Such a wide expansion of existing taxes and the adoption of so many new forms of revenue precipitated, as might be expected, a number of problems with which the administrative officials had to cope. It was extremely fortunate, however, that the income tax was already in operation, that its administrative machinery was organized, and that it was capable of such a wide expansion. The difficulties which arose from the extensive use of this tax were therefore reduced to a minimum.

Much difficulty arose, however, in obtaining satisfactory results from the excess profits tax. Profits were to be calculated on the amount of invested capital, but the amount of invested capital was not always easy to determine. The administrative machinery became swamped with cases held under advisement, and millions of dollars of potential revenue were held up until proper adjustments could be made. The progressive levy worked injustice in the cases where the returns were divided among several

1 An attempt to go into the details of this law as it relates to incomes and excess profits would take us too far afield. A number of technical treatises have been published and are available to anyone wishing to make a more thorough study of these forms of taxes in the United States.

owners as against a comparatively close division - that is, it was not based upon the ability to pay. Difficulty arose, also, in attempting to get a semblance of justice between businesses of different forms of organization. In the revision, the tax was made to apply only to corporations, with the expectation that partnerships would be reached through the individual members. The arrangement, even yet, cannot be said to be satisfactory, and tax injustices between close competitors, with different forms of business organization, frequently occur. The fact that the tax was made one upon excess profits rather than upon profits arising from war, suggests the intention that it might continue as a part of the peace-time taxes. The fact that it retained such an important place in the important post-war Revenue Act also points to the same conclusion. Much agitation has arisen for its repeal, however, and it may be given up in the not distant future.

A nation could not hope to make such an extensive use of taxes without some friction and dissatisfaction. On the whole, the taxes fulfilled what was expected of them. It is perhaps true that more energy was exerted in attempting to find fields for new and increased taxes than was exerted in establishing the machinery to take care of the taxes as they were levied. A large part of the dissatisfaction which was voiced arose from this cause. There appeared little unwillingness to bear tax burdens, but individuals did object to bearing heavy burdens when others equally able to bear burdens were escaping. The sooner the administrative machinery can be so perfected as to be able to iron out these inequalities, the more successfully, extensively, and peacefully can taxes be used to meet the burdens of reconstruction.