The Washington herald., 1921-05-02
Mellon Urges Prompt Cut
In Cost of Running
Government.
SUGGESTS LOWER
TAXATION SCHEME
Favors Repeal of Excess
Profits Revenue With
Other Revisions.

COltinue to spend at thls shocking
rate" Secretary of the Treasury
Mellon in a letter to Chairman Ford
ney of the House Committee on
Ways and Means says that the tax
burden under which the people are
staggering can be reduced only ny
Substantial cuts in current exp@n-
ditures."
At the rate the goyernment is
expending money the Secretary docs
not deem possible any material r.:
duction Of taxes and he proposed
lNrevision program embodying not
so much a decrease as a redistri
button of taxation.
Fayors New Taxes.
Mr. Mellon favors repeal of the
excess profits tax and the substitu-
ton of additional corporation taxes,
reduction of surtaxes and other re-
adjustment of income taxes, reten-
ticn of the transportation and pres
ent sales and excise taxes, but re-
peal of the soft drink and other
taxes difficult to collect. and an in
crease in stamp taxes or levy of an
automobile license tax. A general
sales tax he is not prepared TO
recommend
The Secretary also urges restric-
tiOn Of the issuance of tax free Sc
curities, particularly by States and
municipalities. He also wants a
provision to enanle a taxpayer to
deduct the net losses of one year
from the income Of succeeding years
One billion Less.
Mr.. Mellon says there will be \
deficit June 80 next Of nearly SlI5,-
400, 900. In the next fiscal year the
government will Gxpend about IT,
400. 100000 less than this year s:t
will have a prospective deficit IF
5000. 900. Disbursements this year
will total $500. 900. 900. including
S6OOoO0.G96 for debt retirement
Next year the disbursement will be
$500. 100000, including $500. 900. 900
TOR debt retirement. Internal taxes
Yielding $4,000 100000 next year and
the year thereafter. compared with
s4.55O. 100000 this year the Secretary
regards imperative.
With the nations finances sound
hut the people staggering under
the tax burden and clamoring for
relief. the present rate of spending
shold be halted, says the Secretary.
Enlarged expenditures can be r.
nanced only by increased taxes or.
new loans.
Current Expenses High.
The Unexpectedly heavy current
expenditures, Mr.. Mellon saws,
have upset calculations as to debt
retirement and the government
cannot expect 10 retire any Of the
outstanding $4,000. 100000 Of float
ing debt in the next two. years out
of current revenues. Nor can the
country Took to any plan for fund
ing the floating debt to reduce the
burden OF internal taxes during the
vt two years"
trough the operation of the sink.
fund and miscellaneous debt
-rements the Treasury expects
= reduce the short dated deb,
-. OO.OoO.OOO in the next two wear,
I'd the remaining $4,000. 900. 900
will have to be refunded"
Secretary Mellon hopes that the
u House. having passed the emer- |
genCS tariff bill, will proceed to
revise the revenue laws and to that
end he makes the following pro- !
posals:
q Repeal Profits Tax.
Il. Repeal the excess profits tax,
md make good the loss Of revenue
by means Of a modified tax on cor
porate profits or a flat additional
income tax upon corporations. and
the repeal of the existing $4,000
exemption applicable to CORPORA
porations. to yield an aggregate
revenue of between s4OO. 600, 900 and
$500. 100000.
"2. Readjust the income tax rates
to- minimum combined tax and
surtax on 40 per cent for the tax
able year 1921 and Of about az per
! cent thereafter with a view to nro-
'ducing aggregate revenues substan-
! TALLY equivalent to the estimated
receipts from the income tax under
existing law.
3. Retain the miscellaneous spe-
cific-sales taxes and excise taxes.
including the transportation tax.
the tobacco taxes, the tax on ad- |
missions, and the capital stock tax,
put repeal the minor nuisance
taxes. such as the taxes on fountain
levied under section s04 of the rev.
enue act. which are difficult to en-
force. relatively unproductive. and |
unnecessarily vexatious.
4 Impose sufficient new or addi- |
tional taxes OF wide application. |
such as Increased stamp taxes or a |
license tax on the use o. autorno- |
biles. to bring the total revenues
y from internal taxes after making
Ifthe changes above suggested. 70 l
fbout $4,000. 100000 in the fiscal
ears 1922 and 1928. The only way
escape these additional internal
axes. to an aggregate amount ~
between s25o.0oo.0o0 and $3.50 .ooo-
600 will be to make immediate cnts
In that amount in current expendi-
\ lures.
simplify Method.
Z S-Adopt necessary administer
tive amendments to the revenue act
In order to simplify its admInIstra-
tion and make 1t possible. amonr
other things for the Commissioner
Of Internal Revenue. with the AZ.
CONTINUED OF PAGE rwo l