Evening star., 1921-12-07
FURTHER REVISION
0F:.TAx SUGGESTED
Secretary Mellon Advises Re-
duced Maximum Surtax and
Other Adjustments.
MAKES ANNUAL REPORT
Announces Treasury's Unaltered
Policy With Respect to Defer
ment of Soldier Bonus.

income surtax rate of 20 or 25 per
cent and adjustment of the rates on
business profits and estates. is sug
gested by Secretary Mellon in his first
annual report, transmitted today 10
Congress.
The Secretary also announces that
the Treasury's policy with respect to
deferment Of soldiers bonus is un-
changed, and urges prompt funding Of
the ten billions Of foreign loans as
zone of the outstanding needs of thu
present economic situation"
Mr.. Mellon also informs Congress
that the maturity within the next
eighteen months of $6,750. 100000 oi
the short-dated debt makes il i'm
perative that the government pursus
policy of the utmost economy and
avoid new undertakings that would
throw additional burdens on the
Treasury and embarrass the funding
operations" with respect to the float
ing debt.
Stresses Revenue Revision.
Revenue revision is the subject upon
which the Secretary lays the most
stress. He says the changes in the
tax law voted by Congress last month
give substantial relief to business
and Industry and restore in some
measure the freedom of business
transactions. but our system of taxa
tion still requires careful and thought
full consideration" He then proceeds
to say that il the loss OF revenue re
sulting from the reductions in surtax
and other rates suggested cannot b..
made up by rigid economy in ex-
penditures," it can be met "either b.
placing tax on certain specific ar
ticles. or by a low-rate general tax
broad
actions"
TT is of vital Importance" MIR.
Mellon declares, that adjustment b"
made in our scheme of taxation
duly, either directly or indirectly
upon any particular class and at ia
same time will not seriously inter
fere with productive industry an"
the general prosperity of the country
1T would not seem either wise o.
necessary to change from our pres
ent system of taxation to new an.
untried plans. BY retaining the in
come tax with reasonable surta%
rates. which in peace times ultimate
ly should not rise above 10 per cent
taxpayers would still be required &,
contribute in proportion to thei,
ability TO pay: while by placing
certain amount of tax on specific ar
ticles, or classes of articles, or trans
actions. at SO low a rate that The.
could readily be borne without in
jury. the income tax could be m:
teriaIly simplitied. the tax laws coui,
be more readily administered. a.
at the same time the needed revenu
would be raised without the evil
fects now resulting from the pr
ent excessive rates of taxation.
Discusses Amount Involved.
Mr.. Mellon informs Congress Ii
the amount of revenue involved
of
not nearly as great as is general
! supposed"
ITO reduce the surtax rates to
maximum of 25 per cent and grad
uating the reductions through all Il
brackets" he says, would mean a.
apparent loss of about s13O.000.0i
in revenue. A 20 per cent maximum
rate on the, same basis would inv"'
q revenue loss of about S200,0oO,0Vo
Other adjustments which should
made would probably involve 2
amount equal to that made In tn
surtax rates. This loss of revenu,
however, would not be permanent
| for the reduced rates would ult
mately be productive of more rerenu'
| than higher rates. due to the increas'
| in taxable transactions.
Reiterating arguments that tn
| effect of high surtax rates is to keef
| new capital out of productive en-
| terprise and to prevent normal ousi
ness transactions. with the resulI
that natural industrial development
| is retarded. Mr. Mellon adds:
The idea seems to be prevaieni
that in taxing large incomes only
the person receiving the income, and
! who is to pay the tax, is reaiiy con
! cerned. This is a mistake. for what
| ever the government takes In the
| way of tax out of any income, which
! would otherwise be saved and In :
vested and thereby become part
, of the capital and of the wealth OF
the nation, affects not so much the
| individual from whom 1t is taken as
[ IL does the whole people of the coun-
try. in the direct loss of productive
capital.
/, wealth I'm Private Property.
! "After all. the wealth of the coun-
try. upop which all the activities
and the prosperity of our people De
! nends. is made up of the private
property of the individual citizens
of an the peopie-and anything that
(! unnecessarily takes away from the
! accumulated property necessarily in
/ iuriously affects the people as
whole"
Discussing the proposed adjust
ment of the tax on puslmess sis p,os ro.es
MIR. Mellon suggests no specinc rates;
/ hut calls attention that the repeai
| of the excess profits tax made neces-
sary an increase OF 2h2 per cent IN
the corporation income tax. ana tna'
/ this. with the capital STOCK taN.
| makes the total levy on corporations
approximately IS per cent.
"Nheu we remember, ne wrteS'
/ "that the great bulk of the bushes.
1 IF the country, both large and small,
is carried on under corporate Ioi i,.
1 and that the net income must largel!
he distributed in dividends, and that
these dividends are then. in turn;
smhiect to surtax in the hands OF
nersons receiving them, II is at once
| seen that the resulting taxation 10
\ nersons engaged In productive DUST
Lass Is very heavy For instance. a
| stockholder subject to surtax at ~
| per cent really pays ABOUT 20 Pe'
! cant on his dividends, while STOCK
| holder subject to 30 per cens SUI
tax would be taxed apout 20 p'
cent on such profit.
neciaring that there were two
.chief directions to the present higll
"estate tax rates. running up 70 =
ner cent on the total value OIL es.
| tates," Mr.. Mellon says much OF wha'
/, he has said respecting the high SUI :
taxes applies equally to the estate
/ taxes. Another objection he sets foru
1 ;s that in many instances force'
| iiouidation of estates to OBTAIN Iht
necessary money to pay the taxc
results in loss to the estates as we
as "to every one else VINO rs in.e, ,i
1 eSted IN ln6Se piopea esSS,
| IL at the same time they desire 10 O
must sell"
suggests Way to simpffry LAWS.
| Referring to the oft-repeated state
n,ent that the tax laws need simpli-
1 wing Mr.. Mellon declares that tn.
greatest simpIification that can b.
made is in the reduction of the rates
So long as the rates were low. ht
q asserts. "there was not muchsdnhcuit.
in the law, even though the system
was entirely new and the Organic
80, odn;nisterjng it unfamiliar witt
th. oreration of such q law.