members of any family composed of husband and wife and one or more minor children. On or before March 1 of each year each taxable person was required to file with the collector of internal revenue of the district a sworn statement of gross and net income for the preceding calendar year. All persons, corporations, and associations of any sort having in the espacity of employer, agent, trustee, or otherwise the control, receipt, custody, or payment of salaries, rent, interest or other fixed or determinable annual gains, profits, or income of another individual, were required to # with the collector of internal revenue of the district a statement of the portion so controlled of the income et each such individual; and when the income so controlled exovded $4.000 for any taxable year, echer than dividends on capital stock, the person, corporation, or association was mind to deduct therefrom and pay to the authorized agent of the deferment the amount of the nor In all cases in which the So far of an individual should de Das doducted and paid at the *ma de dill required that an allidaxt clawing the benefit of the exH1176108-02 SLJ00 and of the author Það Holbetions must be filed by the smal with the person or assoWed to withhold and pay The aux at kast 30 days in advance A THE AN AR which the return is due, The SI VARsed on individual inNK $221 as introduced in Cap was estimated to affect EVN persons and to yield $70, a rice, tobacco, and sugar entitled to free entry into the United States. It abolished the maximum and minimum provisions of the Payne-Aldrich Act and empowered the President "to negotiate trade agreements with foreign nations, wherein mutual concessions are made looking toward freer trade relations and further reciprocal expansion of trade and commerce," subject to the ratification of Congress by a majority vote in each house. To protect American producers against exportation of articles from foreign countries to the United States at less than the fair market value of the same articles when sold for home consumption the bill contained "dumping clause," providing for a special additional dumping duty, not to exceed 15 per cent. ad valorem, equal to the difference between the export price and the selling price in the home market. The bill also imposed an additional countervailing duty on articles subject directly or indirectly to bounty in the countries of production equal to the net amount of the grant. To encourage domestic shipbuilding the bill removed the limitations on the free importation of foreign shipbuilding material, and provided for a discount of five per cent, from the duties imposed on merchandise imported in vessels of American registry. As a safeguard against the maintenance of duties at rates too high to produce reasonable competition, the President was instructed each year to ascertain and to report to Congress the articles of merchandise imported to an amount less than five per cent, of the estimated domesThe reparation Tax-The section tie consumption. The penalties for At the Andreaat 11. imposing a tax attempted evasion of the customs law one per zest or the net incomes were made more severe, and to faciliamonapons and joirtstook com- tate the detection of undervaluation exemption of and fraud, the Secretary of the Treasury was empowered to exclude from entry the merchandise of foreign exporters or manufacturers refusing to submit their books to the examina1 on of duly accredited investigating #doers of the United States. Teo The The Fill in the Horse - The UnderC$ wood I was reported to the House on April 22, and after five days of general debate amederation of the by the oorporation tax : | འ 1:|:ཀྱི ག སུ ཎོ se the vote of 281 to 139. Of the 433 members of the House all but 12 were present and only one member, Copley of Illinois, failed to record his vote. The majority comprised 274 Democrats, two Republicans (Cary and Stafford, both of Wisconsin), four Progressives (Kelly and Rupley of Pennsylvania, Nolan of California, and Bryan of Washington), and one Independent (Kent of California). Against the bill were recorded 120 Republicans, 14 Progressives, and five Democrats (Broussard, Dupré, Morgan, and Lazaro, all of Louisiana, and Smith of New York). on the 29th. The Democrats were | and passed the Underwood bill by a solidly united in support of the bill; the opposition of the minority, on the other hand, was discordant and ineffective. During the first two days of debate in committee the Republicans and Progressives offered many amendments to the chemical, earthenware, and metal schedules; the Democrats rejected by an overwhelming vote every proposal of the minority and permitted only a few minor alterations in rates and phraseology recommended by members of the Committee on Ways and Means. Thenceforth the Republicans and Progressives abandoned hope of amending the bill and offered only perfunctory opposition to the few important provisions which had been the subject of controversy in the Democratic caucus. An amendment to strike out the clause admitting sugar to the free list after May 1, 1916, proposed