TfSi Vpr!lipnrw&xr
The Commoner
VOL. 21, NO. 9
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Congressman Oldfield Scores Repub
lican Revenue Measure
(Bolow are extracts taken from the speech
A ilon. Win. A. Oldfield, of Arkansas, in the
House of Representatives, August 18, 1921.
The House In Committee of the Whole on the
state of the union had under consideration the,
bill, H. II. 8245 to reduce and equalize taxa
tion, to amend and simplify the revenue acts
of 1018, and for other purposes. Ed.)
. Now, gentlemen, a great deal has been said
about the rovehue act of 1918. The press of
the country said that Mr. Kitchen, who was the
chairman of the Ways and Means Committee
at that time, was placing the burden of taxa
tion upon the north and upon the east, "that
tho -south was in the saddle, and many Republi
can members of congress made that statement
on this floor, that we were burdening the north
and the east and letting off the south in the
matter of taxation for the purpose of carrying
on the war.
In that connection I think I ought to read to
you a statomdnt which I clipped from the Phila
delphia Public Ledger on the 2Sth day of last
month, and I will read it to you:
"When Claude Kitchin, of Scotland Neck, N.
C, was, as chairman of the Ways and Means
Committee, framing the tax bills under which
the government raised money for the war the
charge was freely made by many Republican
speakers and newspapers th -t the south v as
seeking to place the burden of' taxation upon
the north because the latter had most of the
money. Of course, this was in a measure
true, because taxes must be laid where there
is monjoy. . Where everybody is poverty strick
en Mttle revenue can be raised, no matter how
heavy the taxation is. That the Democrats
played no favorites, sectionally speaking, is
shown, however, by the income tax returns for
1919. The average amount of incomo tax re
turned from North Carol'na, .for instance, was
$269; as against $237 for Pennsylvania. Louisi
ana paid $245 against Illinois's $235 and Arkan
sas $"G as against $118 for Iowa, $103 for
Indiana, $125 for Colorado, etc. The tax re
turns show that there was no sectionalism.
The north paid the most I . jausc the money was
here, but the individual burden was no greater
than it was in the south."
s
PROVISION THAT RELIEVES RICH
SPECULATORS '
Now, gentlemen, in this bill there are a great
many jokers. I wan.t to confine myself to this
bill in this deba'te.
I say to you today that' on page 11, section
207, you 'have a provision in here that will re
lieve a lot of rich speculators of the country
of just taxes. I want to read it to you.
'.'(b) In the case of any taxpayer (other than
a corporation) whose ordinary net income and
capital net gain together exceed $40,000, there
shall be levied, collected, and paid, in lieu of
the taxes imposed by sections -210 and 211 of
this title, a tax determined as follows:
"A partial tax shall first be computed -upqn
the basis of the ordinary net income at the
rates and in the manner provided in sections
210 and 211, and the total tax shall be this
amount plus 15 per centum of the capital net
gain, etc."
In other words, they do not collect a tax
on the capital net gain like they tax other gains
in business. For example, under that section an
individual might buy an apartment house in
Washington in 1913, for which he paid $100
000. If that apartment house sells in 1921 for
a million dollars he would have a net gain of
$900,000, and yet under that provision he
would have the right to separate that gain from
all other gains, and his $900,000 would be
taxed only 15 per cent. Why do you not tax
the $900,0.00 profit at the rate of 32 per cent
as you do other individuals who have an income
of as much as $66,000? I think the court will
sustain that interpretation. I remember quite
well that a very bright lawyer came before
the Ways and Means Committee and urged that
provision on the theory that the people dealin"
in real estate buying real estate r.nd buildings
for investment would not sell them because
they would have to pay so much to the govern
ment. How much do you lose iu revenue under
this, provision? Under that state of facts under
4he, present law the man would have to nav an
proximately $380,000 in Jaxes,.and under this
.provision he would have to pay only $135 000
We say it is not fair to the rest of the people
when you relieve rich speculators of taxation
in that sort of fashion. You can not explain it
to the American people. It seems that Repub
licans are never happier than when they are
relieving rich individuals and rich corporations
of taxes.
