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tion of the reduction then made. That opinion seems to have found approval dually even in the mind of the Secretary of the Treasury, Mr. Mellon.

This year, when it was proposed to formulate and enact another tax-reduction measure, the Secretary of the Treasury expressed his views with regard to the matter. I want to read from the Secretary's recommendation with regard to the new tax bill. His first recommendation is a tax upon corporations of 12 per cent. The committee has exceeded, therefore, and the Senate on Saturday when It voted on the corporation incometax provision, exceeded by one-half of 1 per cent the recommendation of the Secretary of the Treasury with reference to the amount of that tax. That is to say, the committee and the Senate propose a reduction in corporation Income taxes of $41,000.000 less than the Secretary of the Treasury himself recommended.

The second recommendation was with relation to surtaxes, and I will read it:

That the rate applicable to the so-called Intermediate brackets, running from $14.000 to $75.000 of the Individual Income tax. bo revised la accordance with the attached table, resulting In a decrease In revenue of $50,000,000.

In view of what has transpired, that recommendation of the Secretary of the Treasury is startling. He suggested that the reduction needed was within the brackets ranging between $14.000 and $75.000 and he recommended a reduction in the taxes within that range of $r>0,000.000. Later the committee acted and decided to reduce them only $25,000,000. The Secretary of the Treasury not only recommended a reduction of $50,000.000 within these brackets, but the Treasury Department prepared a table covering it. I suppose that table was worked out by Mr. Ogden Mills in collaboration with the experts of the Treasury Department.

I have that table before me, Mr. President. It was prepared with a view to reducing the taxes on incomes between $14.000 and $75,000 to the extent of $50.000,000, but upon examination I find that It was so prepared that persons whose incomes are less than $70,000 would get $28.000.000 of reduction out of the $50,000.000, and persons whose incomes are in excess of $70,000 would get $22.000,000 out of the total $50,000,000 reduction proposed by the Treasury Department for those brackets.

I am not at all surprised that the Treasury Department in any scheme of reduction that It may propose should look out for those of large incomes, but the recommendation of the Treasury Department gives the Impression that it intended this reduction in order to remedy an injustice which had been done to the taxpayers whose incomes range between $14,000 and $75,000.

Again, Mr. President, when the Finance Committee met to consider this bill, the majority members of the committee very kindly, through the able chairman of the committee, the Senator from Utah [Mr. Smoot] handed

Mr. WALSH of Massachusetts. Mr. President, will the Senator from North Carolina permit an interruption at that point?

The PRESIDING OFFICER. Does the Senator from North Carolina yield to the Senator from Massachusetts?

Mr. SIMMONS. Yes.

Mr. WALSH of Massachusetts. Before the Senator takes up the discussion as to the action of the majority of the Finance Committee, is it not a fact that the House of Representatives rejected the proposal of the Treasury Department for any reduction in the surtaxes?

Mr. SIMMONS. Yes.

Mr. WALSH of Massachusetts. The bill came to the Senate from the House of Representatives making no provision for any reduction of surtaxes?

Mr. SIMMONS. That is true.

Mr. SMOOT. But the same Secretary of the Treasury recommended that we retain the tax of $66,000,000 on automobiles, and we have taken that off. That same Secretary of the Treasury recommended that we retain the $17,000,000 derived from admission taxes, and that tax has also been taken off, as the bill has been reported to the Senate.

Mr. SIMMONS. I am not now discussing the automobile tax or any other tax except the surtax, nor am I discussing the question of how much tax reduction the Treasury can stand. I am now discussing the question of the justice of giving those who have the smaller incomes the reduction to which they arc entitled and which they did not get in 1920.

Mr. SMOOT. Mr. President, does the Senator from North Carol inn think for a moment, if the Secretary of the Treasury had recommended the elimination of the tax of .$00,000,000 on automobiles and of $17.000.000 on admissions, that he would have aLsu recommended the reduction in the surtaxes?

Mr. SIMMONS. I do not know. The Secretary of the Treasury, through Mr. Mills, came before the Finance Committee and vigorously opposed the repeal of tile automobile tax, hut the Senator from Utah and his associates voted for the repeal.

Mr. SMOOT. Certainly; hut the Senator from North Carolina is stating what the Secretary of the Treasury recommended. I say that the Secretary of the Treasury recommended that the $66,000,000 tax on automobiles be retained and that the $17,000,000 tax on admissions be retained; and if he had recommended the repeal of the automobile tax and the admissions tax he never would have recommended this amount of reduction oil surtaxes.

Mr. SIMMONS. I am not discussing that question at all. I am saying that the Secretary of the Treasury before the committee, before Congress had assembled, or when it had, perhaps, just assembled, made his recommendation. In that recommendation he recognized the fact that these small surtaxpayers had been done an injustice In the 1926 bill, and he recommended that that injustice be remedied. I am simply trying to get the Senate to realize the fact that even the Secretary of the Treasury recognized that injustice had been done this class of taxpayers. It is that injustice that we are now trying to remedy. The question of whether the condition of the Treasury will permit us to remedy it. has already been discussed. The question now is, Are they entitled to this remedy? The question of whether the Treasury can afford it we have already discussed. Senators on the other side contend that the Treasury can not afford to do justice to these small surtaxpayers. We contend that the Treasury can afford to do it.