by Mr. Mann, was defeated on May 1 by a vote of 186 to 88. On the 2d Mr. Gardner (Mass.) and Mr. Green (Ia.) urged a substitute for the cotton schedule on which the Republicans did not challenge a division. The wool schedule, reached the following day, was more vigorously opposed, but the Republicans were able to secure only 74 votes to 193 for a substitute offered by Mr. Payne (N. Y.) which proposed a rate of 15 per cent. on raw wool and comparative rates based on a duty of 18 cents a pound on the wool content of various stages of manufactured wool. In the tariff schedules of the bill the few unimportant changes admitted were made on the recommendation of the Committee on Ways and Means. The same deference to the wishes of the Committee was paid in the debate on the income-tax section on May 6. Republicans, Progressives, and Democrats united in a demand for a reduction of the limit of exemption on individual incomes, but the majority adopted only a few minor changes proposed by Mr. Hull (Tenn.), the author of the law. The Bill in the Senate Committee on Finance.-While the Underwood bill was pending in the House, the Senate Committee on Finance rejected by a strict party vote on April 22 a proposal to conduct public hearings on the measure as submitted to the Senate. The stubborn fight on this question which began on the introduction of the bill in the Senate on May 9 was an earnest of the difficulties of the Democratic leaders during the next four months. Several Democratic Senators from the sugarand wool-growing states favored a motion introduced by Senator Penrose (Pa.) to refer the bill to the Finance Committee with instructions to hold public hearings, and the Senate debated the question for a week before the Democratic leaders won over enough of the recalcitrants safely to challenge a vote. The proposal was rejected on May 16 by a vote of 41 to 36, the two Louisiana Senators, Ransdell and Thornton, voting with the Republicans, and Senator Poindexter (Wash.), the Progressive, with the Democrats. Although the Committee on Finance declined to hold public hearings on the tariff schedules, the three subcommittees of the Democratic majority among which the different schedules and sections of the bill were distributed for detailed consideration were occupied during nearly On May 8 the House rejected mo- the whole of May with private heartions by Mr. Payne and Mr. Murdock ings granted to protesting manufacto recommit the bill to the Committee turers and producers. The sub-comon Ways and Means with instructions mittees began their revision of the to report a provision for the creation schedules on May 28, and on June 20 of a non-partisan tariff commission, the Finance Committee reported the bill to the Senate Democratic caucus with over 300 changes in rates and important amendments in the income-tax and administrative sections. Discussion of the bill in caucus ended on July 7, and on the 11th the Finance Committee approved the further changes recommended by the caucus and reported the bill to the Senate. The formal report (Senate Rept. 80) was filed five days later. increased to $928,911,675, but an increase in the value of free imports to $147,367,238 would reduce the customs receipts to $247,780,723, an average rate of duty of 26.67 per cent. The Finance Committee proposed to make up the revenue sacrificed by reductions in duties by the restored tax on wine spirits, estimated to yield about $7,000,000, an extension of the income tax to individual incomes between In the tariff schedules the changes $3,000 and $4,000 per year, and a in the bill as passed by the House tax on contracts for the future dewere for the most part in the direc- livery of cotton, estimated to yield tion of lower duties. The wood and about $5,000,000 per year. The retobacco schedules were retained in- duction of the limit of exemption on tact; all the others were subjected to individual incomes from $4,000 to more or less extensive revision. Over $3,000 affected only single persons. 40 items were transferred from the The amendment adopted by the Fidutiable to the free list, the most im- nance Committee on June 19 separated portant being alizarin and deriva- the incomes of husband and wife; tives; bagging; wool blankets; text allowed on account of marriage an books; cast-iron pipe; sugar machin- additional exemption of $1,000 to ery; cement; eggs; flax, tow, and either husband or wife when living hemp; fur skins; explosives; indigo together, but not to both; and alcolors; pig, wrought, and scrap iron, lowed also an additional exemption slabs, blooms, etc., and ferroman- of $500 for one minor child and up ganese; asphalt and bitumen; steel to $1,000 for minor children living ingots; cattle, sheep, and other food animals; and wheat (subject to countervailing duty). On the other hand, a duty of one-tenth of a cent per pound was placed on bananas, oatmeal and rolled oats were restored to the dutiable list, and potatoes were made subject to a countervailing duty. The few increases in rates were chiefly in the chemical, cotton, and silk schedules; on a number of