Mr. LAWRENCE, ofOhio. I move toamend the amendment by inserting “ 5 cents.” The bill under consideration is designed to amend the internalrevenue laws of the U.S. in many respects, apd especially to furnish relief to the great mechanical and industrial interests of the country, many of them now heavily taxed. The able chairman of the ComWays&Means [Mr. Moamu] has furnished us an exhibit and an estimate of the workings of the entire revenue system, as follows: Treasuryreceiptsfor fiscal yearendingJune 30, 1805. Customs. 384, 028,000 internal re$09, 464,000 Mise ellaneous. 35.175, 126 Total receipts, exclusive of loans. EstimatedTreasuryrccciptafnrfiacalyearendingJune 30 1806. Custom receipts to April 1 1866(actual) (coin). "$128, 967, 375 Internalrevo actual) 243, 890, 548 Mise ellaneous (actual) premium on gold, 1! Actual aggregatereceiptsto April 1. 410, 041, 232 Estimated custom receipts, April 1 to unc30. 30,000,000 Estimated internalrevenue, April 1 to June. 60,000,000 Estimated mise ellaneous, April 1 to June 80. 1,500,000 Total aggregate receipts from all sources for the fiscal year ending June 30, 1866. 8501,541, 232 Estimate of receipts fOeoflle fiscal year ending June Customs. S125,000,000 Internalrevenue. 260100000 increaseoncot ton. 15, 00to0 increase on spirits. limito0 Mise ellaneous Requirements of the SecyTreasury. 350,000,000 Available for reduction of taxation. 875.000.000 The internalrevenue for the fiscal year ending June 30, 1867, if the present revenue laws should continue in force, with the preposed increase on cotton, is estimated at $200,000,000. The bill now under consideration is designed to reduce this $75,000,000, and to that extent relieve mechanical industry, employments, and labor from the burdens which now to some extent oppress them. A few illustrations will show this. By the law as it now stands a tax is levied as follows: " On ready made clothing, bootsand shoes, gloves, mittens, and moccasins, caps, huts, and bonncts or other articles of dross not otherwiseassessedand taxed as such.for the wear of men women, or children 6%.oil valorem: Provided, That any tailor, not; or shoemaker, hat.cap or bonnetmaker, inilliner or dress maker, exclusively enirngedin manufacturing any of the foregoingarticles to order ase ustomwork and not for sole generally. who shall make atlidavit to the assessoror asst assessor, that the entire nmonnt of such manufacturesso madedoes not exceed the sum of 81,00operannum, shall be exempt from duty." The bill now under consideration changes all this and reduces the tax as follows: On boots and shoes, two%. advalorem; to be paid by every person making, manufacturing, or producing for sale boots and shoes, or furnishing the materials or any part thereof or employing others to make, manufacture, or., producc them: Provided, That any boot or shoe maker making bootsor shoes to order as custom work only, and not for general sale, and whose Work does not exceed annually in value 81.000s, hall be exemptfromthis tax. 0n ready made clothing, and on gloves. mittens, moccasins, cups, and other articles of dress for the wear of men. women and children not. otherwise assessedand taxed, 1%. advalorem: to be said by every personmaking, manufacturing or proucing for sale clothing, gloves, mittens, moccasins, caps, and other articles of dram, or furnishing the materials or any part thereof, or employingothersto make, manufacture, or producethem: Branded, That any tailor, or an maker of gloves, mittens, mocca sins, caps and ot or articles of dressto order ase us tom work only and not for general sale, and whose work does not exceedannually in value $1,000s, hall be exemptfrom this tax; and articles of dressmade or trimmed liy.milliners or dressmakersfor thowear pfwomen and children shall also beexemptfrom this ax. Then by this bill there is a large list of articles entirely exempt from taxation. This exemption will give great satisfaction to the geople and encouragement to productive in justiy. Among these are plows, cultivators, harrows, straw and hay cutters, planters, seed drills, horse rakes, wiuiiowing mills, and many others, generally articles of necessity or the products of mechanical industry. These articles, heretofore taxed, but now exempt, with the other reductions in taxes made by the bill would have reduced $75,000,000 annually, i the present law had continued in force. But I cannot now enumerate the changes in detail. While I am free to concede the great improvement which this bill will introduce in our revenue system, I desire to point out briefly some changes in the bill which it seems to me should be made. The law now in force levies a tax “On all cigars, cheroots, and cigarettes, made wholly of tobacco, or of any substitutestherefor, ten dollars per 1,000 cigars. On smoking tobacco of all kinds, and imitations thereof, not otherwise herein provided for, 35 cents perpound. "0n smoking tobacco made exclusively of stem, and sosold, 15 centsperpound." There are otherprovisions affecting imported, NewEngland, and southern tobacco, but as they donot materially affect western tobacco, I do not propose to allude to them now. The blnow before us changes the present law as fo lows:, 0n smoking tobacco of all kinds, including that made of stems or in part of stem and imitations thereof. a tax of 20 centsperpound. On cigarettes, or small cigars, made of