The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1921-12-07
lBy Associated Press)

! tBy Associated Press
WASHINGTON. Dec. Further |
| revision OF the tax laws. with reduc- |
ton of the maximum of income of sur |
/ tax rates to 90 or 25 percent and ad- |
Justment of the rates on business
profits and estates, is suggested by !
! Secretary Mellon in his first annual !
! report, transmitted today to congress. !
I The treasury secretary also an /
! nounces that the treasury's policy with I
/ respect to deferment OF the soldiers |
! bonus is unchanged, and urges prompt |
funding of the 10 billions of dollars of !
/ foreign loans as ''One OF the outstand |
ing needs of the present economic sit |
uation."
. Mr.. Mellon also informs congress !
that the maturity within the next IS
months Of S6.750,OOO,000 of the short
dated debt makes it imperative that
the government pursue q policy of the
6utmost economy and avoid new I'M
dertakings that would throw addition
al burdens on the treasury and en-
barrass the funding operations" with
respect to the floating debt.
Revenue revision is the subject up
on which the secretary lays the most
stress. He says the changes in the
| gave substantial relief to business
and industry, and restore in some
measure the freedom of business
transactions. but our system Of taxa
ton still requires careful and thought
full consideration. He then proceeds
to say that if the loss of revenue re
sultlns from the reductions in surtaX
and other rates suggested cannot be
made up by rigid economy in expendi-
lures it can be met either by pIaC-
ing tax on certain specific articles.
or by low rate general tax on a
broad class of articles or transactions"
Must Adjust Burden.
/ 1t IS OF vital Importance" Mr. Mel
lon declares, that adjustment be
made in our scheme of taxation where
by the burden will not fall unduly,
either directly or indirectly. upon any
particular class. and at the same time
VIII not seriously interfere with pro
ductiye industry and the general pros
perlty of the country.
1T 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
above 10 per cent, taxpayers would
still be required to contribute in pro-
- portion to their ability TO pay; while
{ by placing a certain amount of tax
on specific articles. or classes of ar
llCIes, or transactions, at so low rate
) that they could readily be borne with
out injury, the income tax could be
/ materially simplified the tax laws
could be more readily administered
and at the same time the needed reye-
nues would be raised without the evil
q effects now resulting from the pres
ent excessive rates of taxation
Mr.. Mellon informs congress that
the amount of revenue involved in the
suggested reduction of rates "is not
nearly as great as is generally sup
= posed
2 Loss Not Permanent
ITO reduce the surtax rates to a
: maximum of % per cent and gradual
ing the reductions through all the
l brackets he says, would mean an
5 apparent loss of about $130,000,0O0 in
revenue. \ 20 per cent maximum
rate on the same basis would involve
d revenue loss of about $200, 100000.
Other adjustments which should be
made probably would involve an
amount equal 10 that made in the sur
ever, would not be permanent, for the
reduced rates would ultimately be
productive of more revenue than high
u or rates, due to the increase in TAX
able transactions"
= ReiteTating arguments that the eff
y feet of high surtaX rates is to keep
. new capital out of productive enter
II prise and to prevent normal business
Z transactions, with the result that nat
uraI industrial development is re-
tarded, Mr.. Mellon adds:
The idea seems to be prevalent
; that in taxing large incomes, only the
u person receiving the income and who
t is to pay the tax is really concerned
IT, This is a mistake For whatever the
u government takes in the way OF ta3
out of any income which would other
wise be saved and invested, and there
by become a part of the capital anC
of the wealth of the nation. affects
/. not so much the individual from whom
< it IS taken as it does the whole PEG
> pie of the country in the direct loss OF
productive capital.
After all the wealthy of the Coun
f. try, upon which all the activities anl
q. the prosperity of our people depend
70 is made up Of the private property o
II the individual citizens (of all the PEG
: pIe-aud anything that unnecessarily
'c takes away from the accumulated
10 property necessarily injuriously al
lie fects the people as a whole.
" Discusses Corporate Levy.
IF Discussing the proposed adjustment
OF the tax on business profits, MI. Mel
G. lon suggests no specific rates bu
n calls attention that the repeal Of The
IL excess profits tax made necessary ar
IS increase of 2t2 per cent in the cor
il poration income tax and that this
with the capital stock tax, makes th'
total levy on corporations approx
matelv l. per cent
when we remember" he writes
that the great bulk OF the business o
III the country. both large and small. Il
N carried on under corporate form, ant
that these dividends are then in turf
. subject to surtaX, IN the hands o
IT, persons receiving them. it is at once
@. seen that the resulting taxation t.
" persons engaged in productive bust
d ness is very heavy. For instance
I'D stakeholder subject to surtaX at 10 pc