items in the silk schedule, equivalent specific duties were substituted for ad valorem rates. The spirit schedule repealed the exemption from the excise tax granted by the McKinley Tariff of 1890 to wine spirits or grape brandy used in the fortification of sweet wines, and imposed a tax of $1.10 per gallon. The Finance Committee submitted with their report new calculations of imports and revenue under the rates proposed in the House bill. They estimated the value of total imports under the House bill at $925,286,426, the value of free imports at $103,000,327, and the customs receipts at $257,583,768, an average rate of duty of 27.84 per cent. Under the bill as reported to the Senate, they estimated, the value of total imports would be with and dependent upon either parent. To obviate constitutional objections to the assessment of the tax on incomes accrued before the proclamation of the Sixteenth Amendment, it was provided that the tax should be assessed for the last ten months of 1913 and annually thereafter. To the classes of corporations exempted from taxation were added business leagues, chambers of commerce, boards of trade, and civic leagues organized exclusively for the promotion of social welfare. The Finance Committee rejected as too drastic many of the new administrative provisions of the House bill. They eliminated the dumping clause and the clause giving the Secretary of the Treasury the right to determine without appeal the existence or nonexistence of a foreign market; and vetoed the proposal to empower the Secretary of the Treasury to exclude the goods of foreign exporters or manufacturers refusing to open their books to the examination of his agents. The proposed discount of five per cent. from the duties levied on goods imported in American bottoms was rejected as in contravention of a score of commercial treaties. The chief administrative provision added to the revision of the bill was the by the Committee empowered the amendment imposing a stamp tax on President to impose specified retalia- contracts for the future delivery of tory rates against countries discriminating against the exports of the United States or refusing to enter into reciprocal trade relations on certain specified articles, the most important of which were fish, wheat, flour, coffee, tea, earthenware, wines, and malt liquors, silk dress goods, leather gloves, jewelry, sugar, and molasses. cotton. This clause, proposed by Senator Clarke (Ark.) and adopted by the caucus with certain modifications by the Finance Committee on July 1, was designed to eliminate speculation in cotton. It provided that sales or agreements to sell or purchase cotton for future delivery in conformity with the rules of cotton exchanges, boards of trade, or similar associations should be subject to a tax of one-tenth of a cent per pound, to be paid by the affixing of stamps to every contract, the amount of the tax to be refunded on actual delivery of the cotton covered by the transaction. The tax was made applicable also to orders transmitted from the United States to foreign Mr. McReynolds' Excise Tax on Tobacco.-The caucus rejected on July 2 another tax plan, proposed by Senator Hitchcock (Neb.) on the inspiration of Attorney-General McReynolds, designed to protect independent tobacco manufacturers against the unfair competition alleged against the concerns formerly combined in the American Tobacco Co. Mr. McReynolds has maintained since the dissolution of the Tobacco Trust that the plan approved by the U. S. Circuit Court in New York was a subterfuge and left conditions in the tobacco industry practically unchanged. He urged the insertion of a provision in the tariff bill levying a special graduated excise tax on the production of tobacco, cigars, cigarettes, and snuff by any one concern above certain specified limits, the plan proposed affecting about seven large companies. The Senate Democratic Caucus.The tariff bill approved by the caucus of the Senate Democrats was fundamentally identical in policy with the House measure. But the bill did not have in all respects in the Senate the same invincible party backing as in the House. The influence the Administration exercised successfully on most of the Democratic Senators countries. failed to subdue the opposition of a small minority to the President's freesugar and free-wool provisions. Five Senators voted against both these provisions on June 25, Newlands (Nev.), Ransdell (La.), Thornton (La.), Shafroth (Col.), and Walsh (Mont.); besides, Senator Hitchcock (Neb.) voted against free sugar, and Senator Chamberlain (Ore.) against free wool. Against an opposition sufficiently large to overturn the small Democratic majority in the Senate the party leaders forebore to attempt to pass a resolution binding the Democratic Senators absolutely to support the bill. Instead, the final resolution adopted on July 7 declared the bill to be a party measure and "urged" the undivided support of the party in the Senate. The resolution was supported by 45 Senators; Senator Newlands cast a single dissenting vote, and Senators Thornton, Ransdell, and Shafroth refrained from voting. Senators Newlands and Shafroth declared that they would vote for the bill on final passage but declined to be bound by caucus action. The two absentees, Senators Hitchcock and Culberson (Tex.), were counted with the majority. The bill was reported to the Senate, therefore, with a majority of only two pledged to its support. The Bill in the Senate.