The Treasury Department contend that they have a surplus of only about $400,000,000 for this year and $200,000,000 for next year available for tax reduction purposes. We have attempted to .show, and I think successfully, that those estimates are entirely erroneous, as most of the of'er estimates made by the Treasury heretofore have been erroneous. In fact, all of the other estimates by the Treasury Department have been erroneous. But even if they are correct in the main, it has been shown that they are not correct with reference to certain other items that would make an additional margin of $100,000,000; and it has been pointed out further that by a proper application of the amount received from our foreign debtors we may release another $160.000,000 for tax reduction purposes.

As I started to say, when the committee met its chairman very kindly brought to the minority what was called the Republican program of tax reduction for this year. The committee had been in session; the minority had asked that they be given the room, and the majority had gone out, but we had requested them to give us the statement, and the chairman came and, as he will remember, submitted it in person. In that statement I find this clause:

5. Revision In surtax brackets from $18,000 to $76,000, $25,000.000.

My recollection is that in pursuance of that program of the majority the majority did present to the committee a reduction, which was almost identical with the proposition which I have submitted here, and that that was tentatively agreed upon. Subsequent to that time for some reason or other the majority, which at that time was willing to follow out the proposition that I stand for here and that the minority stands for here, of giving all this reduction to those men who have incomes ranging from $10,000 to $70,000, changed their position. The proposition of the majority might have varied somewhat from that, but very slightly. I think their plan began at a higher bracket and went up to incomes of $75.000.

Mr. SMOOT. Mr. President, our program submitted at that time had reference to rates and not to the policy adopted by the minority. Our policy was always to apply certain rates and, as I said then, to allow such rates clear through as to all taxpayers, as has been done in the case of every tax hill since the first one which was passed.

Mr. SIMMONS. I am talking about the tentative proposition which wns submitted by the majority; I am not talking about their second proposition.

Mr. SMOOT. That is exactly what I have reference to.

Mr. SIMMONS. The tentative proposition of the majority provided, as I understand, very much as did our proposition; that is to say

Mr. SMOOT. Oh, the Senator

Mr. SIMMONS. The Senator in his own time, if I am not right, may correct me. I really am not able to get into a wrangle about this matter.

Mr. SMOOT. I realize that.

Mr. SIMMONS. And I would prefer the Senator would answer me in his own time.

Mr. SMOOT. Our proposition was as to rates; that is all.

Mr. SIMMONS. But the proposition of tbe majority was so framed that the taxpayer in the range of lower brackets would get a benefit from the reducttion made in the total amount of the $25,000,000 which the majority said ought to be reduced on the incomes of those falling within those surtax brackets. Subsequently a different proposition was submitted, and it is to that proposition that I file this proposed substitute. Why do the minority through me file this proposed substitute? Because the second proposition of the committee gives only about three-fifths of the reduction to income-tax payers within the brackets dealt with and gives the other two-fifths of the reduction to income-tax payers whose incomes exceeded .$75,000.

I think that is a clear ease, Mr. President, of the admission of a wrong and of a purpose to remedy that wrong in order to give struggling taxpayers, who have been overburdened by the last bill, relief to the extent of $25,000,000. But when the proposition is put in writting and incorporated in the bill and presented to the Senate, and stands here to-day to be voted upon, the fact is disclosed that, so far from carrying out that purpose, so far from carrying out what was conceded to be justice to these taxpayers, while apparently it is proposed to give them a $25,000,000 reduction the schedules have been so readjusted and juggled, if I may use that term without being offensive, that they get only $15,000,000, in round numbers, instead of $25,000,000, and at the same time the great rich surtax payers are handed over $10,000,000 of the reduction that ought to have gone to them and that was justly due them by reason of the fact that this wrong and injustice had been done them in the last bill.

Mr. WALSH of Massachusetts. When the Senator speaks of the rich class who get the benefit of this reduction of $10,000,000 he means those who have incomes of $70,000 or more?

Mr. SIMMONS. Yes.

Mr. WALSH of Massachusetts. Which means that class of taxpayers in this country who have capital assets of a million and a half dollars and over?

Mr. SIMMONS. Yes. The largest taxpayers in this conntry pay upon Incomes of between five and ten million dollars; but each of them gets his share.

Mr. WALSH of Massachusetts. And, if I am correctly informed, that the tables show that these taxpayers, since the war taxes of 1918, have received a reduction of 06 per cent in their taxes.

Mr. SIMMONS. Their surtaxes at the peak of the war, Mr. President, were 65 per cent. That was tbe maximum—65 per cent. We reduced that to 50 per cent. Then we reduced it to 40 per cent.

