The Mankato free press., 1921-12-09
REVISE TAX LAWS
URGED BY MELLON
First Annual Report Of the
Treasury Secretary
SENT TO THE CONGRESS
Adjustment Rates On Business
Profits and Estates Also
+ Favored
IAssociated Press pispatch. ]

IAssociated Press Dispatch.l
Washington D. C., December T.
Further revision Of the tax laws, with
q reduction Of the maximum Of income
surtax rate to 20 or rs per cent and
adjustment of the rates on business
profits and estates, is suggested by
Secretary Mellon in his first annual
report, transmitted today to congress.
The Treasury secretary also an
nounces that the treasury's policy
with respect to deferment OF the SOL
diers' bonus is unchanged. and urges
prompt funding of the ten billions of
dollars of foreign loans as zone Of the
outstanding needs OF the present eco
nonaic situation"
Mr. Mellon also informs congress
that the maturity within the next
eighteen months of $6,750 ,000, 900 of
the short dated debt makes 1t i'm
perative that the government pursue
a policy Of the utmost economy and
avoid new undertakings that would
throw additional burdens on the
treasury md embarraSs the funding
operations" with respect to the toat-
ing debt.
Revenue Revision Urged
Revenue revision is the subject up
on whcih the secretary lays the most
stress. He says the changes in the
tax law voted by congress last
MONTH" gave substantial relief to
business and industry. and restore in
some measure the freedom Of business
Iation stiil requires careful and
thoughtful consideration He then
proceeds to say that If the loss of rev.
enue resulting from the reductions in
surtax and other rates suggested can
not be made up by rigid economy In
expenditures" it can be met either
by placing a tax on certain specific
articles, or by a low rate general tax
on a broad class OF articles or trans
actions"
''tI is vital importance" Mr.. Mellon
declares, that adjustment be made in
our scheme of taxation whereby the
burden will not fall unduly, either i
rectfy or indirectly. upon any partcu
lar class, and at the same time will
not seriously interfere with productive
industry and the general prosperity of
the country.
TT would not seem either wise or
necessary to change from our present
-rem 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 ten per cent, tax payers
would still be required to contribute
in proportion to their ability to pay;
while by placing a certain amount Of
articles, or transactions. a SO low rate
that they could readily be borne with
out injury, the income tax could be
materially simplMed, the tax laws
could be more readily administered at
the same time the needed revenues
would be raised without the evil eff
fects now resulting from the present
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"
Loss To Department
To reduce the surtax rates to a
maximum of 25 per cent and gradual
ing the reductions through all the
brackets" he says would mean an ap-
reenue. 20 per cent maximum rate
on the same basis would involve a
revenue loss of about 5000, 0,000, 900.
Other adjustments which should be
made would probably involve an
amount equal to that made in the sur =
tax rates. The loss of revenue, how
ever, would not be permanent, for the
reduced rates would ultimately be pro-
ductive Of more revenue than higher
rates. due to the increase in taxable
transactions"
Reiterating arguments that the ef-
feet of high sIlrtax rates Is to keep
new capital out Of productive enter
prise, and to prevent normal business
transactions with the result that ma
tural industrial development is re-
tarded, Mr.. Mellon adds:
1.-The idea seems to be prevalent
that in taxing large incomes, only the
person receiving the income, and who
is to pay the tax is really concerned.
This is a mistake. For whatever the
government takes, in the way of tax,
wise be saved and and invested, and
thereby become a part of the capital
and of the wealth of the nation, af
fects not so much the individual from
whom it Is taken as it does the whole
ffivilbxafAan41Lr'a ffctst'
people of the country in the direct,
loss of productive capital.
after ALL the wealthy of the coun-
try, upon which all the activities and
the prosperity of our people depends,
is made up Of private property of the
individual citizens of all people
and anything that unnecessarily takes
away from the accumulated property
necessarily injuriously affects the peo-
pie as a whole"
Discussing the proposed adjustment
of the tax on business, profits, Mr..
Mellon suggests no specific rates, but
calls attention that the repeal Of the
excess profits tax made necessary an
increase of 2 IL per cent in the cor
portion income tax and that this with