THE PEOPLE LOST-WEALTH WON

...The net change was to increase the taxes four hundred and three million, five hundred thousand dollars ($403,500,000) over the amount orginally proposed in the bill...

...The money is to be raised now...

...Prom the data already at hand as above pointed out, the Senate knew the income of every individual as reported to the government for taxation purposes through a series of years...

...Forced to Increase When the bill was reported from the Senate by the majority of the Finance Committee, it provided for raising additional revenue according to the estimate of the majority members of the committee, amounting to two billion, six million, nine hundred and seventy thousand dollars ($2,006,970,000...

...WEALTH WON...

...Later the committee changed its plan o determining taxable profits and limited the deduction which could be made for war profits to 10 per cent, of the capital employed in the business, as many corporations made profits in the pre-war periods greatly in excess of this 10 per cent...

...Individual incomes in excess of $25,000 amounted approximately to two billion dollars ($2,000,000,000), and in the same way it was a simple matter to determine just how many persons were in receipt of incomes sufficiently large to have been reported under the old law...

...In the meantime interest charges must be met and each issue of bonds means higher prices for necessaries, and finally after the war, in the years of contraction and hard times and panic which are sure to come, the people must pay the taxes to redeem the bonds, principal and interest...

...This amounts to about 131/3 per cent, of the total sum to be raised...

...including the -$7,000,000,000 which it is proposed to turn over to the Allies...

...But the one immediate fact to reckon with is that this vast amount of money is ,to be raised from the people of this country during the present fiscal year...

...Here therefore the Senate had almost ready made for its use the means of raising abundant revenue by a tax that would not have disturbed business, and would not have caused inconvenience, much less distress to any individual...

...In that interview the Lord Chief Justice said: "Don't leave the burden of the war to posterity...

...The homes and the earnings of all the people will be as securely mortgaged to pay this debt as though the mortgage was written out, signed and filed in the recorder's office...

...How Cost Should Be Met The minority members of the Finance Committee and a minority of the Senate contended that the bill should have imposed heavier taxes upon war profits and surplus incomes...

...It has refused to conscript even a modest amount of the surplus wealth of the coun-try to pay the expenses of this war...

...This is a hill, as its title declares, '"To Provide Revenue to Defray War Expenses...

...Suppose that 80 per cent, of the war profits and excess profits had been taken in taxation, the government would have had three billion, two hundred and eighty million dollars ($3,280,000,000) more in revenue, and all of these great war-profiting corporations WOULD HAVE BEEN" LEFT NET PROFITS—that is profits after ALL EXPENSES HAD BEEN PAID, EQUAL TO 10 PER CENT...

...Cost of the First Year For the first fiscal year—that is from July 1, 1917, to July 1, 1918—the war expenses over and above the ordinary expenses of government will amount in round-numbers to $18,000,000,000...

...Their ability to pay will depend upon their ability to endure the economic waste and destruction of the war...

...Failing in all argument to sustain their position, the majority members of the Senate committee undertook on the floor of the Senate to charge the Senators who favored a reasonable rate of taxation for war profits and fat incomes with "lack of patriotism," and declared the course we were pursuing would "make the war unpopular with the pcoplt...

...Remember that England is a country with much less than half our population and very much less than one-third of our wealth, and yet she is raising $2,000,000,000 in taxes on war profits and individual incomes, against $1,767,000,000 we propose to raise through the same sources under this bill...

...Is he with wealth or the people...

...All estimates indicate that the cost of the second year of the war will be more than double that of the first, and each succeeding year must cost more than the previous one...

...The figures were also at hand showing what was called the excess profits of all corporations and firms for the taxable year...

...No person would have been harmed...

...Such a statement should be illuminating even though not convincing...

...It represents the first year's cost of war—a year spent merely in preparing to really enter the war...

...OF THEIR CAPITAL AND 20 PER CENT...

...Bat just the opposite course was pursued...

...But war profits and surplus incomes must be dealt with gently, if the war is to be successfully prosecuted...

...Disregarding alike the warnings of all the greatest economists of the world, the experience of all nations, including our own, in the financing of great wars and the plainest demands of justice, the majority of the Senate could not be moved from its determination to relieve wealth from just taxation, while burdening the present and mortgaging the future to pay the cost of the war...

...Assuming that there are twenty million heads of families in this country, it means on an average for each family, between eight and nine hundred dollars...

...England, as a matter of fact, is taking by taxation 80 per cent, of war profits, except in the shipping industry, where she is taking 88 per cent...

...Where did your senator stand on the revenue bill...

...particularly in the form of the high prices for the necessaries of life caused by the war...

...WAR PROP-ITS ADDED TO THAT...

...As a net result of the minority opposition, we forced an addition to income taxes amounting to sixty-four million dollars ($64,000,000) and an addition to the war profits tax amounting to four hundred and ninety-eight million dollars ($498,000,000...

...Look over the roll calls on pages 4, 5, 6 and note how your representative voted...

...In that day when wages are low and money scarce, the taxes will be levied to pay the debts so lightly and easily contracted today...

...Suppose that all incomes in excess of $25,000 or a very large per cent, thereof had been taken by taxation, the government would have received nearlv two billion dollars ($2,000,000,000) in revenue from this source alone, and it can hardly be contended that the possessors of incomes of $25,000 are likely to suffer for the necessaries of life...

...The plain people do not count...