MORE THAN DOUBLE THE LMIT ON TAX
EXEMPT SECURITIES
You say in the report that you want to re
duce the surtaxes and repeal the excess-profits
taxes, especially the surtaxes. And why? Be
cause you say it forces the' rich and wealth of
tho country to place their money in tax-exempt
securities.
That is the excuse you give, and we hear the
gentleman from Ohio (Mr. Fess) and the gentle
man from New York (Mr. Mills) crying out in
favor of a constitutional amendment prohibit
ing the issuing by the states and cities and coun
ties of the country of tax-exempt securities, and
they say that if you will do that the rich would
not put' their money into that kind of security
but would put it in productive industry. You
say you want no more tax-exempt securities for
the reason that the rich of the country put their
money in those securities instead ofin produc
tive industry. Under the present law a man
can buy as much as $160,000 of government
bonds, if he will purchase them properly and
according to law, and they are exempt from
taxation, and in this bill you increase that
amount to $335,000. Why do you do that? In
one breath you say you do not want any more
tax-exempt securities because those tax-exempt
securities are causing the rich of the country
to place their money in them instead of in
productive industries, and in the ;next breath
in this very bill you violate the very excuse
you lay down as an excuse for the legislation
you carry in the bill, because on page 82 of the
bill we find the following provision:
"Sec. 1010. The various acts authorizing the
issues of Liberty bonds are amended .and sup
lemented as follows:
"(a) On and after January 1, 1921, 4 per
cent and 4 per cent Liberty bonds shall be
exempt from graduated additional income taxes,
commonly known as surtaxes, and excess-profits
and war-profits taxes, now or hereafter imposed
by the United States upon the income or profits
of individuals, partnerships, corporations, or
associations, in respect to the Interest on aggre
gate principal amounts thereof as follows:
"Until the expiration of two years after the
date of the termination of the war between the
United States and the German government as
fixed by proclamation of the President, on $125,
000 aggregate principal amount;, and for three
years more on $50,000 aggregate principal
amount." l
You do not want any more tax-exempt secur
iti.es, yet you double, more than double, the tax
exempt securities than one can buy today under
the present law How are you going to explain
that? -I hope Mr. Longworth or Mr. Treadwav
or some other gentleman of the Ways and
Means Committee will explain why it is that
in onOreath you do not want tax-exempt secur
ed 'laIi ? thea n?Xt you increase the amount
of exemption. So long as you play falsely with
the people and try to mislead then! on these
tax-exempt securities you could not in a thou
sand years get them to adopt a constitutional
.amendment such as Mr. Mills proposes, and they
ought not to do it if you are going to treat
them in that sort of fashion. l
REPUBLICAN PARTY RUNNING TRUE TO
FORM IN PROPOSED LEGISLATION
The Republican party in this proposed leg
ation is running true to form. You are try??
to relieve the wealthy of the country- you 5
trying to relieve the great multim l'lfonairel
and the ncome of the big corporations and pi acl
the burden somewhere else. You say that In,
lose $450 000,000 because of repeals : the ex
cess-profits tax. ' MUb ine ex"
You admit that, you lose $450,000 000 wi,on
$1,33,750,000 by your corporatism flat tax of
12 per cent. The. trouble Is tnat you rSievl
the big, corporations, the profiteering rmfnnl
ions ; of .$45.0,00Q,0O0,and placl ?VrdcK
the little corporations, as' I shall, bSbl "tSShow
you before I finish. But you are running tr
to form. , i b irue
There is nothing unusual about this nronnc
legislation, coming from the Republicans 1
1862 ybu placed an income tax on the tair
bobks of 3 per cent, 'I -think it was. in S
you increased that to '5 per cent, and in nil
to 10 per cent. Why? To get money to cam
on the Civil war, in order to win the war if iJ,
please. In 1870 what did you do? You repeal!!