Mr. WALSH of Massachusetts. Maximum.

Mr. SIMMONS. Maximum. I am speaking about the maximum. In the last bill we reduced the 40 per cent to 20 per cent; we cut it in two; so that the present maximum tax is less than one-third of what it was at the war peak of taxation.

Mr. WALSH of Massachusetts. I think it represents a taxbill reduction of about 6(! per cent in the case of those who have incomes over $100,000.

Mr. SIMMONS. I have not estimated the exact amount, but I should say it was fully that.

Mr. SMOOT. Not on the $80,000 man.

Mr. SIMMONS. The Senator was speaking about the maximum, as I was. Kverybody with an income over $100,000 under this bill gets the maximum rate, docs he not?

Mr. SMOOT. Yes; certainly.

Mr. SIMMONS. And he gets the benefit of that reduction. I am only speaking now about the maximum rate.

Mr. SMOOT. Does the Senator know that under his plan all the reduction that taxpiiyers with incomes over $50,000 will receive is $2,100,000?

Mr. SIMMONS. How is that?

Mr. SMOOT. Under the plan of the Senator the total credit, to all of the taxpayers with incomes over $50,000 is $2,100,000. That is all they get out of the $25,OOO;«30.

Mr. SIMMONS. That means, of course, that the people with incomes between $50,000 and $70,000 would get a good part of the total and the rest of it would go to the other taxpayers.

Mr. SMOOT. Twenty-three million dollars would go to one class and $2,000,000 to the other.

Mr. SIMMONS. Hut I am advised by the Actuary of the Treasury that under your plan of reduction the taxpayers with incomes'above $70.000 will get $0,600,000 reduction.

Mr. SMOOT. I think the Senator is mistaken.

Mr. SIMMONS. If I am mistaken, then I am mistaken because of the estimate that has been given to me. I have it right here. I will read the statement before I finish, if the Senator will be patient with me.

Mr. SMOOT. I have the statement here.

Mr. SIMMONS. I will read the statement given me by the Actuary of the Treasury in his own handwriting.

Mr. REED of Pennsylvania. Mr. President, will the Senator from North Carolina permit a question?

Mr. SIMMONS. I want to say to the Senator from Pennsylvania that on account of physical conditions I can speak only a very short time, and if I submit to interruptions I shall find myself unable to discuss the essential things that I want to discuss. I will thank the Senator, therefore, if he will reply in his own time.

Mr. REED of Pennsylvania. I .shall be glad to do so.

Mr. SMOOT. I recognize that, and I am not going to interrupt the Senator in any way.

Mr. SIMMONS. Of course, the Senator knows that I never object to interruptions; but I have a task before uie, and it is about all I can do.

Mr. SMOOT. I told the Senator myself that I did not want to get him excited, as he generally does. I am very triad indeed that the Senator is taking the discussion easily ami quietly, and I am not going to ask him any other questions.

Mr. SIMMONS. The Actuary of the Treasrury informs me at this minute that the figures I have just given were accurate.

Mr. President, I might state in a general way that the minority plan imposes no surtax on incomes between $10,000 and $12,000. The present law imposes none upon incomes up to $10.000. We extend that, and impose no surtax upon incomes from $10,000 to $12,000. The majority plan retains the tax in the present law.

Mi'. WALSH of Massachusetts. And there Is no reduction until the $20,000 bracket is reached.

Mr. SIMMONS. Twenty dollars is the tax in the present law, and the majority proposition retains that tax.

Mr. WALSH of Massachusetts. That is the surtax.

Mr. SIMMONS. I am talking about the surtax. The Senate understands that

On a net income of $14,000 the present rate Is $40. The minority proposes to make it $20. That is a reduction of onehalf.

I might add In a general way that after we reach an income of $70,000 the minority makes no reduction whatsoever. All of its reductions are made between $10,000 and $70,000. The majority plan continues its reduction up to the highest income that is listed for surtax.

Both the majority and the minority schedules of surtaxes impose no surtax on incomes below $10,OOO.

On incomes between $10,000 and $15,000 the majority make no reduction from the present law, while the minority reduce the present surtax on $15.000 from $60 to $40.

On incomes between $15,000 and $20,000 the majority make no reduction from the present law, while the minority reduce the present surtax on $20,000 $60, both from the present law and from the majority.

On incomes of $30,000 the minority reduce the surtax $210 more than the majority.

On incomes of $35.000 the minority reduce the surtax $280 more than the majority.

Now we come to the $70,000 mark, and the situation is changed. We reduced the surtax only up to that point, and we reduced it up to that point to the total extent of $25.01)0.000, at least; maybe a little more. 1 think it is more; but when we reached $70,000 we stopped. When $70,000 was reached, however, the majority continued their reductions; and let nu; read the reductions that they made in excess of what we had made.

On incomes of $70,(MK» the majority reduce the surtax $670 more than the minority.

