New-York tribune., 1921-05-02
Suggests Flat Additional
Impost on Corporations,
Without 81, ,OOOExemp-
tion, to Replace Loss
Modified Income
And Surtax Sought
Tells Congress Outlay Is
Shocking; Warns of
Wasteful Expenditures

From Tho Tribwwe's W0shfnGtoN Bwrsuw
WASHINGTON, May 1.-Repeal Of
the excess profits tax. readjustment Of
income tax rates so % to limit the
maximum normal tax and surtax to 40
per cent Tor the present year and 8S
per cent for succeeding. years; reten-
tion Of the lcvies on transportation and
amusement tickets with new or addi-
tional taxes on Injuries and imports,
and revision downward in appropria-
tions for the army and navy are sug-
gestions made TO the House Ways and
Means Committee and the Senate
Finance Committee by Secretary Of the
Treasury Mellon.
In letters to Chairmen Fordney and
Penrose, Secretary Mellon reviewed the
shocking rate" Of outlay Of the fiscal
year thus far, and warned against a
continuation Of RECKLESS or wasteful
expenditures"
"This is no time for extravaganza or
for entering upon new fields Of ex-
penditure," Mr.. Mellon salo. "Expendi-
lures should not even be permitted to
continue at the present rate. The
country is staggering under the exist
ing burden Of taxation and debt and
clamoring for gradual relief from the
war taxation."
May Not Be Able to Erase Debt
Unless expenses are sharply reduced,
Mr. Mellon added, there will be practi-
,rallv M furAs owos1ohln kkte vync- ~n
next for the retirement Of tho floating
debt represented by loans and outstand-
ing tax certificates.
The Secretary said that the nations
expenditures thus far in the fiscal year
of 1921 amounted to $3,783, I'll ,996.74, or
at the rate of about S., 600, 900 900 for
the year. According to the estimates
Of the spending depa artments, ordinary
expenditures during the fiscal year Of
1922, including interest on the public
debt. will be more than $4,000, 100000.
Mr. Mellon pointed out that the esti-
mated current surplus both In 1921 and
1922 will be absorbed by redemptions
OF war savings securities, acceptances
estate tax, and by other debt retire
merts required under law.
This mems" he went on, "that the
Treasury's earlier expectations as to
the retirement Of the floating debt have
been upset by the continuance Of un-
expsctedly heavy current expenditures
during the last twelve months, particu-
larly on account Of the army and navy
and the railroads, and that the govern
ment cannot now expect to retire any
material portion Of the $4,000, 100000
Of floating debt now outstanding dur
ing the fiscal years 1921 and 1922 out
~ -1-
that the country cannot look to any
plan for funding the floating debt to
reduce the burden of internal taxes
during the next two years. Substan-
tial cuts in current expenditures offer
the only hope of effective relief from
the tax burden"
Upholds Harding's Appeal
Citing the words Of President Har-
"the readjustment Of internal taxes
and the revision or repeal Of those
taxes which have become unproductive
and are 80 artificial and burdensome
as to defeat their own purpose" Secre-
tary Mellon said:
"The higher rates of income sur
taxes put constant pressure on tax
payers to reduce their taxable income,
interfere with the transaction of busi-
ness and the free flow OF capital into
productive enterprise and are rapidly
becoming unproductive. The excess
profits tax Is artificial and trouble
some. Taxes Of this extreme character
are clogs upon productive business ind
should be replaced by other and more
equitable taxes upon incomes and
profits. An intelligent revision Of
these taxes should encourage produc-
ton and in the long run increase
rather than diminish the revenues.
Early action is necessary, for unless
a revision is adopted within few
months it could not in fairness apply
to income and profits arising from
the business Of the present calendar
year"
Mr.. Mellon made the following sue-
gestions for revision Of the internal
tax laws:
III. Repeal the excess profits tax
and make good the loss Of revenue by
tcsatinusd On pass ssvsa,