New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-05-02
Mellon Asks
Excess Profit
Tax Repeal
-------'----~-s-----~---~~
tContInued from paoe ane)


means of modified tax on corporate
profits of fiat additional income tax
upon corporations, and the repeal Of
the existing $4,000 exemption applic-
able to corporations, to yield an aggre-
gate revenue of between $500, 900
and $500,000,00O. The excess profits
tax ia complex and difficult of adminis-
tration and is losing its productivity.
1t Is estimated that for the taxable
year 1921 it will yield about $3.50, OOo,-
600, as against $500, 000, 900 in profits
taxes for the taxable year 1918. ST.
320,000,000 fos the taxable wear 1919
and $4,000, COO for the taxable year
1920. In fairness to other taxpayers
and in order to protect the revenues,
however, the excess profits tax must
be replaced, not merely repealed, and
should be replaced by some other tax
upon, corporate profits. A fiat addi-
tional tax on corporate income would
avoid determination of invested CAPT.
tai, would be simple of administration
and would be roughly adjusted to
ability to pay. 1t is estimated that
the combined yield to accrue during
the taxable year 1921 from tax Of
this character at the rate of s per
cent and the repeal of the $4,000 ex-
emption would be about $4oo,ooo,oOo.
Surtax Passes Collection Point
"2. Readjust the income tax rates to
a maximum combined normal tax and
surtax of 40 per cent for the taxable
year 1921, and of about 33 per cent
thereafter, with a view to producing
aggregate revenues substantially equiv
alent to the estimated receipts from
the income tax under existing law.
This REIMBURSEMENT is recommended
not because it will relieve the rich,
but because the higher surtax rates
have already passed the collection
point. The higher rates constitute a
bar to transactions involving turnovers
OF securities and property, which with
lower surtax rates would be accom-
plished, and thus yield substantial new
revenue to the government. The total
net income subject to the higher rates
is rapidly dwindling, and funds which
would otherwise be invested in produc-
tive enterprise are being driven into
fields which do not yield taxable in
come. The total estimated revenue
from the surtaxes under existing law
is about S500,000,00O for the taxable
year 1921. The estimated yield for the
year from the surtax rates above so
per cent would be about $4,000 600
The immediate loss in revenue that
would result from the repeal of the
higher surtax brackets would be rela-
lively small, and the ultimate effect
should be an increase in the revenues.
"3. Retain the miscellaneous specific
sales taxes and excise taxes, including
the transportation tax, the tobacco
taxes, the tax on admissions, and the
capital stock tax, but repeal the minor
nuisance taxes, such as the taxes on
fountain drinks and the miscellaneous
taxes levied under section 9O4 of the
Revenue Act, which are difficult to en-.
force, relatively unproductive, and un.
necessarily vexatious. The repeal OF
these miscellaneous special taxes would
1t is estimated, result in loss of abou,
S50,000,000 in revenue. The transports.
ton tax is Objectionable, and l wish IL
were possible to recommend it's repeal
but this tax produces revenue in the
amount of about $500, 900 a year
and could not safely be repealed or re.
duced unless Congress is prepared to
provide an acceptable substitute. The
Treasury is; not prepared to recon.
mend at this time any general sales