tobacco, inclosed in a wrapper, or binder, and not over 3 and a half inchcs in length, the market value of which (tax included) is not over 6 dollars per 1,000,:1.tax of 2 dollars of 1,000; when the market value is over six dollars and not over ten dollars per 1,000, (tax included, )and oncherpots, and cigars known as short sixes, and on any cigars made with or without. asted or twisted heads.the market value of which tax Included) is not over ten dollar per 1,000, a tax of 4 dollars per 1,000. On all other cigars. cheroots, and cigarettes, made wholl of tobacco, or of any substitute therefor, a tax of ten dollars per 1,000. My colleague [Mr. Seusse s] proposes to amend this by levying ten only instead of 20 cents perpound on smoking tobacco and imitations thereof, and by striking out the provisions as to cigarettes and cigars, and by inserting in lieu thereof a provision as follows: On cigarettes or small cigars made of tobacco, inclosed in a wrapperor binder and not over 3 and a half inches in length and on ci arsmadeWith twisted heads, the market value of which, exclusive of the tax, is not over 6 dollars per 1,000.a tax of 2 dollars per 1,000. On cheroots and cigars known as short sixes, and cigars madewith posted heads, the market value of which, tax included, is not over 12 dollars per 1,000, and on all cigarettes and cigars. the market value of which, excluswc of the tax, is over 6 dollars and not over tWclve dollars per 1,000, a tax of 4 dollars per 1,000. On all cigarettes, cheroots, and cigars, the market value of which, exclusive of the tax, is over 12 dollars and not over 20 dollars per 1,000, a tax of ten dollars per 1,000. On all ci ii rettes, cheroota and cigars, the market value of which, exclusive of the tax, is over 20 dollars and not over 40 dollars per 1,000.a tax of 20 dollars per 1,000. On all cigarettes, cigars, and cheroots, the market value of which, exclusive of the tax is over 40 (10113.78 per 1,000, a tax of 40 dollars per 1,000. The tobacco raised in Ohio and other western States generally known as “seed leaf” is used mainly for smoking tobacco (cutand dry) and common cigars. It is not employed in the manufacture of chewing tobacco or fine cigars, which are made from the more exensive Ha vana and Connecticut tobacco. The present law was not only oppressive but ruine us and destructive to the growth and manufacture of western tobacco. The reason of this is presented in a preamble and resolution of the General Assembly of Ohio, adopted February 13, 1866, as follows: " Whereasby enactment, of the congressof the last session, the excise upon cigars is levied at the Unif rm rate often dollars perth ousnnd; and whereas this rule compels Ohio seed lenf worth in the market ten centsperpound to pay a tax of 450%. advulorem, while Connecticut to hacco themarkutprice of which is 20 centsperpound paysonly 2211v%., and imported Havana tobacco ratedat b1 50 perpound pnys only 33%.: and whereas this discrimination against the product of Ohio and otherwesternStates hiis. but offt a demand for and if continued is likely to put a stop to the growing oftobacco in theseStates; and whereasthis rule levies the heaviest%.of taxation on that kind of tobacco mainly used by the class lenst able to pay, and touches but lightly the high priced luxury of the richer class: Therefore, Be it resolved by the GeneralAssemblyof HICbum of Ohio, That the presentrule of assessing the internalrevenue on cigars is unequal, unjunst, and oppressive to the agricultural interest of this State: and that our Sens&Repsin Congress.be and hereby arc, earnestly requested to use their in flnenceto securesuch a changein the law ns shall levy a, tax ml imlorem or such other modification as in their judgment will remove the objection herein urgedagainst the presentlaw." The result of the law has been that as it requires nearly the same labor to make 1,000cigars from tobacco of high or low price, while the tax is the some on a l alike, the latter or western tobacco is effectually driven out of the market. This is by no means an insignificant branch of industry. Tbe report of the commissioner of statistics of Ohio for the year 1864 shows a product of tobacco as follows: Onmly. Montgomery. Belmont. Athens. Ashtobula. Hamilton. The 3rd congressionald Total in State. 37.m.323 There are a number of other counties that produce large amounts. One of the most intelligent men of my dis t riet, who fully understan 5 this subject, writes me: “ Your own district loses moneyto the amount of 850000 this year by this single enactment, while Ohio, Indiana, Illinois and Michigan, all Statesthat firow low priced tobacco lose millions of dollars. ive us anad valnremtax oncigars and immediately the lowriced tobaccoof the West (now excluded by the proi not of NewEngland and the South, which have had a common interest)will come into market. No“w it is rotting in our fields and tobacco houses. More than this, the Government, by this change, will get more revenue, because the amount of cigars consumed will be much greater. Now low priced cigars always used in the urcutest number, arealmost GXCluded, buturider an mlonloremtax they will again be freely manufactured and largely consumed." One effect of the law has been that large amounts of western tobacco have been used for smoking in the leaf unmanufactured. In this form it has been sold and extensively