The daily star-mirror. (Moscow, Idaho) 1911-1939, 1921-12-07
annual REPORT
SECRETARY MELLON
MATURITY OF DEBT MAKES
ECONOMY IMPERATIVE TALKS
REVENUE REVISION.

REVENUE REVISION.
Washington, Dec 7-CBy A. P.)-
With a revision of the maximum o
income surtax rate to 20 or 25 pc
cent and adjustment Of the rates OF
business profits and estates is sug
gested by Secretary Mellon in hi
first annual report, transmitted today
to congress.
The treasury secretary also an
nounces that the treasury's policy
with respect to deferment of the sol
dier's bonus is unchanged, and urges
prompt funding of the ten billions Of
dollars of foreign loans as "one of the
outstanding needs of the present
economic situation
Mr.. Mellon informs congress that
maturity within the next 18 months OF
$6,750,000 of the short dated debt
makes it imperative that the gov
ernment pursue policy of the ut
most economy and avoid new under
takings that would burden the treas
ury and embarass the funding opera
tions with respect to the floating
debt
Revenue revision is the subject up
on which the secretary lays the most
stress. He says the changes in the
tax law voted by congress last month
sgive sub h1tantial relief to business
and industry and therefore in some
measure the freedom of business
transactions, but our system of tax
alton still requires careful and
thoughtful consideration" He then
proceeds to say that if the loss Of
revenue resulting from the reduction
otI tod
cannot be made up 'sby rigid economy
in expenditures" it can be met "either
by placing a tax on certain specific
articles or by low rate general tax
on broad class of articles or trans
actions"
"It is Of vital Importance" Mr.. Mel
Ion declares, "that adjustment be
made in our scheme of taxation
whereby the burden will not fall un-
duly, either directly or Indirectly, on
any particular class, and at the same
time will not seriously interfere with
productive industry and the general
prosperity
"It would not seem either wise or
necessary to change from our present
system of taxation to new and untried
plans By retaining the increasment
tax with reasonable surtax rates,
which in peace times ultimately
should not rise above ten per cent,
taxpayers would still be required to
contribute in proportion to their
ability to pay; while by placing
certain amount of tax on specific ar
tic1es or classes Of articles or trans
actions at a low rate, that they could
readily be borne without injury, the
increasement tax could be materially
simplified, the tax laws could be more
readily administered, and at the same
time the needed revenues would be
raised without the evil effects now
from the present excessive
rates of taxation
Mr. Mellon informs congress that
the amount of revenue involved in
the suggested reduction of rates, is
not nearly as great as generally sup
posed
"TO reduce the surtax rates to
maximum of 25 per cent and graduate
The reductions through all the brack-
ets," he said, wouldn't mean an ap-
sts," he said would mean an ap-
parent loss of about $130,000,000 in
revenue.
"a twenty per cent maximum rate
IN the same basis would involve a
-evenue loss of about $200,000,OOO.
Other adjustments which should be
made would probably involve an
amount equal to that made in the sur
ak rates. This loss Of revenue, how
,ver would not be permanent, for the
reduced rates would ultimately be
productive Of more revenue than |
higher rates, due to the increase in Z
axable transactions"
<<,I 1oy, re
hat the effect of high surtax rates v
s to keep new capital out of the pro- t
uctive enterprise and to prevent nor t
nal business transactions with the t
esult that natural industrial de- il
elopment is retarded.
Discussing the proposed adjustment r
t the tax on business profits, Mr.. +,
Iellon suggests no specific rates, but s
alls attention that the repeal of the v
xcess profits tax is made necessary il
n increase of 21a per cent in the a
income tax and that this, b
nth the capital stock tax, makes the n
0tal levy on corporations approx O
lately Is per cent. U
"When we remember" he writes, B
that the great bulk of the business of b
le country both large and small is Il
arried on under corporate form and h
1at the net income must largely be O.
attributed in dividends and that W
lese dividends are then in turn sub 81
,ct to surtax, in the hands Of per-
ons receiving them, it is at once seen W
lat the resulting taxation to persons " "
ngaged in productive business Is "
Dry heavy, for instance, stOckhold- n
: subject to surtax at ten percent, -,
sally pays about Is per cent, on his
lvidends; while a stockholder sub
ct to SO per cent surtax will be tax
l about IS per cent on such profits.
Declaring that there were two =
,hief objections to the present high d
,tate tax rates, running up to rs per p
mt, on the total value Of estates, Mr.. y
ellon says much of what he has g
i'd, respecting the high surtaxes, ap- 70
les equally to the estate taxes. An
her objection he sets forth is that
~ c<onooc fnrood 1iuui6 q finn