Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1921-11-18
HOUSE ACCEPTS SENATE
PLAN TO MAKE MAXIMU UNI
INCOME TAX SO PER CENT
CONTINUED from Page ono

republican spokesman said that the
republican party had promised to
reduce taxes and that the SO per
cent rate should not be approved
by the house.
The letter written by President
Harding to Chairman Fordney fol-
lows:
MY dear Mr.. Fordney:
I'm response to your inquiry as
to the wisost course in dealing with
the difference between the congress
in higher sur tax on incomes. l can
say only that in view of our earlier
conference on tax matters and the
ultimate adoption of the higher sur
tax rate of 80 per cent. | still be-
lieve the rate approved by the
house to be the nearer to a just
levy and the more promising one in
retu MS to the public treasury.
1.-THE responsible administration
is anxious, first or all, 20 lay neces-
sary taxes to meet demands of the
treasury. There is moral obli-
cation, however, on the party in
power to do everything possible to
keep faith with promises made.
I'VE have been collecting the
highest sur tax on incomes, levied
at this time in the world. The eff
feet has been restriction of the easy
flow of capital in the channels mos
essential to our normal and very
necessary activities. No one chal-
lengea the levy of the higher tax
in the stress of war, but now we are
struggling for the readjustment of
peace.
"Where there Is so wide diff
ference In the Judgment of the
two houses, / have thought 1t might
be possible and wholly desirable to
reach an equitable compromise, say
a maximum sur tax levy of 40 per
cent. This would put the higher
federal tax on income at 4S per
cent, which would measurably meet
the expectations of those who are
above all else, concerned with the
return of helpful investment of
capital and the application of our
capital resources to profitable pro-
ductivity, | am wholly confident
that the helpful results spreading
therefrom TO every active partici-
pant in our industrial and economic
life, from management to every
wage Garner, would be vastly more
advantageous to our people than
the maintenance of wartime levies
as peace-timc penalties on capital
which are certain to hamper the
restoration of our ! tivities for
which We all so much hope.
zone experience will afford
convincing illustration, In seeking
to hasten ailway settlements,
growing out of federal control, I
authorized the director general to
invite the cooperation of the war
finance corporation to convert sale
able securities into the cash needed
for the settlements in process of
making. During the period If pub
lie belief In a 80 per cent sur tax
as provided by the house the sale
of these bills receivable, was pro-
crossing in most promising way
Indeed, we had converted more
than 100000. 900 of railway notes
into cash. The moment the higher
sur tax became likely levy these
conversions ceased.
"Manifestly the prohibitive sur
tax tends to divert our available
and much needed capital from en-
ployment in our everyday activi-
ties to investments in tax free Sc
curities. The re ords show that II
is making a continued diminution
in our receipts from income taxes
and 1t is making more difficult the
rormal financing of every sort of |
ssential activity and is emphasiz-
ing the tendency to turn to the
government for that paternalistic
relief of both industry and agricul-
ture which has no rightful place in
a peace-time policy.
II am we'll convinced that fair
compromise between the rates
adopted by either house will be the
best possible solution of the situa-
ton, and an early decision will put |
an end to existing anxiety, even
though the larger expo ctations of
Of the country are not fully met"