166 



CONGRESS. (THE \VAR REVENUE LAW.) 



Means have addressed themselves to the various 

 methods that have l.ceti Mw^cd for tlu' raising 

 of additional revenue. They naturally have had 

 o the legislation of the period of the civil 

 war. when so large an amount had to be raised, and 

 they have found, after a careful consideration of 

 the iju-tion <>f taxation, that on the whole it is 

 IK-HIT at tin- present time, and we trust that that 

 may IHJ all that may IK- necessary, that about $100,- 

 000,0, K additional "revenue should be raised, and 

 that entirely through internal-revenue legislation. 

 Hence the war revenue hill which has been reported 

 provides for internal-revenue taxes exclusively. 



These taxes have been selected, first, because 

 we have the machinery for the collection of them 

 now. and they can be collected with but slight 

 addition* to the force and with but slight increase 

 of expense. We have selected them also because 

 they were a source of revenue successfully seized 

 upon during the civil war, and because they are 

 - either upon articles of voluntary consump- 

 tion or u|*m objects where the tax will be paid by 

 tho>e who are ordinarily able to pay them ; and we 

 have refrained from putting a tax in a direction 

 where it would be purely upon consumption unless 

 the consumption is of an article of voluntary con- 

 sumption, so that the consumer may regulate his 

 own tax. following what is the accepted rule of 

 taxation in all countries, with a view of imposing 

 the least burden and disturbing the business of th.3 

 country as little as possible. 



Now I want to point out the direction in which 

 we have proceeded. First, we have doubled the 

 tax on fermented liquors, giving a rebate of 5 per 

 cent., the estimated proportion of packages that 

 are spoiled and which the owner does not receive 

 compensation for. This increase of tax will yield 

 about $33,000,000. 



" The rebate prior to the act of 1897 was 7| per 

 cent. We have reduced it to 5 per cent., for the 

 reason that the evidence presented satisfies us that 

 the proportion of spoiled packages is less than 

 formerly, on account of improved processes of man- 

 ufacture and improved means of cold storage ; and 

 we have made the amount 5 per cent. This in- 

 crease of tax on beer, as I have said, will give an 

 additional revenue of about $33,000,000. 



" We have also doubled the tax on tobacco, now 

 cents per pound, raising it to 12 cents per pound, 

 which will give an additional revenue of $15,000,- 

 (i i'i : and we have increased the tax on cigars and 

 cigarettes $1 per thousand on each kind, giving an 

 additional revenue of about $5,000,000. The act 

 of 1807 increased the tax on cigars without increas- 

 ing the tax on tobacco, so that by this arrangement 

 the proportion between tobacco and cigars has 

 been made almost exactly the same as it was before 

 1897. 



We have provided also that the increased tax 

 .-hall apply to stocks of tobacco and cigars on hand. 

 A* then- has been some objection to this, I shall 

 briefly state the reasons that controlled the com- 

 mittee in its action. Internal taxes applied to 

 articles increase the cost and necessarily the selling 

 price of the articles to the extent of I he'tax. When, 

 therefore, an additional tax of $1 per thousand is 

 placed on cigars and of 6 cents per pound on the 

 tobacco, the increased cost of the article in the 

 market is inevitably placed on the consumer. 



"In view of the fact that the (Jovernment pro- 

 pOMS to increase the tax for the purpose of securing 

 nue, and the consumer must pay this increased 

 price to the owner of the stock, this increase be- 

 longs to the Treasury, and not to the accidental 

 holder of large stocks, who would gather that 

 amount into his own pocket unle>s this provision 

 were made. The committee with great unanimity 



in this matter, feeling that justice justice to the 

 Government, justice to all interests, justice to the 

 different manufacturers of tobacco and cigars, some 

 of whom have stocks and some of whom have not 

 stocks required it, determined that the increased 

 tax should apply to stocks on hand as well as goods 

 to be made hereafter. 



" This view is strengthened by the fact that when 

 the tax has been reduced by the Government, the 

 Government has refunded to the holder of stocks 

 the amount of the reduction of the tax and given 

 him the benefit, because the price would be reduced 

 to the extent of the tax; and what was just for the 

 owner of stocks when the tax was reduced is now 

 just to the Government when the tax is to be in- 

 creased. 



" We have also restored a special tax of $4.80 per 

 annum upon dealers in tobacco and cigars. Many 

 of you will probably remember that the tax on 

 these special dealers was abolished ki 1890. It had 

 continued from the war period and subsequently up 

 to 1890, with frequent reductions. It will produce 

 about $5,000,000 ; and the belief is that a small tux 

 of this kind will not only enable the officers of the 

 Internal Revenue Bureau to better enforce the tux 

 on tobacco and cigars, but will be so small as to not 

 be felt by the individual dealer, and will yield a 

 considerable revenue to the Government. Thus 

 about $25,000,000 additional revenue will be secured 

 from tobacco, cigars, cigarettes, and dealers. 



" We have restored the adhesive-stamp tax which 

 existed from 1864 to 1872. placing it in large part 

 on the basis of the law as it stood in 1866, with 

 certain additions, including the tax on transfers of 

 stock, etc., which was placed by the Senate as an 

 amendment in the tariff bill of 1897 and wjis 

 omitted in conference. This will produce a revenue 

 of about $30.000,000; that is, so far as it can be 

 estimated. The details of that stamp tax in large 

 part are the same as they were under the act of 

 1866, which can be explained better in the debate 

 under the five-minute rule. 



" We selected several articles of voluntary con- 

 sumption, on which we have placed a stamp tax. not 

 included in the act of 1866. They are chewing 

 gum, mineral waters, beverages of all kinds not 

 otherwise taxed under the internal-revenue laws, 

 and wines. I should also add that we have restored 

 the tax on proprietary medicines substantially as it 

 existed in the act of 1866. It is estimated that the 

 adhesive-stamp tax on instruments, bonds, etc., will 

 reach, as I have said, $30,000.000. 



" How much will be raised on the four articles 

 added it has not been found possible to estimate 

 with any precision. It is not estimated by any ono 

 nt less than $5,000,000, and by many it is estimated 

 at very much more. The committee felt that with- 

 out precise data on which to make a statement they 

 would leave the matter nnestimated, being certain. 

 however, that these articles will be large revenue 

 producers. 



" We have increased the tonnage tax on vessels 

 in the foreign trade only. There is no tonnage t;i\ 

 now on vessels in the coastwise trade, and none is 

 placed on them by this bill. We have restored 

 these taxes, not however to the amount of the war 

 period, on which there will be an increased revenue, 

 of about two and one half million dollars. The 

 reasons for this increased tax lie in these facts. 



" Nine tenths of the vessels in this trade an 

 foreign, and during the war now before us, I regret 

 to say, it is probable that nearly all will be foreign 

 vessels. The tonnage tax we propose to apply t< 

 these vessels in the foreign trade is not much largei 

 than that imposed by the leading European power- 

 on vessels engaged in foreign trade, precisely the 

 same as France imposes, and slightly larger than 