On incomes of $80,000 the majority reduce the surtax $670 more than the minority. That is their total reduction. We made none.

On incomes of $90.000 the majority reduce the surtax $570 more than the minority.

On incomes of $100,000 and upward the majority reduce the surtax $470 more than the minority.

The highest reduction made by either the majority or the minority is that of $670. which is on incomes of from $70.000 to $8!»,000. The next highest is that on incomes of $90,000. where they reduce thesurtux $570. The next is on incomes of $100.000; and then they make a flat reduction of $470 to every individual income-tax payer whose income is above $100,000, without reference to the amount. If it is $10,000,000, the taxpayer gets the same reduction, $470. from his surtax.

Mr. President, in determining the question of equality of individual income taxes it is necessary to consider not only the surtax but the normal tax imposed.

Ton may impose a normnl tax in .such a way as to oppress the low taxpayer, just as you may impose a surtax so as to oppress the low taxpayer. You can make a normal tax so as to give the lower taxpayer less advantage than you give to the higher taxpayer. So that In considering the question of the fairness of a tax, whether it he normal or surtax, you have to take those two taxes together, the surtax and the normal tax.

There is a graduated normal tax on the first taxable $8,000 of net income ranging from 1% per cent to 5 per cent on incomes in excess of tins $8,000 in the present Inw. That is to say, when the taxable income exceeds $8,000 every income-tax payer, however great or small the amount of his income tax, must pay a normal tax of 5 per cent.

On the first $8,000 there is a graduated normal tax. but even those who pay that have to pay the normal tax, and the man with a taxable net income of only a thousand dollars has to pay a normal tax, but to $8,000 it is graduated. When we reach the $8,000 mark the normal tax becomes flat, and the man with an income of over this $8,000 of taxable income has to pay exactly the same percentage upon his income over this .$8,000 of taxable income that the man with a million dollars has to pay upon his income.

Mr. President, based upon the idea of the ability of the taxpayer to pay, that, of course, is an indefensible proposition, because the inability of a small taxpayer to pay 5 per cent is not as great as the ability of a large taxpayer to pay 5 per cent. But there seems to be no escape from the idea that every taxpayer, practically, ought to be required to pay a normal tax. So, after various reductions, we have come down to a flat tax of 5 per cent, not a very excessive tax, but a very considerable tax. It is almost equal to the interest upon the amount of the income per year.

If it stopped there, the inequity would not be so palpable, but we must consider, in connection with that normal tax, the fact, and it is the big fact in this proposition, that a man whose income is derived from dividends of corporations pays no normal tax at all. He pays only a surtax if his net income is in excess of $10,000. Where do the big dividends from corporations finally find lodgment in this tax scheme? Is it in the small incomes'! Does the man of $10,000 income get much benefit from the exemption of the dividends of corporations from the normal tax? No; usually he does not receive dividends from corporations, or if he does, it is so infinitesimal as to amount to nothing. The great dividends which go into these incomes of individual taxpayers are to be found in that range lying between $70,000 and the peak of incomes listed for taxation.

I have here a table with regard to that which I desire now to rend to the Senate. Dividends returned by individuals with net incomes of $70.000 and more amount to $807,000.000. Not a penny of this normal tax of 5 per cent is paid on $807.000,000 of rhe incomes of taxpayers with incomes in excess of $70,000, because that $807,000,000 is derived from dividends of the big corporations of this country; 17,542 individuals pet the benefit of that reduction. What per cent la that $807,000.000 of the total income of these taxpayers with incomes above $70.000? It is 27 per cent. That is. taxpayers with incomes above $70.000 I-'jy not one dime of this normal tax of 5 per cent on 27 per cent of tlieir total net income.

Mr. President, the Senator from Utah shakes his head. I am giving figures in the handwriting of the Actuary of the Treasury. They pay no normal tax at all upon dividends received amounting to $807,000,000.

Now, take the total reduction because of dividends, which applies to 4,000,000 people, and it is only 10 per cent. So that tlie general average of the per cent of dividends in the total amount of income returned by the individual taxpayers of this country is only 1(5 per cent, but of that part of the taxpayers wliose incomes exceed $70,000 it is 27 per cent. I am advised that that statement is absolutely correct.

Mr. President, I say that tlifit situation must be considered. Sn that these people who have incomes above .$50,000 have not only received a reduction since the war of from 65 per cent, their maximum surtax, to 20 per cent, their maximum surtax now, but in their normal tax (hey receive an exemption of 27 ptr cent of their total net income by reason of dividends, while tlie average of all taxpayers hns received only 16 per cent.

While I have not the figures worked out as to the taxpayers in the lower brackets, I believe that in the lower brackets they have received a much smaller average than 16 per cent. The taxpayers with these small incomes, I will say up to thirty or forty thousand dollars, even, have very little income derived from dividends. Of course, some of them may have considerable, but some of them have none. It is not until we get into the range uf a hundrcd-thousand-dollar income that the dividends

begin to play an Important and a controlling part in the normal taxation.

