New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-08-05
Tells House Committee
Revenue Must Not Fall
Below$3,5 30, 100000:
Drastic Changes Urged
$780, O,0OO,0OO Is
Needed for Year
Outlines Legislation to
Yield $3, 900, 100000:
Proposes New Levies
and Dropping of Others

W NAtoI14NNl ON, Aug. III ur-
ther drastic cuts must be made in
government expenditures if there is
to be material reduction in the tax
burden OF the next fiscal year, Sec
retary of the Treasury Mellon said
today in laying before the House
Committee on Ways and Means the
basis upon which the revenue bill is
to be framed. If no cuts are made
IN expense, he pointed out, the tax
burden must be increased In any
event, he said. the internal revenue
yield could not safely be allowed to
fall below $3.50, 100000, the return
under the present tax laws.
After taking into account all pro-
posed reductions in expenditures, the
Treasury estimates that the total
expenditure for the fiscal year 1922,
for which provision must be made
out of the current revenues of the
government, will be about $4,550,-
100000.
"This in itself would mean sub
stantial reduction in current revenues
and expenditures below the fiscal year
1921" Secretary Mellon told the com
mittee. "The total ordinary revenues
for 1921 amounted to about $685.
600, 900, or over 81 ,O00.0 900 in excess
of the revenues estimated to be nee
essary for 1922"
The Treasury estimate does not
mean, he pointed out, that $4,55O,.
100000 must be provided by taxation.
for it is expected that there will be
miscellaneous revenues during the
year from salvage and sources other
than taxation amounting to about
$3.50, 100000. This would leave S4-
2OO,0O0,000 to be provided from Gus
toms ano internal revenues.
S25t,O0O,O0O Cut Needed
The additional cuts in expenditures,
which must precede the avoidance of
any new taxes to supplant some of
those to be repealed, must amount to
at least $250,000,0 900, he said
Mr.. Mellon sounded in this connec-
ton the further warning that unless
there is an extraordinary new effort
TO reduce expenditures, the estimates
which the Treasury has presented may
be regarded as conservative" This
is indicated, he said, in the actual
expenditures for the first full month +
of the present fiscal year.
"Ordinary expenditures for July.
1921 the Secretary said, amounted
to about 1922 900, 900. as against S307-
100000 for July, 1920, while the cur
rent deficit for July, 1921, was about
81 100000, as against S76,000 900 for
July, 1920.
"An analysis of the principal items
Of expenditure for July, 1921. shows
that S59 100000 was on account Of the
/ War Department, 5000 900 on ac-
count of the navy and $32, 100000 on
account of the Shipping Board. If cN-
penditures are to continue at anything
like these rates the estimates viii be
greatly exceeded.
without the assurance of substan-
tial additional reductions in expendi-
lures it would be folly to proceed TO
reduce revenue merely in the hope Of
reduced expenditure. Even without
change in the law revenue will shrink
from natural causes, and will shrink.
| according to the present outlook, at a
faster rate than current expenditures
Treasury's Proposals
The Secretary presented to the COM
mittee the Treasury's proposals for
general revision Of the tax laws. The
yield from internal revenue and Gus
toms under the revisions, if effective
January J. 1922, would be $1,000, ,000,-
coo. The revision upon which this
estimate is based includes:
A new tariff law IN effect about De-
7 cember 81, 1921.
The increase of the corporation in
come tax to Is per cent and the repeal
of the $4,000 exemption.
The repeal of the excess profits
! tax.
Increased collections Of back in
come and profits taxes.
An increase in the tax on cigar
cites and smoking and chewing to-
bacco.
The repeal of the transportation
( tax upon freight and passengers, the
! tax to be reduced one-half January
!, 1922, and entirely repealed Janu
ary l. 1928.
Certain of the stamp taxes to be
/ materially increased
An annual Federal license tax upon
apiece and to be graded according 30
! power.
The repeal of the tax on ice oreass
and fountain drinks.
The repeal OF miscellaneous taxes
I levied under Section 904 Of the
revenue act Of 1918 as Of January |,
1922
A revision of the income tax rates.
with the maximum surtax rate re-
duced to 80 per cent.
Discussing these proposed repeals
and new taxes. Secretary Mellon said:
The estimates Of revenue under the
revised law assume that a more pro-
ductive tariff law will be adopted, cap
able of yielding about $70,000,0 900 add
tional revenue for the fiscal year 1922
and Sl50,00o.000 additional for the fiscal
year 1928
THE total net income subject to the
higher surtaN rates is rapidly dwin-
ding. and funds which would Otherwise
be invested in productive enterprise
are being driven into fields which do
not yield taxable income. The total
estimated revenue from the surtaxes
under existing law is about S500,00o.ooo
for the taxable year 1921. The csti-
mated yield for the year from the sur