The Wheeling intelligencer. [volume] (Wheeling, W. Va.) 1903-1961, 1921-12-08
MELLON ADVOCATES REDUCTION
OF SUR-TAX RATE To 70 PR.CT.

Washington. Dec. i.-Fur'5e7 revision
OF the tax laws NTH n reduction az the
maximum income surtax rate to :" or
* ner cent and adjustment OF the rates
on business profits and estates. Is SuS-
pested by Secretary Melloa IN MS NrS'
annual report, transmitted today 10 con-
gross.
The secretary also that the
treasury's policy with respect 70 defeE-
rnent OF the soldiers bonus IS uh-
changed and urges prompt funding OK
tho ten billions ot foreign loans As one
OF the outstanding needs CT the present
economic situation
Mr., Mellon also Informs congress that
the maturity within the next six months
OF s6,T5O.00o 900 OF the short dated DEBT
makes II imperative that the govern,
mcnt pursue q policy OF the utmost
, economy and avoid new undertakings
that would throw additional burdens on
the treasury and emoarraSs the tundlhS
operations" with respect 10 the noa'IhE
de6t
Revenue revision Is the subject upon
which tho secretary lays the most
stress. He says the changes In the tax
law voted by congress last month give
substantial relief 20 business and indus
, Try n restore n some measure the
! freedom OF business transactions but
! ohr system OF taxation stu reQuires
J cAreful and thoughtful consideration"
He then proceeds TO say that II the loss
| oS revenue resulting from the reductions
IN surtax ard other rates suggested cam
| not be- made up. by rigid economy in
4; expenditures" q can De met either by
placing a tax on certain specific articles
or by . loH-rate general tax on q broad
class OF articles or transactions
must Rsmovo "HtndrAnco0."
1t IS Of vital Importance" Mr.. Mel
Ion declares. that adjustment be made
in our scheme OF taxation whereby the
burden will not fslly unduly, wither
directly or indirectly. upon any parttcu-
!ar class and at the same time win not
seriously interfere with productive in
dustry and tho general prosperity or the
country.
1T would not seem either wise or
necessary TO change from our present
system OF taxation TO now and I'M
tried 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 ay:
by placing a certain amount OF tax
on specific articles, or classes Of ar
ticles, or transportations. at 80 low q
I9J0 lndl N.Cg SO4Au lSoAAAJ ~
without Injury. tho income tax could be
materially simplified; tho tax laws
! could be more readily administered and
at the same time the needed revenues
would be raised without the evil effects
now resulting from the present excess
sive rates OF taxation"
Mr.. Mellon informs Congress that
! tho amount OF revenue involved In the
suggested reduction OF rates els not
nearly as great as Is generally sup
posed"
Losses Not Permanent
To reduce tho surtaS 10 a maximum
OF 25 per cent, and graduating the re-
! ductIons through all the brackets" he
says, would mean an apparent loss OF
about $3.50, 900. 900 in revenue. A 20
per cent maximum rate on the same
basis would Involve a revenue loss OF
about 5000. 900, 900. Other adjustment:
which should be made would probably
involve an amount equal to that made in
the surtax rates. This loss OF revenue.
however, would not be permanent. for
the reduced rates would ultima tely be
productive OF moro revenue than higher
rates due 10 the increase In taxable
transactions"
Reiteratlng arguments that the effect
OF hlR surtaS rates Is to keep new
capital out OF productive enterprise and
10 prevent normal business transactions
with the result that natural industrial
development Is retarded. Mr.. Mellon
adds:
The idea seems 70 be prevalent that
in taxing large incomes only the per
son receiving the Income, and who Is
10 pay the tax, IS really concerned. This
IS a mistake. for whatever tho govern
ment takes in the way OF tax. out o.
any income. which would otherwise be
saved and invested. and thereby become
a part OF the capital and OF the wealth
OF the nation. affects not so much the
Individual citzens-or all the people
II does the whole people OF the coun-
try, in the direct loss OF productive
capital.
upon which all the activities and tie
prosperity OF our people depends, -
made up OF the private property OF the
Individual c!uZens-of al tho people
n anything that unnecessarily takes
away from the accumulated property
! necessarily i~njur!ously Affects the peo-
pie as a whole"
Discussing tho proposed adjustment
OF the LAX on business profits. Mr.. Mel
Ion suggests no specific rates. but calls
attention that the repeal OF the EXCESS
profits tax made necessary an Increase
OF ga percent IN the corporation income
tax and that this. with the capital stock
tax. makes the total levy on corporations
approximately is percent.
Industry Taxed Too Heavy.
when we remember, he writes, that
the great bulk OK the business OF the
! NOuAllJt OOLAA - DO oll'A 40 -
on under corporate form and that tho
net Income must largely be distributed
in dividends. and that these dividends
are then in turn subject 10 surtaN IN
the hands Of persons receiving them. II
ig at once seen that the resulting tax
alton 70 persons engaged in productive
business Is very heavy. For instance a
stockholder SUBJECT 10 surtaH at 10 per-
cent really pays about 20 percent on his
dividends. while q stockholder subject
10 a so percent surtaS would be taxed
about 65 percent on such profits"
Declaring that there were two chief
objections" 20 the present high estate
tax rates, runninG up 70 % percent on
the total Value OF estates,' Mr.. Mellon
says much OF what no has said respect
ing tho high surtaXeS applies equally
10 tho estate taxes. Another objection
he sets forth Is that in many instances
a forced liquidation OF estates 10 obtain
the necessary money 70 pay the taxes
results in loss to the estates as well as
TO everyone else who !s interested In
these properties. especially II at the
same time they desire 10 or must sell"
Reduction woud Simplify Taxation.
Referring TO the ort-repeated state
mont tina tho tax laws need simplify
Ing, Mr.. Mellon declares that the great
est simplIhcation that car be made Is
in the reduction OF the rates"
SO long rs the rates were low. he as
sertS "there was not much difficulty
in the law; even though the system was
entirely new and the organization ad-
uAinisterins II unfamiliar with the OPP
Grafton OF such a law.