consumed, thus affording no revenue to the government. An advalorem tax properly adjusted would permit the manufacture into cut and dry smoking tobacco, and thus a large revenue would be derived. The Tobacco Cutters As sociation, of Michigan, in their memorial to Congress say: "From facts ascertained, we find that farmers and othershave been(owing to the high priceof smoking caused in consequenceof the liigh rate of tax) lar ely engagedin growing and preparing tobaccofor ticir own use, thereby lcssening the amount of revenue the Governmen t. would otherwisederive fromthat source. besidestending, in a great degree to injure the business of the manufacturers.” and the effect of the law has been well described by the memorial of an Ohio Tobaceo Growers Association, as follows: “ In addition to this unhappy featurein the present law, an equally i niuriouse hangewasmadoin making the tax on smoking, cut of stems 15 cents, while on.all other kinds 35 cents was placed. By thrsunfortunate stroke, all smoking cut out of anything elsethan stems.waseffectuallyprohibited, and all home demand for lugs and common Ohio seed out of which the article hiid been out before.was killed; and cutters. that beforerun fromoneto 3 machines, and used from one to 3 hum headsof lugs perday in smoking, have not run a machine or out a hogs cad since and are now accumulating Inuch capital of unavailable shorts that necessa rily grow out of the making of chewing cut. By these changesin the previous law. seedleafdeclined m 18 and 20 centsto 6 and 8, and has from 11 and 13 to 6 and 7, entailing losseson the dlStIltltSJWOtlllC ln these styles Ind gradesof severalmillion dollars. omedemnnd n: thus out off, our growersof the stylesnamed wereboundhand and foot, and turned over to the “rider merciesof Europe for a market. Al net cite this picture of depression nremerely mention that, by the same change. that tax on connecticut and Havana cigars was reduced at 15 dollars, and Connecticut seed leaf went up from 18 and 22 to 30 and 35." The present bill is a cat improvement on the law as it now stunts; but if the tax of 20 cents peround on smoking tobacco is levie, it will wi the cost of the raw material and of manufacturing so enhance the price to the consumer that the leaf in its unmanufactured state will be largely consumed by many, and it will so approximate the price of cigars that smokintobaeco will be comparatively driven out of the market. For the interests of the revenue and of the producer, the manufacturer and the consumer, I will urge the 1st amendment proposed by my colleague, [Mr. scanners] I am aware that a reduction from 35 cents, the rate now fixed by law, to 20 cents, as proposed by the hi 1, is an improvement, but the rate proposed by my colleague of ten cents perpound is decidedly preferable. This is absolutely necessary if we would permit the use of western tobacco in the manufactured state, cut and dry for smoking. But the present law, so far as it relates to common cigars, is equally destructive to the production of western tobacco. Underthe res? ent law the tax%., as aid by 3 distinct kinds of tobaeeos, is as ollows, allowing 20 pounds of tobacco for 1000 cigars: 20 ounds Havana, at $1 55, equals 31 dollars, which, at ten dollars tax, isequal to 33%., 20 pounds onnecticut, at 22 and a half cents, equals $4 50, which, at ten dollars tax, is equal to 220%. 20 pounds NewYork, Pennsylvania, an Ohio, at 11 cents, equals $2 20, which, at ten dollars tax, is equal to 450%. I object to the present law so far as it relates to western tobacco, because 1. It is unjustin principle. Western tobacco is Worth from 6 to, 11 cents perpound, while Connecticut is worth 22. To require the some tax on all alike is a discrimination against the low priced article. 2. It has operated practically to destroy the product of western to acco. The Ohio association, before referred to, in their memorial say: “ The particular do ession for which wethin the law clearly responfl O relatesto Ohioseedlea and Kentucky lugs. By making the tax on all as of cigarsten dollars, cigars innde of Ohio leaf. which weredear beforeat 13 dollors had 7 dollars additional tax put on them, an with it a complete extinguisher on their sales and as the manufacture of these cigars furnished demand for the bulk of the Ohio seedusedin the U.S. with the destruction of this trade almost all demand for Ohio ceased, and not one case of Ohio seed has beenusedsince, where before 100 found consumption: and prices of the article went down accordingly." I " The inequality and inustioc of this tax is readily seen, and were it not fort efact that ullsales of Ohio seed, for home consumtion had entirely ceased. perhapsour people, with their boundless resources, might still rest satisfied.making avirtuc of necessity, change their farm products, let their tobacco housesgo to destruction. 