...With this and other available material as a basis, a strong minority opposition developed in the Senate against the bill...

...The amount of the war profits was arrived at by taking the average net profits of any given corporation or concern for the years 1911, 1012 and 1913, which was called the pre-war period, as the normal net profits, and the excess over that amount for the taxable year was taken as the war profits...

...Did he vote with wealth or with the people...

...Had this been done, a much smaller bond issue woald have teen sufficient...

...The proposition presented the Senate was really a simple one...

...THE PEOPLE LOST...

...They can be,—they have been conscripted...

...no business injured...

...It was accordingly estimated that upon this basis the taxable profits wounld amount to four billion one hundred million dollars ($4,100,000,000...

...War profits," as the words signify, mean profits made out of the war, profits which would not have been made except for the war...

...It had before it the figures showing the individual incomes of the country as returned for a number of years past for the purpose of fixing the federal income tax...

...It had before it the figures showing the war profits made during the year 1916 by the different corporations and firms engaged in business which profited by the war...

...Prom this source it was ascertained that individual incomes in excess of $10,000 amounted to three billion, three hundred and forty-six million dollars ($3,346,000,-000...

...The balance of the cost must be borrowed, and since it can be borrowed no where else, it must he borrowed from our own people...

...It shows that it is the wealth of the country that is to be placated, it the war is to be continued...

...of the hardest (fights ever known in the United States Senate came to a close...

...The debate lasted for just one month...

...That the income and war profits taxes of the bill, even with the increases we forced upon the majority, are absurdly and unjustly small, even by the standard of Great Britain, is shown by the interview of Lord Chief Justice Reading, of England, given to the press on August 25, .1917...

...Whether we will be repaid all or only some portion of the $7,000,000,000 turned over to foreign governments remains to be seen...

...The highr prices which come with the inflation eatisedvby bond issues would to some extent have, been avoided, and a substantial part of the burden of the war would have been carried by the wealth of the country...

...You ought to know...

...Of this amount, however, the war profits tax was only seven hundred and eighty-eight million dollars ($788,000,000), and the tax on individual incomes was only four hundred and seventeen million dollars ($417,000,000...

...Governmental figures show that revenues of the current year (for England) are estimated on a basis of $2,000,000,000 from incomes and excess profits tax...

...War profits and surplus incomes escaped with a light tax, while the mass of the people must stagger on under the taxes imposed by the war...

...We could have cut down our bond issue by several billions of dollars, all taxes upon necessaries could have been avoided, and the public would have felt that there was a determination on the part of the administration to make surplus wealth bear at least a respectable portion of the expenses of the war...

...How the Cost is Met The bill just passed by the Senate will only produce $2,410,000,000 in additional revenue for war expenses...

...That is the reasoning of the majority of the Congress, who will write this bill into the law, and who at the present time arc controlling the destinies of the people...

...For Profits or the People...

...It was calculated that this limitatiou of the deduction, which could be made as pre-war profits to 10 per cent, of the capital employed in the business would substantially increase the taxable profits, inasmuch as during the pre-war period many corporations made net profits in excess of 10 per cent, of the capital invested...

...This Congress adopted the policy of conscripting millions of men to carry on this war...

...With the passage of this bill one...

...Suppose there was taken by taxation two-thirds of all incomes in excess of $10,000, the government would have had two billion, two hundred and thirty million dollars ($2,230,000,000) in taxes, and the fortunate recipients of ineomes in excess of $10,-000 each would not have been deprived even of the comforts of life...

...The application of any such principle of taxation would have meant that our government would have had for the first year five billion, five hundred million dollars ($5,-500,000,000) in revenue just from war profits and fat incomes alone...

...The roll calls on the excess profits and excess income taxes show clearly who stood with special privilege and who stood with the people...

...This statement was repeated many times in many forms by majority members of the committee...

...As will be seen by referring to the Roll Call Department of this issue of the magazine, a number of the minority Senators did introduce amendments to the committee bill increasing the tax upon war profits and surplus incomes...

...The day of payment is postponed...

...It has been decided by a majority of the Congress that the people must bear the ever increasing burden resulting from the policy deliberately adopted of issuing bonds, instead of taxing surplus wealth...

...If wealth cannot make all its normal profits and liandsome war profits besides, then wealth will not support the war, and of course the war will stop...

...All of the amendments offered proposed only MODERATE INCREASES—the most moderate increases, because we knew in advance that a rate high enough to be even APPROXIMATELY JUST would NOT BE ACCEPTED...

...In behalf of the minority members of the committee, consisting of Senator Gore, of Oklahoma, Senator Thomas, of Colorado, and the writer, I presented a minority report setting forth not only the views of the minority, but submitting as well tables Avhich showed, among other things, the net income for the years 1911 to 1917, of ninety-five leading industrial corporations and fifty representative railroads, together with their respective net earnings for the pre-war period, and their undistributed surplus for the year 1916...

...For the taxable year, war profits so ascertained were estimated at three billion dollars ($3,000,000,000...

...We were able also to force an abandonment of the tax on tea, coffee, cocoa and sugar, amounting to eightysix million dollars ($86,000,000) and of the proposed increase on letter postage amounting to fifty million dollars ($50,000,000), and other consumption taxes, reducing the total of the consumption taxes so stricken out of the bill one hundred and fifty-eight million, five hundred thousand dollars ($158,-500,000...