The Birmingham age-herald., 1921-09-09
MELLON SUGGESTS
 TAX LAW CHANGES
Recommends Transportation Tax Be HaIved in 1922 and
 Profit Tax Killed in 1921
By Associated Press

Washington. September s.-Changu. in the House tax bill recommended today to the Senate finance commit tee by Secretary Mellon included:
 Repeal of the excess profits tax effective as of last January
 l, unsteady of next January.
 Retention of all of transpor-
 tation taxes for the calendar
 year 1922, but at half the present
 rates, instead of complete re-
 peal as of next January l.
 Rcpal of the capital stock tax.
 effective next year, an entirely
 new proposal.
 Reduction of the maximum fn-
 come surtax rate from 83 per
 cent to 25 per cent effective Jam
 uary I, 1922, instead of to 32 per
 cent as provided in the House
 bill.
 An increase of per cent in-
 stead of 2H per cent in the nor
 maI income tax making the total
 15 per cent. retroactive to last
 January 1.
 A manfucturer~ tax on eos-
 mctics and proprietary medicines
 to replace the. present stamp
 taxes which were eliminated by
 the House.
 Retention next year of the tax
 es on Insurance preminums, but
 at one-half the present rates.
 With Changes, Hill o. K.
 With these exceptions. the treas ury secretary was understood |. have approved the House measure with its provisions for an increase of $500 in the exemption to heads of families having net incomes ..i S5,000 a year or less and s20o ld- for dependents; for de- creased rates on sporting goods yachts and furs and for manufac- turers' taxes on fountain syrups and other ingredients of soft drinks in lieu of the present so called auis- ance taxes.
 MT, Mellon was before the commit tee at two sessions and there was a general discussion of his recommen dations as well as of the probable revenue needs of the government for this fiscal year. The secretary placed these at $4,034, 100000 on the basis of the reduction in expenditures agreed upon at the White House tax COZ ference last August g, and estimated that $500, ,0O0,000 of this total wohl.' be raised from non-tax sources, sucn as customs, salvage and the hke leaving s3,234, 100000 to come from internal taxes.
 This total is $134.o00,000 less than the estimated receipts under the bill for this fiscal year, the differ ence being accounted for through I e. neal of the excess profits tax as of last January l. It was to make up the loss from the profits tax that MT. Mellon proposed an additional 2ta ner cent increase in the corporation income tax, retention of the trans and insurace premium taxei and restoration of the taxes on cos metics and proprietary medicines.
 Lower Rate to Increase Revenue
 The additional corporation income tax is estimated by treasury officers to yield approximately $260, ,000.000 q year. The transportation tax would return $13O,000,o00 next year at half the present rates and the insurance taxes and the levies on cosmetics and an additional $25,o00.0o0. his proposal for further reduction of per cent in the maxi mum income surtax rates, Mir. Mellon was said to have told the committee that the lower rate eventually would return a greater yield to the govern ment than the 32 per cent rate be- cause additional money would be di- verted to actual business instead of being invested in tax-exempt securi- ties.
 It was stated that there was no discussion of new sources of taxation and that none was recommended by Mir. Mellon who estimated that the House bill as amended in accord with his recommendations would meet the needs of the government provided the economies agreed upon at the White House conference were effect ed He was said to have told the that he thought they would be and committee members generally were reported as having agreed with him.
 As to the authorization in the House bill for the treasury to issue $500. 900, ,00O additional in short term notes. it was said officially that this had no relation to any anticipated deficit and was not wholly necessary as the treasury had asked for it merely with the idea of having a little more margin in funding vic- tory notes and certificates of in- debtedness into short term securi- tieq