It is commonly known In this country that great financiers, who stand at the head of the column that chronicles the rich of this country, derive the bulk of their incomes from dividends of corporations. They transact their business almost entirely through corporations. Take, for instance, the Standard Oil, and the other oil companies in this country. The men who have made immense fortunes out of those oil companies derive their incomes chiefly from dividends, which are exempt from tills normal tax. Take the great steel corporation. The men who control that great organization and have grown enormously rich in recent years—rich beyond the dreams of avarice, men who can hardly count their millions—derive their incomes from dividends of corporations. They have their full share, and we do not think they are entitled to any more. But the administration, through its Secretary of the Treasury, and through the majority meml>ers of the Committee on Finance, speaking the voice and command of the Secretary and his assistant, Mr. Mills, instead of giving relief to the people who were done an injustice in the last law, say they will not give them any relief unless we let the big rich in this country, men with incomes of over $70,000, have their part in it, unless we will permit the millionaires to participate to a small extent in it.

Mr. President, I have nothing to say against corporations. I have stood upon this floor and advocated what some call radical reduction in the burdens imposed by the present administration upon corporations. I asked for the graduated income tax upon the smaller corporations, but I asked also for a reduction of 2 per cent in the corporate taxation on all corporations.

Mr. WALSH of Massachusetts. Instead of the one recommended by the majority.

Mr. SIMMONS. Instead of the one recommended by the majority. I have nothing against corporations. I want justice done them. I thought before and I think now that the best way in the world to relieve the small taxpayers of this country is by reducing the taxes on corporations, especially the big corporations, which, by trust agreement, by combinations, by cooperation, by price fixing, are able to fix their prices, pay these taxes of the Government, and add the taxes to the cost of operation, and pass them on to the general consumers of the country. I think that to reduce their tax is not only just to them, but it is just to the individual consumers of the country as well. I favored it.

I have no prejudice against corporations. I have no prejudice against wealth. God knows 1 believe that every man in the country has a right to acquire all of this world's goods that his capacity and his opportunity will permit him honestly to acquire. I would not inveigh against any accumulation of riches if it were acquired honestly and legitimately. I respect the man who has the ability to take advantage of his opportunities and by his great talent, foresight, sagacity, and caution accumulate wealth, hundreds of thousands and even millions of dollars. But when it conies to the matter of taxation I am utterly opposed to any scheme of taxation that will permit those men to escape their just burdens in the payment of their just part of the expenses of the Government.

Tell me, if you will, where the great rich and the corporations pay any tax except through the income tax and the corporation tax? .What other taxes do they pay? That is all. The income tax is our chief means of reaching them and our only source outside of the corporation tax. I want them to pay their just share. If they were taxed too high for war purposes, when that emergency is past let us cut those taxes down. That we have clone. With the consent of the minority that has been done. We said these tnxes were made very onerous during the war because an emergency and a necessity existed. I told one great, taxpayer who came to see me with reference to the matter of overtaxing his income while the war was raging. "My dear sir, wre have taxed you high." He said, "You have taken most of my income." I said, "AVe will take it all and we will go into your principal if it is necessary for this Government to win the war in the interest of peace and in the interest of civilization." But the war is over. They are entitled to the same treatment in reduction of their taxes that the humblest man in the country is entitled to, but no more.

When they come here and demand that we give them greater relief in the reduction of taxation than we do the small man, I for one will not be silent, but I will speak as loudly as I am able to .speak, whether ill or well, in denunciation of such a suggestion. I say that the smaller taxpayers were not justly treated. When the 1026 act was under discussion I had then a scheme by which taxpavors having incomes of less than $70,000 would have been given $43,000,000 reductiou more than was actually given them. We actually gave them only half of that for which the minority contended. The minority contended for $44,000,000, and we gave them only about $23,000,000. The sum of $23,000,000 was taken off to meet a situation which existed in the committee under the hurried conditions under which we were operating, the administration driving us under whip and spur to get through with tax legislation before the 15th of March, 1926, threatening dire disaster and calamity to the Treasury unless we did so. We yielded $23,000,000. The Secretary of the Treasury knew and the minority knew this was the reason for so doing.

This year the Secretary of the Treasury and the minority unite in agreeing that they ought to be relieved to the extent of $25,000,000. What I stand here and oppose to-day is this second attempt to allow the men with incomes in excess of $70.000, and running up to $1,000,000, $5,000,000, and $10,000,

000 to grab two-fifths of that reduction and appropriate it to themselves. Nobody ever contended that they did not get their full share in the last bill. I think they were only asking 20 per cent. I do not think they asked a reduction below 20 per cent maximum. I will ask my brethren on the committee if they remember any request for less than that?

Mr. GEORGE. There was none.

Mr. WALSH of Massachusetts. I recall none.

