New-York tribune., 1921-12-08
Mellon Seeks
Sl1rtax Cut to
25 Per Cent
Policy of Secretary of the
Treasury on Bonus for
Soldiers Unchanged in
Report of Department
Utmost Economy Urged
Maturing Debt of Govern
mcnt Is $6,75O, ,O0O, 900
in Next l8 Months

WASHINGTON, Dec. 7--Further re-
vision of the tax laws, with reduc-
tion of the maximum income surtax
rate to 20 or % per cent and adjust
ment of the rates on business profits
and estates, is suggested by Secretary
Mellon in his first annual report, trans
mitted to-day to Congress,
The Secretary also announces that
the Treasury's policy with respect to
deferment Of the soldiers bonus is un-
changed, and urges prompt funding of
the $lO,000,000,000 of foreign loans as
"one of the outstanding needs of the
present economic situation"
Mr.. Mellon also informs Congress
that the maturity within the next
the short-dated debt makes it impera-
tive that the government pursue pol
icy of the utmost economy and avoid
new undertakings that would throw ad
dltional burdens on the Treasury and
embarrass the funding operations"
with respect to the floating debt
Outlines Changes
Revenue revision is the subject upon
stress. He says the changes in the tax
law voted by Congress last month "give
Substantial relief to business and in
dustry and restore in some measure
the freedom of business transactions,
but our system of taxation still re-
quircs careful and thoughtful consid-
Grafton" He then proceeds to say that
If the loss of revenue resulting from
the reductions in surtax and other
rates suggested cannot be made up "by
rigid economy in expenditure" it can
be met "either by placing tax on GER
tain specific articles or by low rate
general tax on broad class of articles
or transactions"
"It is of vital Importance Mr.. Mel
lon declares, "that adjustment be made
in our scheme of taxation whereby the
burden will not fall unduly, whether
directly or indirectly, upon any par
ticular class, and at the same time will
! not seriously interfere with productive
industry and the general prosperity of
the country.
"It would not seem either wise or
necessary to change from our present
system of taxation to new and untried
plans. By retaining the income tax
with reasonable surtax rates, which in
peace times ultimately should not rise
e'DONC ~ PSI CeLC, taxpayers WOulu SLlll
be required to contribute in proportion
to their ability to pay, while by placing
certain amount of tax on specific ar
ticles, or classes Of articles, or transac-
tions, at so low a rate that they could
readily be borne without injury, the
income tax laws could be more readily
administered and at the same time the
needed revenues would be raised with
out the evil effects now resulting from
the present excessive rates of taxa
ton"
Mr.. Mellon informs Congress that
the amount of revenue involved in the
reduction of rates sis not nearly as
great as is generally supposed.'
"To reduce the surtax rate to a
maximum Of 25 per cent, and gradu-
ating the reductions through all the
brackets" he says, would mean an
apparent loss Of about $130,O00,000 in
revenue. A 20 per cent maximum rate
on the same basis would involve q
revenue loss of about s2oo,ooo,ooo
Other adjustments which should be
made would probably involve an
amount equal to that made in the
surtax rates. This loss of revenue
however, would not be permanent, for
the reduced rates would ultimately be
productive of more revenue than
higher rates due to the increase in
taxable transactions.''
Reiterating arguments that the ef
feet of high surtax rates is to keer