of $154,- 00o,000 from ,his source could be in creased by $200,O00, 900 8 year with out imposing any hardship. Chair man Fordney and some other mem bers of the committee apparently received this suggestion without ap- proval, but other members indicated sympathy with 1t.
 Now that the arms conference has approved the naval limitation treaty, some committeeman are considering the subject of naval and army reduc- tion as one means of providing reve- nue for the bonus Because of the cost of scrapping ships on the ways they are not at all certain that the building appruJ iaH,,1 cau be greatly reduced in the ueS- fisca, year, but it is their belief taat with many ships now 1f.)1t consigned to ths scrap heap, tte person. el can be GU. down, sharply effecting a consider able saving.
 This phase of the situation is ex- pected to be among those to come up at the fortnco.ning honts conferen. between President harding ard House and SeIt's lesdcbs.