Evening star., 1921-05-03
CONGRESS STUDIES
MELLON TAX VIEWS
Reference to Army and Navy
Estimates May Have
Big Bearing.

Congressmen were studying with
deep interest today Secretary Melons
, recommendations on tax reforms and
refunding of the governments short
term debt and victory loans. Sew
eral features of his suggestions at
tracted especial attention.
! His announcement that the Treasury
is not prepared to recommend any
| general sales tax afforded comfort
to those in the House and Senate who
| who are against the sales tax. and
created corresponding gloom among
| the advocates of that plan. Leader
| Mondell of the House has been con-
WINGED for some time that it would
| be impossible to get the House to agree
| to a sales tax, and the SecrctaryS op-
position to it is regarded as a tower of
strength by those who drnOunce the
| plan.
! A very important feature of his re-
! port and calculated to have bearing
upon the action of Congress on ap-
Army and Navy estimates. The Sec
retary's comment upon these esti-
mates was clasSed as recommending
reduction.
Naval Policy Involved.
The foreign policy of the adminis-
tration and certain recent events
have indicated that the necessity for
- iltI tIilu'''i IIitLltlt tllbllCe OF me ARMY
and May anon an adequate seal"
is fixed administration policy in
order to enable the administration
to make good its declarations and
policies for national security.
The votes in the House thus far
have been Sympath thetic, on the whole.
with the administrators plans for
an adequate Navy. The crux will
come when the Army and Navy bills
have been passed by the senate and
have gone into conference. 1t is
realized that Secretary Mellon is
looking at the situation from til,
viewpoint of the department that
must raise and expend the money.
and does not visualize questions OF
policy beyond these very practical
ones.
Needs Railroad Tax.
It is expected that the public will
be dissatisfied with the Secretary's
stand against reduction of the trans
portatiOn taxes. as there has been
bitter outcry against this addition
to railroad fares already raised very
high by increased wage rates. But
the Secretary points out that these
taxes produce about 100000, 600. and
he needs the money" He suggests
that it will be all right to discon-
tinue these taxes if Congress can
devise an adequate substitute. 1t is
regarded as certainty that Con-
gress cannot so it is believed the
transportation taxes will have to re-
main.
Another subject for legislation by
Congress is suggested in his report
on the amount of tax-exempt securi-
ties now being issued by states and
municipalities. He estimates that
there are now ten billions of such
tax-exempt securities outstanding.
constituting an economic evil of the
first ma gnitude." Wealthy people are
resorting to these investments and
the government is seriously feeling
the loss Of revenue thus entai1ed. The
policy of the government is now not
TO issue taxexempt securities. The
intimation that an amendment of the
Constitution may be necessary to
cure the evil. if it is found to be out
of reach of congressional action, at
tracted the further attention of con-
greSSmen.
Where to Cut Question.
Congress is regarded as being in
thorough sympathy with the Secrc-
tary's outcry against the Shocking"
rate of public expenditures, but finds
itself facing the always existent
question of where to begin to cut
down, in view Of the lavish estimates
of all departments of the government
The one big terrifying fact which
congressman recognize as staring
them in the face is the Secretary's
will need four billion dollars in reve-
nue. for the fiscal years 1922 and 1923,
and that it is devolvent upon Con-
gress TO lay the taxes to produce this
sum. They also must cut off the bill
lion dollars of extravagant estimates
in excess of the four billions to be
raised by taxes.