Mr. SIMMONS. I was not in favor of giving them quite that much, but I will say here now what I have not said before, that I consented in the meeting of our minority members of the committee, to reduce them 20 per cent upon the condition that they would give the smaller incomes in the lower brackets a $44,000,000 reduction. I filed a statement here, representing the minority, saying that that 20 per cent was agreed to upon that condition. But in the committee, as I said, we were forced to give up nearly half of that reduction and we are now asking that they have it, and have it all and not only a part.

Here is a statement which I said I would read in confirmation of the statement I made that the larger taxpayers would get $0,600,000 of the $25,000,000 which it has been agreed to allow.

1 read it. It is in the handwriting of the Actuary of the Treasury:

The majority reduction of surtaxes on Individuals reduces the taxes on Individuals with net Incomes of over $70,000, $9,600,000, and $15,600,000 of net Incomes not In excess of $70,000. It provides that every taxpayer with a net income In excess of $100,000 be relieved of $470. The minority proposes to reduce the tai so as to confine it to the lower brackets.

Some question has been made about an inequity in the reductions allowed to incomes ranging between $70,000 and $100,000, particularly $80,000 and $90,000, and along there. Under our scheme they do not get any reduction this time. It is contended that they did not get enough last time. They did not get the same per cent last tinie, and they did not get the same per cent in 1924, but in the original tax law, from which we make our reductions and upon which our reductions are all based, they got a very decided advantage. The advantage which they then got they are not entitled to bring forward now. That must be counted against them in any reduction now.

In discussing the matter a few days ago in the Senate I said that they were given a lower rate than they were entitled to. That was disputed. I want to read a statement: 'Under the temporary act of 1917 the taxpayer with net income of $80,000 had a decided advantage over the net income down to $60,000 The Income-tax brackets of Hint act started at $20,000 and jumped $20,000.

Then follows a technical statement, which I will not undertake to read, showing that fact. In the 1917 act they were not taxed in proportion to the taxes imposed upon the other incomes. In the adjustment of the spread between the brackets this little spread between $70,000 and $100,000 got a great advantage. My impression is now that we had a jump from $80,000 to $100,000. They got an advantage by reason of that tremendous spread. We have discussed that many times here in the Senate. We have shown that we can raise or reduce taxes by simply increasing the spread or reducing the spread. That is the process by which both sides of the Chamber, when they go to write a surtax amendment, either increase or reduce rates. It is done by the spread.

In the original act, by reason of this tremendous spread, this class of taxpayers got a decided advantage in the rate of tax imposed upon them over the balance of the taxpayers, and that fact should be taken into consideration now in reducing taxes, as it has been taken into consideration more or less, but not fully, in other tax bills which we have considered. All of the 1017 brackets tend to make the tax rate on incomes of $80,000 comparatively low. A comparison of the 1926 act with the

1917 act Is very misleading. That is the comparison which the majority make and it is very misleading. The trouble with such comparisons of the total tax is that the 1917 normal tax rate was only 4 per cent, while that in 1926 is, after the first $8,000 taxable income, 5 per cent. If there is any inequality, it is in the normal tax rate, and it can be cured by reducing the 5 per cent normal tax rate to 3^ or 4 per cent. That is what I said a little while ago. We have to take these things into consideration. We have never reduced that normal tax. By reason of the fact that we have never reduced it, this class of taxpayers, which they say now are getting such a little reduction, have during all the yea re carried this great advantage which they got in the original rates fixed in the 1917 act.

The document which I have just read in part is a statement prepared by me, the figures of which have been verified by the representative of the Treasury Department, Mr. McCoy. I ask that it may be printed in ^the Recokd entire at this point as a part of my remarks.

The PRESIDING OFFICER (Mr. Coczeks in the chair). Without objection, it is so ordered.

The matter referred to is as follows:

The 1017 revenue act rates were a makeshift scheme hurriedly enacted to meet the great war emergency, fully Intended to be perfected by the 1918 act. It added to the surtax zones of the 1916 act new additional rates, and to this superimposed a further tax never applied lo Individuals before nor after 1917—the excess-profits tax. This surtax scheme began at a net income of $5,000 and with jumps of $2,500 for each 1 per cent of Increase In rate, until a rate of 5 per cent wag reached on net Income In excess of $15.000 and not in excess of $20,000. The next rone covers Income of $20.000. from $20,000 to $40.000, at the single rate of 8 per cent, a rate very evidently too heavy for the lower part of this $20,000 zone and too light for the upper part The 1918 act wisely broke this zone Into 10 zones of $2,000 each, with 10 several and increasing rates of tax. The next rate of tax in the 1917 act again applied to a zone of $20,000, a rate jumped from 8 per cent to 12 per cent. The 1918 act again broke this $20,000 zone Into 10 zones of $2,000 each, each with Its different rate of tax. The 1917 act again made Its next zone $20,000, running from $60,000 to $80,000, with the single rate of 17 per cent, a jump from 12 per cent. The 1918 act again broke this zone Into 10 smaller zones, each with Its separate rate of tax. Again the 1917 plan used a zone of $20,000, increasing the rate for the entire zone from 17 per cent to 22 per cent. The 1918 act again broke this zone into 10 smaller zones, each with its own rate of tax.

