New-York tribune., 1921-12-08

new capital out Of productive enter
prise and to prevent normal business
transactions, with the result that
natural industrial development is re-
tarded, Mr.. Mellon adds:
"The idea seems to be prevalent that
in taxing large incomes only the per-
son receiving the income, and who is
to pay the tax, is really concerned.
This is mistake, for whatever the
government takes in the way of tax
out of any income, which would other
wise be saved and invested, and there
by become part Of the capital and
of the wealth of the nation, affects
not so much the individual from whom
it is taken, as it does the whole peo-
pie of the country, in the direct loss
Of productive capital.
After all, the wealth of the country,
upon which all the activities and the
prosperity of our people depends, is
made up of the private property Of the
individual citizens-of all the people
and anything that unnecessarily takes
away from the accumulated property
necessarily injuriously affects the peo-
pie as whole"
Discussing the proposed adjustment
Of the tax 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 2ls per cent in the corporation in
come tax, and that this, with the capi-
corporations approximately Is per cent.
"When we remember he writes,
chat the great bulk of the business,
both large and small, is carried on
under corporate form and that the net
income must be distributed in divi-
dends, and that these dividends are
subject to surtax in the hands of per-
sons receiving them, it is at once seen
that the resulting taxation on produc-
tive business is very heavy. For in
stance, stockholder subject to surtax
at 10 per cent really. pays about 25
per cent on his dividends, while a
stockholder subject to a so per cent
surtax would be taxed about 60 per
cent"
Tax Selling
Declaring that there were two "chief
objections" to the present high "estate
tax rates, running up to 25 per cent on
the total value of estates" Mr.. Mellon
says much of what he has said re-
specting the high surtaxes applies
equally to the estate taxes.
Another objection he sets forth is
tidL III HdNy iuScouSSS q 4OASC0 IL
quidation of estates to pay the taxes
results in loss to the estates as we'll
as "to every one else interested in
these properties, especially if at the
same time they desire to or must SELL"
Referring to the statement that the
tax laws need simplifying, Mr.. Mellon
declares that the greatest simplifica-
tion that can be made is in the reduc-
tion of the rates.
Es long as the rates were low, he
asserts, "there was not much difficulty
in the law. even though the system
was entirely new and the organiza-
tion administering it unfamiliar with
the operation of such law"
"The complexity of the law as far
as it concerns the income tax ITSELF"
Mr.. Mellon concluded. "has arisen
largely out of the high rates which
make every point that arises involve
substantial amounts of money, and
which means that each possible ques-
tion is contested by the taxpayer and
by the government, with resulting de-
lay in the collection Of the revenue,
irritation and annoyance and expense
on the part of the taxpayer and costly
litigation. With moderate rates, much
of this difficulty would disappear"