Arizona republican., 1921-05-02
MELLON
 MAKES 4 PROPOSALS
 FOR TAX REVISION
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 WASHINGTON. May -Four pro posals for revision os th. federal taxes 2Se made t5 cdu re Ay Sec retary MsIior vi 'S @ S1nmenda- ton for early aGslCA s'Ssf a. the new taxes can be applied fo.- this year. They are:
 Repeal of the excess profits tax and the $2,000 income exemption of corporations, the loss of revenue to be made good by a modified tax on corporate profits Or flat additional income tax on corporations, to yield an aggregate of between $400, 100000 and $500, 100000
 Readjustment of, income tax rates so that no income will pay more than 40 per cent this year and 33 per cent thereafter, with view to producing aggregate revenues substantially equivalent to the estimated receipts from the income tax under the exist ing law.
 Repeal of the o-called luxury taxes together with the nuisance" taxes such as those on. soda fountain drinks but retention of the transpor- tation and miscellaneous specific sales taxes.
 Imposition of sufficient new and additional taxes of wide application" such as increased stamp taxes or H- >~iioO eo-ACo oii tlle uSC Ol ddlOlilODhCS to bring total revenues from internal taxes after making the changes sug- gested, to about s4,000. .000, GOO in 1922 1 and 1923.
 The secretary's suggestions are contained in a letter to Chairman Fordney of the house ways and means committee.
 Mir. Mellon suggests adoption of administrative amendments to the revenue laws simplifying collections and final collections and permitting under safeguards the carrying over of net losses by taxpayers for one year i as a deduction from incomes of suc- ceeding years.
 ! "The treasury is not prepared" he says, ito. recommend any general sales tax.
 1 MT. Mellon says also that he wishes i it were possible to recommend the 1 repeal of the transportation tax but 1 adds that it produce annually around l $330.000,000 and it's repeal cannot be 1 effected with safety unless congress 1 has a substitute He also suggests l to congress that it may be ''advis- | able'' to take action to restrict fur | ther issues of tax exempt securities saying that it is estimated that there
 are now outstanding $10.0o0, 900 of 1 these securities.
 Emphasizing that expenditures for 1 this fiscal year have been at the
 rate of s5.000. .O0o.000, MT. Mellon 1 warns congress that the nation can l not continue to spend at this shock I ing rate" Substantial cuts in current ! expenditures, he said, offer the only 1 hope of effective relief from the tax | burden.
 Reduction of appropriations. more | over, will not of itself be effective tc l reduce expenditures unless congress | avoids or controls measures which 1 result in expenditures without an ap-
 parent appropriation" he says. Re ! appropriations of unexpended bal i ances, revolving fund appropriation: and appropriations of receipts anC
 other indefinite authorfz ations of ex-
 penditures in the past have been re- sponsible for hundreds of millions O
 dollars of actual cash outgo." Mir. Mellon. said that estimates fel T 1922 are subject to great uncertainty
 The estimated collections of S3.1OO,
 000.o00 of internal taxes are based , on the provisions of existing law. h' : adds and are sS50.000,000 less thar the estimated collections for 1921 chiefly because of the shrinkage fl
 business.
 "The estimated ordinary expendi
 lures of s4.014. 900, 900 will be effected by appropriations still to be made,
 he adds. The estimated expendi lures of the war department and thu navy department, aggregating owe s1 100 000.0 for 1922. will depen'
 largely upon the military and maya
 policy adopted.
 "The estimate of about S545, ,000. co
 for payment to the railways in 192 is made necessary by the provision of the transportation act and in . creased estimates from the directo general of railways. In absence O ' drastic cuts in military and naval eX . penditures. there is almost no pros
 pect of any substantial available sur f plus even in 1922"
 , Urging early repeal of the exces
 profits taxes he says an intelligen
 revision of these taxes should en
 courage production. The nro1lt
 taxes he estimates, will yield nc ' more than s45O. 900 900 for the taxabl year of 1921.
 As for a substitute for this ta1
 Mir. Mellon cites estimates of s40O. !. 000,o annually for an additionf flat tax of five per cent on incorpo
 rate incomes. providing the eXemp
 tfon of S2000 now accorded corpora y tions is eliminated
 : Discussing the readiustment or m come tax rates. he says higher surta = rates have reached the point wher l they serve to drive capital into ta 0 the revenue
 e The tobacco and capital stoc f taxes and the taxes on commission K should be retained he believes. but h e urges that so called luxury an e "uuisance" tax be got rid of becaus t nuisance tax be got rid of becaus e unnecessarily veXatIous-"