3. The destruction of the western product diminishes the national revenue from tobacco. It will be seen the bill of the ComWays&Means proposes to remedy the in justice of the present law by levying a tax of 4 dollars per 1,000 on all cigars the market value of which, tax included, is not over ten dollars per 1,000, and on all other cigars a tax of ten dollars per 1,000. Only 2 grades of tax are proposed. Now, let us inquire what will be the effect of this. Cigars made of Conneeticut tobacco will cost less than ten dollars per 1,000 and will paya tax of 4 dollars per 1,000. Cigars made of Ohio and other western tobacco will cost less than ten dollars per 1,000 and they will pay a tax of 4 dollars per 1,000. Western tobacco worth from 7 to ter! cents perpound will pay as much tax, as Connecticut worth 22. The tax will fall on the producer mainly, for it will require nearly the same labor to manufacture common cigars of western tobacco as the finer cigars of Connecticut tobacco. This unequal tax will enable eastern manufacturers to sell the finer cigars so nearly the price of those made of western tobacco that common cigars of western tobacco will be driven from the market, or produced only to be consumed nnmanufae tured, or cut and dry, or exported at ruine us rates. Will any gentleman tell me why this discrimination should be made against western or low priced tobacco? Or why should common cigars pay as much tax as the fancy “ ci garettes” or the ci rs “inclosed in a wrap peror hinder 7” Teamendment proposed by my colleague will remedy all this inequality. It proposes to adopt the rule of equality by classifying cigars and thus approximating an advalorem tax. It will tax common cigars 2 dollars per 1,000; a finer article 4 dollars per 1,000. Still finer classes respective y ten, 20, and 40 dollars per 1,000; these last classes being generally manufactured by Havana fillers and Connect icut wrappers. The general se epe of the amendment is to protect the home article and to give the western product a living chance alongr with the eastern. There are some other particulars in which I hope the bill reported by the committee will be changed, though I cannot advert to them all now. It propoaes to tax manufactures of flax, hemp, jute, and silk 5%. advalorem. The manufactures of flax, jute, and hem are in their infancy and cannot hear tax at al. A tax is equivalent to their destruction. The production of flax and hemp is one of the agricultural interests of the W est which should not be destroyed by taxation, but rathereneouruged. Silk is a luxury and can beara tax lii her than ordinary articles which enter into aily consumption. By this bill diamonds, emeralds, precious stones, and iewelry are only taxed 5%., while threa, candles, leather, se rews, and many other articles are taxed an rate. This, in my judgment, Oqlllill is wrong. ict diamonds, jewelry, and all articles of unnecessary ornament or luxury hear at least double the tax if not still more, as I would make it, than that imposed on articles of ordinary consumption or necessity. By the present law the tax on incomes over $600 and under $5,000 is 5%., and on incomes over $5,000 the tax is greater. The bill now before us levies one uniform rate on all incomes over $1,000. I have 2 objec;tions to this. I would tax incomes over $5,000 ater than those of a less sum. The discrimination is founded on the greater capacity of the wealth to pay and not on any hostility to capital.The amount of income exempt from tax should not be fixed at a uniform sum but should depend on the number and age of children each head of a famil might have to support. The exemption is designed for the support of families, and the amount of it should e made to de pend on the nuinberof the family. A man like John Rogers, with “9 small children and one at the breast, " needs and should have a greater sum exempt than one who has rendered the country no such service and has no equal need for income exempt. There are some axioms of political economy which should not be overlooked. Taxation. should mainly be levied upon wealth realized in the form of property or incomes rather than upon the sources of productive wealth, the means by which wealt is created. Hence it has always been regarded unwise to east oner ous burdens on useful labor or industry in any form, upon the mechanic, the producer, the artisan, and the laborer. A tax upon the implements or products of useful labor discour ages industry and impairs the production of wealth. The necessities of a nation may be such as to require a resort to taxes of this description to a limited extent, but when this may be so they should be levied with great discrimination. There is ucluss of products which may, under these or other circumstances, be properly taxed, and sometimes heavily taxed. Mere articles of expensive luxury or indulgence, from which England derives the larger part of her revenue, may be appropriate subjects of taxation. This bill has kept these principles in view, and though by no means perfect, it is a great improvement upon the law as it stands, and with the modifications which time and experience may suggest, will contribute much to wipe out an immense national debt entailed upon usbytreason, rebellion, and traitors, their aiders and abet tors. As the people annually make their contributions of national taxes let them remember that traitors and their allies rendered them necessary, and let them at the polls see to it that they shall no more be intrusted with political power. I withdraw my amendment to the amendment. the question being taken on the amendment offered y Mr. scanner to strike out “ 20 cents” on smoking tobacco and insert “ten cents, ” no quorum voted. Tellers were ordered; and the Chairman appointed Messrs. Sonsxex and Aucosa. lhe committee divided; and the tellers reported ayes 48, noes 46. So the amendment was agreed to.