The minority Is criticized for making one jump of 4 per cent in its rates, while the 1917 act made many jumps of 4 per cent,- several of 5 per cent, and several of 6 per cent, yet they want us to change our rates on account of a comparison of the 1926 rates with the 1917 rates. The above explanation of the 1917 rates shows them so unfair and unreaBouable that it Is surprising that any person would wish to recall them. However, in the comparison so strongly emphasized and charted, the normal tax must be Included and the excess-profits tax eliminated ia order to arrive at the desired base of an argument. The excess-profits tax has been eliminated. If the majority wish to remedy the condition shown by their charts, why not change the normal tax rate. The 1917 normal rate was 4 per cent, while the normal tax on taxable Income In excess of the first $8,000 of such income Is 5 per cent. Of course, taxpayers with the highest Incomes care much more for the surtax rates than they do for the normal rates, as their Income ia subject to the surtax rates, but only part of this income is subject to the normal tai rates.

Mr. SIMMONS. Mr. President, I am tempted to enter inlo other lines of discussion in this connection, but necessity compels me to desist. I shall not at present make any further observations with respect to the question.

CALL OF THE BOLL

Mr. REED of Pennsylvania obtained the floor.

Mr. SMOOT. Mr. President, I suggest the absence of a quorum.

The PRESIDING OFFICER (Mr. Oddie in the chair). The clerk will call the roll.

The legislative clerk called the roll, and the following Senators answered to their names:

Ashurst Diilo Haydpn Xeely

Barkley Dcnceu Ili'flin Xorbock

Bayard 1)111 Howell Norria

Blngham Kdwards Johnson Nye

Black 1-Vss Jones Uildle

Blalne Fletcher Kondrick Overman

Borah (iporge Kcyes Phipps

Bratton (ierry King Hiu>

Brookhart Glllett I& Follcttc 1'iltman

Broussard Class I-orhor Kansdi-ll

Bruce 'Soft MrKrllar Heed. 1'a.

Capper liould McLean Itoliingon, Ind.

Carawav (Jreeue MrMiixter Saekott

Copeland Hale MoNnrv Schall

Couzens Harris MayfiVld Hliopnard

Curtis Harrison Metcalf Sliipsti-nd

Cutting Haweg Moses Shortrldge

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The VICE PRESIDENT. Eighty-six Senators having answered to their names, a quorum is present.

ALLOTMENTS ON SHOSHONE OB WIND RIVER RESERVATION, WYO.

The VICE PRESIDENT laid before the Senate the amendment of the House of Representatives to the bill (S. 3365) to authorize allotments to unallotted Indians on the Shoshone or Wind River Reservation. Wyo., which was, on page 2, line 3, to strike out the word "to" and insert "in common for the benefit of."

Mr. KENDRICK. I move that the Senate concur In the House amendment.

The motion was agreed to.

EVENING SESSION WEDNESDAY FOR THE CONSIDERATION OF THE CALENDAR

Mr. CURTIS. Mr. President. I ask unanimous consent for the adoption of the order which I send to the desk. I will state that I have spoken to tile Senator from Montana [Mr. Walsh! and several Senators on the other side, and it is agreeable to them.

The VICE PRESIDENT. The proposed unanimous-consent order will lie read.

The Chief Clerk read as follows:

Ordered (bu unanimous consent). That on Wednesday. May 16, 1928, at (lot later than 6 o'clock p. m., the Senate take a recess until 8 o'clock p. m.. and that at the evening session, which shall not continue Inter than 11 o'clock, the Senate proceed to the consideration of unobjected bills on the calendar.

Mr. WALSH of Massachusetts. I understand that order hns the approval of the Senator from Montana [Mr. Walsh], who represents the minority leader, and the Senator from Arkansas [Mr. Ron In Son]?

Mr. CURTIS. It has his approval.

Mr. DILL. If, after unobjected bills shall have been called, there is any time remaining

Mr. CURTIS. I have not asked for the consideration of anything except unobjected bills, thinking that I would later ask for another evening session for the consideration of objected bills.

Mr. DILL. Very well.

The VICE PRESIDENT. Without objection, the unanimousconsent agreement is entered into.

NAVAL APPROPRIATIONS CONFERENCE REPORT

Mr. HALE. I ask unanimous consent to take up the conference report on the naval appropriation, being House bill 12286.

Mr. REED of Pennsylvania. Will that result in any discussion?

Mr. HALE. I do not think so.

Mr. SMOOT. If it shall, I would not like to give consent for the consideration of the conference report.

Mr. HALE. If consideration of the conference report leads to debate, I shall withdraw it, but I do not think it will do so.

The VICE PRESIDENT. Is there objection to the consideration of the conference report?