-After three days of general debate, the Senate began consideration of the bill in committee on July 23. During the first fortnight of debate the Democratic leaders avoided a test of their uncertain party support by passing over for subsequent consideration the controversial items in the tariff schedules. The many votes forced by the Republicans, however, showed that the minority, through an irreconThe Tax on Cotton Futures.-The cilable. ion between the "standprincipal contribution of the caucus pate ive elements, were power to contro. unable to take advantage of the pre- lette proposed an amendment levying carious situation of the Democratic a surtax of one per cent. on incomes majority. Half a dozen progressive between $10,000 and $20,000; of oneRepublicans voted regularly with the half of one per cent. additional on Democrats in favor of tariff reduc- each $10,000 up to $50,000; of one tions and gave the Democrats a ma- per cent. additional on each $10,000 jority of at least ten on nearly all between $50,000 to $100,000; and of divisions. Accordingly, in the middle ten per cent. on incomes above $100,of August, although the nominal 000. Twelve Republicans joined the Democratic majority was reduced to Democrats to defeat this amendment five by the death of Senator Joseph by a vote of 43 to 17; it was supF. Johnston of Alabama on Aug. 8, ported, however, by Senator VardaSenator Simmons began to hasten the man (Miss.), and the Democratic progress of the bill. The Finance leaders were able to prevent further Committee amendment placing cattle defections only by an agreement to on the free list was sustained on submit the question of increasing the Aug. 12 by a vote of 38 to 31, and rates on large incomes to a party two days later free wheat was ap- conference. A Democratic caucus on proved by 37 to 32. On the 16th the Sept. 5 adopted an amendment imamendment imposing a duty on posing a normal tax of one per cent. bananas was passed by a vote of 31 on incomes between $3,000 and $20,to 28. In the debate on the sugar 000 and surtaxes as follows: one per schedule on Aug. 19 all the Demo- cent. between $20,000 and $50,000; crats except the Louisiana Senators, two per cent. between $50,000 and Ransdell and Thornton, who voted $75,000; three per cent. between $75,with the Republicans on nearly every 000 and $100,000; four per cent. beimportant division in the Senate, sup- tween $100,000 and $250,000; five per ported the Administration programme cent. between $250,000 and $500,000; for free sugar in 1916. An amend and six per cent. above $500,000. ment offered by Mr. Bristow (Kans.) The Senate approved this amendment, for a gradual reduction of duty from with the other changes in the House the existing rate of $1.90 per hun- bill proposed by the Finance Comdredweight, which would have mittee on Sept. 6. amounted in six years to 62 cents, was defeated by 39 to 34. The Senate adopted, however, a clause proposed by Mr. Bristow to abolish immediately the Dutch standard color test for sugar, which was held to give results strongly in favor of the refiners. The wool schedule was disposed of on Aug. 23, the Republicans reserving their substitute proposals until the debate on third reading; and on the 25th the Senate completed the revision of the tariff schedules by the approval of the free list. Senator Hitchcock returned to the attack on trusts on Aug. 27 with an amendment to the corporation tax law extending to all corporations the principles of the scheme for the taxation of large tobacco companies rejected by the Democratic caucus. It proposed a tax of five per cent., or five times the normal corporation tax, on the income of any concern producing or selling from one-quarter to onethird of the total amount of any given line of production, ten per cent. on concerns producing or selling from one-third to one-half of the total, and 20 per cent. on concerns producing or selling over one-half of the total, provided the concern had a total capital of over $50,000,000 and an annual product valued at more than $10,000,000. The Senate rejected the proposal on the 29th by a vote of 41 to 31. The opening of debate on the income-tax section revealed the first symptoms of serious insurgency in the ranks of the majority. The arguments of the progressive Republicans on a number of amendments increasing the surtax on large incomes, rejected by the aid of regular Republican votes on Aug. 26 and 27, created a strong sentiment for further revi- With the approval of the Comsion of the bill along these lines mittee amendments for the taxation among the more progresses Demo- of cotton futures and wine spirits on crats. On the 28th imports woufol- Sept. 6, the bill was reported from |