The West Virginian. [volume] (Fairmont, W. Va.) 1914-1974, 1921-12-07
Secretary of Treasury
Makes Annual Report
to Congress Today
TAX LAW REVISIONS
Policy in Respect to Sol
diers' Bonus Remains
Just the Same
az the Associated Press. J

WASHINGTON, De4. Fur
ther revision OF the tax laws
with a reduction OF the maximum
income surtax rate to 20 or rs
percent and adjustment of the
rates on business profits and es-
tates, is suggested by Secretary
Mellon in his first annual report,
transmitted today to Congress.
The secretary also announced
that the treasury's policy with re-
spect to deferment OF the soldiers
bonus is unchanged and urges
prompt funding OF the ten billions
Of foreign loans as "one of the out
standing needs of the present
economic situation.
MT. Mellon also informs Cong
ress that the maturity within the
next six months OF $6,75O0O0, 900
Of the short dated debt make it
imperative that the government
pursue a policy that the utmost
economy and avoid new undertake
Ings that would throw additional
burdens on the treasury and en-
barrass the funding operations"
with respect to the floating debt.
Revenue revision is the subject
upon which the secretary lays the
most stress. He says the changes
in the tax voted by congress last
month 'give substantial relief to
business and industry and restore
In some measure the. freedom, OF
business transactions but our sys-
tenn of taxation still requires care
ltiI and thoughtful 5consid deratton :
,lHe then proceeds to say. that tf
the loss Of revenue resulting from
the reductions in surtax and other
rates suggested cannot be made
up 'Hby rigid economy In eIpend-
lures" It can be met "either by
placing tax on certain specific
PARTICLES or by low rate general
tax on a broad class Of article sor
transactions"
"It is Of vital importance" MT.
Mellon declares, that adjustment
be made in our scheme OF taxation
whereby the burden will not fall
unduIy, whether directly or indi
rectly upon any particular class
and at the same time will not SER
iously interfere with productive In
dustry and the general prosperity
OF the country.
ut 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 percent. taxpayers would still
Ibe required to contribute In pro.
portion to their ability to pay;
while by placing a certain amount
OF tax on specific articles, or class
es Of articles or transactions, ut
so low a rate that they could
readily be borne without injury.
the income tax could be materially
simplified, tho tax laws could be
more readily administered and at
the same time the needed reve.
nues would be raised without the
evil effects now resulting from the
present excessive rates of taxa
tion.
Mr.. Mellon informs Congress-
that the amount OF revenue Phi.
volved in the suggested reduction
of rates "is not nearly as great as
is generally supposed.
ITO reduce the surtax rates to
a maximum Of 25 percent and
graduating the reductions through
all the brackets" he says. would
mean an apparent loss OF about
$3.50 100000 in revenue. A 20 per
cent maximum rate on the same
basis would involve a revenue loss
Of about $200,0OO,000. Other ad-
tustments which should be made
would probably involve an amount
equal to that made in the surtnx
rates. This loss of revenue, how
ever would not be permanent, for
tho reduced rates would ultimately
be productive of moro revenue
than higher rates due to the In
crease In taxable transactions,
Reiterating arguments that the
effect of high surtax rates is to
keep new capital out Of productive
enterprise and 10 prevent normal
business transactions with the re-
suit that natural Industrial devel-
opment is retarded, Mr.. Mellon
adds:
"The idea seems to be prevail.
ent that in taxing large incomes
only the person receiving the In
come, and who Is to pay the tax,
is really concerned. This is mis-.
take, for whatever the govern
ment takes the. way of tax out
OF any income, which would other
wise be saved and invested and
thereby become part Of the cap.
ital and OF the wealth of the ma
tion, affects not so much the In
dividuaI from whom It is taken, as
It does the whole people Of the
CcontInusd 90 nAAa- slRhtA :