Mr. REED of Pennsylvania. Mr. President, of course, I lose the floor by yielding in that fashion, but I will submit myself to the good graces of the Chair.

Mr. HALE. I move to take up the conference report.

Mr. SMOOT. I do not wish the Senator to move to take it up. Let him ask unanimous consent that it be taken up.

Mr. HALE. I ask unanimous consent that the conference report may be taken up. and I move its adoption.

The VICE PRESIDENT. Is there objection? The Chair hears none, and the conference report will be read.

The report was read, as follows:

The committee of conference on the disagreeing votes of the two Houses on the amendments of the Senate to the bill (II. R. 12286) making appropriations for the Navy Department and the naval service for the fiscal year ending June 30. 1929. and for other purposes, having met. after full and free conference have agreed to recommend and do recommend to their respective Houses as follows:

That the Senate rpcede from its amendments numbered 5, 6, 13, 14, 15, 16, 18. 22. 23. 32. 3T. 38. 39. 41. and 48.

That the House recede from its disagreement to the amendments of the Senate numbered 1. 2, 3, 4, 8, 26. 43, 44, 47, 51, and 56, and agree to the same.

Amendment numbered 7: That the House recede from Its disagreement to the amendment of the Senate numbered 7, and

agree to the same with an amendment as follows: In lieu of the sum proposed insert "$200,000"; and the Senate agree to the same.

Amendment numbered 9: That the House recede from its disagreement to the amendment of the Senate numbered 9, and agree to the same with an amendment as follows: In lieu of the sum proposed insert "$260,000"; and the Senate agree to the same.

Amendment numbered 10: That the House recede from Its disagreement to the amendment of the Senate numbered 10, and agree to the same with an amendment as follows: In lieu of the sum proposed insert "§260,000"; and the Senate agree to the same.

Amendment numbered 11: That the House recede from its disagreement to the amendment of the Senate numbered 11, and agree to the same witli an amendment as follows: In lieu of the sum proposed insert "$200,400"; and the Senate agree to the same.

Amendment numbered 12: That the House recede from its disagreement to the amendment of the Senate numbered 12, and agree to the same with an amendment as follows.: In lien of the sum proposed insert "$85,400"; and the Senate agree to the same.

Amendment numbered 17: That the House recede from its disagreement to the amendment of the Senate numbered 17, and agree to the same with an amendment as follows: In lieu of the sum proposed insert " $4,075,820 "; and the Senate agree to the same.

Amendment numbered 19: That the House recede from its disagreement to the amendment of the Senate numbered 19, and agree to the same with an amendment as follows: In lieu of the sum proposed Insert "$101,400"; and the Senate agree to the same.

Amendment numbered 20: That the House recede from its disagreement to the amendment of the Senate numbered 20, and agree to the same with an amendment as follows: In lieu of the sum proposed insert "$110,400"; and the Senate agree to the same.

Amendment numbered 21: That the House recede from its disagreement to the amendment, of the Senate numbered 21, and agree to the same with an amendment as follows: In lieu of the sum proposed insert "$68,518"; and the Senate agree to the same.

Amendment numbered 24: That the House recede from its disagreement to the amendment of the Senate numbered 24, and agree to the same with an amendment as follows: In lieu of the sum proposed insert "$19,421,700 "; and the Senate agree to the same.

Amendment numbered 25: That the House recede from Its disagreement to the amendment of the Senate numbered 25, and agree to the same witli an amendment as follows: In lieu of the sum proposed insert "$1,596,700 "; and the Senate agree to the same.

Amendment numbered 27: That the House recede from Its disagreement to the amendment of the Senate numbered 27, and agree to the same with an amendment as follows: In lieu of the sum proposed insert "$17,228,000 "; and the Senate agree to the same.

Amendment numbered 28: That the House recede from its disagreement to the amendment of the Senate numbered 28, and agree to the same with an amendment as follows: In lieu of the sum proposed insert "$1,828,000 "; and the Senate agree to the same.

Amendment numbered 29: That the House recede from its disagreement to the amendment of the Senate numbered 29, and agree to the same with an amendment as follows: In lieu of the sum proposed insert "$11,952,050"; and the Senate agree to the same.

Amendment numbered 30: That the House recede from its disagreement to the amendment of the Senate numbered 30, and agree to the same with an amendment as follows: In lieu of the sum proposed insert " )?960,8<X)" ; and the Senate agree to the same.

Amendment numbered 31: That the Honse recede from its disagreement to the amendment of the Senate numbered 31. and agree to the same with an amendment as follows: In lieu of the sum proposed insert "$66.539,350 "; and the Senate agree to the same.

Amendment numbered 33: That the House recede from its disagreement to the amendment of the Senate numbered 33. and agree to the same with an amendment as follows: In lieu of the sum proposed insert "$127,651,215"; and the Senate agree to the same.

Amendment numbered 34: That the House recede from its disagreement to the amendment of the Senate numbered 34. and agree to the same with an amendment as follows: In lieu of the

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