New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-07-22
New Spending Tax
Plan Presented i'm
Congress by Mills
N. Y. Representative Calls
1t the major Operation
Country Is Expecting in
Revision of Present Levics

From, The Trtbune's Warrington Bureau
WASHINGTON, July M.--Holdine
that the present surfaces on incomes
must either be reduced or repealed
and declaring that existing tax evils
cannot be cured without a major
operation Representative Ogden Mills
of New York, to-day introduced in the
House a new tag measure which prom
Uses to arouse much interest in Con-
gress. 1t is called tine spendings tax,
and is intended to take the place Of the
surfaces on incomes.
As described by Representative Mills
the spendings tax is a tax on all ex-
penditures for personal, living and
family purposes of every citizen or
resident Of the United States made
Guiding the following items:
ta) All the ordinary and necessary
expenses Of carrying on a business,
trade or profession;
CD Taxes, except spending taxes;
(c) Gifts for charitable or educa-
tional purposes;
CD Medical and dental services, and
funeral expenses;
(e) Investments made during the
year, including real estate, except in
the case of the purchase Of a home
when the tax payer already owns one;
f) Insurance premiums.
An exemption of $4,000 is allowed to
a single man or woman, and one of
$4,000 to the head Of a family or to a
person having one or more persons
wholly dependent on him or her for
support.
The tax is imposed at a graduated
rate, which increases l per cent for
every $4,000 spent up to $4,000, and
thereafter l per cent for additional
$1,000 spent up to $4,000. All spend
lngs in excess of $4,000 are taxed at
the rate of 40 per cent.
The tax is not made applicable to the
spendings of the year 1921, but in order
to meet the existing emergency the bill
provides that the largest rate of sur
tax on income received from the date
of the signing of the act to the end
OF the calendar year shall be 80 per
cent. After 1921 all surfaces on in
come are abolished and the spendings
tax substituted therefor.
The administrative provisions are
substantially those of the present per
sonal income tax act. Mr. Mills said:
The arguments that can be urged.
In all fairness, in favor of this tax are
as follows:
"Since all income saved and invested
Will be exempt from surtaxes. it will
flee surplus liquid capital and make it
available for the needs of agriculture.
commerce and industry. 1t will solve
the tax exempt security problem. 1t
Will shut the door to the escape from
income taxation by means of losses and
gifts. 1t Will promote thrift and dis
courage extravaganza. 1t can fairly
claim the virtues of the sales tax.
being in effect tax on money spent
Tor consumption, without being regres-
slve in character or laying a dispro-
portlonate burden on those least able
to bear it, and without being open to
the serious evils which arise from the
pyramiding of the tax. 1t maintains
the principle of a graduated tax based
on what economists have held to be
true income for taxation purposes. 1t
does away with the discriminatory bur
den now laid on partnerships, as com
pared with corporations, and puts them
on an equal basis. 1t will yield at least
as much as the present law, and while
making use of existing machinery it
should prove easier to administer, since
we will have eliminated the principal
means of evasion.
Existing tax evils cannot be cured
without major operation. The country
expects one. 1t will not be satisfied
with timid tinkering, which will neces-
sarlly fall short of what the situation
demands"