the income tax. law and placed the burton
through consumption and other taxes on th
people generally, thereby relieving the rich of
that time and placing the burden of paying for
that war on the masses of the people of Amer
ica. (Applause on Democratic side.) That is
what you are doing today. There can bo no
question about it, not the slightest doubt 1
dare say that half of the Republicans of the
House will agree with the statement that I am
aDoiu 10 maite, ueeause 1 nave taiKeu with some
of them and I know they will. In 1918 the rev
enue 0 contained a provision taxing stock divi
dends o- corporations, and those stock dividends
must be worth' something to these corporations
otherwise they would not issue them. In 1920 1
believe it was, on March 8, the Supreme Court
of the United States, by a 5 to 4 decision, de
clared the stock-dividend provision of the law
unconstitutional. The court might change. In
the legal tender cases the congress of the United
States sent the cases back to the Supreme Court,
'and the Supreme Court changed. Why don't
you do that? In this bill you could get $300,
000,000 by taxing a privilege, if you please
taxing the privilege of these corporations to is
sue stock dividends. Let me show you how
ridiculous you will make yourselves in pass
ing, this sort of legislation, I can not for the
life of me understand how any Republican can
give a satisfactory excuse for tjie passage of this
legislation. I think it iq he.most vicious bill
that I have eyer seen.in myterm, of service here.
I can not understand how any honest man can
support this legislation, regardless of politics.
Let us look at this. 1 haye here a statement
, prepared for me by the, Treasury Department.
There have been a billion and a half , dollars'
.vorth o.f stock dividend jssyled since that de
cision. A tax of 2p $erC)cenf-on the privilege of
issuing those stock dividends would, bring in
$300,00,0,000 -to the Trea,suig . and .;, would hot
hurt the rich. ' '.
These big corporations issuing these- stock
dividends knew when they issued them that the
Republican party was liable to come into power,
and they knew you would, reduce the surtax,
that you would reduce the excess-profits tax,
you would reduce the tax on the rich, if you
please, and then after that they can sell those
dividends and pay the lower taxe's, if you please.
I shall not go into that at this time, but I
want 'to say this: I believe they ought to pay
for this privilege. I think they ought to pay
for it, and I believe the people of America will
say so. Take the Crane Co., which issued 200
per cent stock dividends-; take the North Texas
Oil Co., which issued a 500 per cent stock divi
dend; take the Franklin Yarn Co., which issued
a 2,000 per-cent stock dividend. The Standard
Oil Cq., of Nebraska just a few days ago issued
"a 200 per cent stock dividend, Gentlemen, why
do you not tax them? I will tell you why you do
not- tax them. You do not tax them because
the tax would fall upon those who are most able
to bear the burden of taxation to run this gov-
, ernment and pay the war debt.
. ' .
EXCESS-PROFITS TAX DEFENDED AS MOST
JUST TAX EVER WRITTEN
Now, let me discuss for a little while the
question of the excess-profits tax, I want to say
at the outset that there was -never a more just
tax written on the statute books of America
than the excess-profits tax. It is Simply nothing
more or less than a graduated income tax on
profits; excess profits, if you please. I have
some maps here, which I shall use at this point.
I am greatly indebted to Mr. Howard Clinton
Beck, a certified public accountant from the state
- of Michigan, who has prepared.. the figures here,
which show you without any question, gentle
men, that upon the rich you decrease the taxes,
and upon the poor corporations, the weak cor
porations, you increase the taxes. Do you agree
with me? There qan be no- question about it.
Lot me show .you., It is so outrageous I do not
see how any man. can afford to repeal the excess
jofits tax and substitute the flat corporation tax
of 12 per cent, as proposed in this bill. This
!?. ? " blue-ftsures (indicating), and it shows
-nat.the corporation pays, more than under the
present law. ,'Take,a cprporatlphth $5,000
invested capital, if it ma:ej3- Wper cent on
Vtw.
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