Daily Kennebec journal., 1921-12-08

SpeClnC dTtlCieS, OT by a lOW -Tdte
! general tax on a broad class of ar
ticles or transactions"
/. 1T is of vital Importance" Mr..
Mellon declares, that adjustment be
(, made in our scheme of taxation
whereby the burden will not fall un-
! duly. whittier directly or indirectly,
upon any particular class and at the
same time will not seriously interfere
with productive industry and the
general prosperity of the country
'It would not seem either wise or
necessary to change from our pres
| ent system of taxation to new and
untried plans. BY retaining the in
!. come tax with reasonable surtax
rates. which in peace times ultimate
ly should not rise above 10 per cent,
taxpayers would still be required to
contribute in proportion to their abil-
: ity to pay: while by placing a cer-
, tain amount of tax on specific arti-
| cles, or classes of articles, or transac-
tions, at so low rate that they could
I readily be borne without injury the
| income tax could be materially SIM
! plified, the 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 excessive
rates of taxation"
Mr.. Mellon informs Congress that
the amount of revenue involved in
the suggested reduction Of rates "is
not nearly as great as is generally
supposed"
ITO reduce the surtax rates to a
maximum of % per cent, and grad
uating the reductions through all the
brackets" he says, would mean an
| apparent loss of about $3.50. .000, 900 in
! revenue. A 20 per cent maximum
rate on the same basis would involve
revenue loss of about 100000, 900.
I Other adjustments 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 ultimately be
productive of more revenue than
higher rates due to the increase in
taxable transactions"
Reiterating arguments that the
effect of high surtnx rates is to keep
new capital out of productive enter
prise and to prevent normal business
transactions with the result that nat
ural industrial development is re-
tarded, Mr.. Mellon adds.
The idea seems to be prevalent
that in taxing large incomes only the
person receiving the income, and who
is to pay the tax, is really concerned.
This is a mistake, for whatever the
government takes in the way of tax,
out of any income, which would
otherwise be saved and invested, and
thereby become n part of the capital
and of the wealth of the n3tion. af
fcct5 not SO much the individual from
whom it is taken. as it does the whole
people of the country. in the direct
loss of productive capital.
"Aftcr all, the wealth of the coun-
try, 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
pcople-and anything that unncces-
sarily takes away from the accumu-
lated property necessarily injurious
ly affects the people as n whole"
Discussing the proposed adjust
| lHcltl ol INC ldN Oh DuSincSS
Mr.. Mellon suggests no specific rates.
but calls attention that the repeal of
the excess profits tax made neccs-
sary an increase of IL per cent in
the corporation income tax and that
this. with the capital stock tax.
makes the total levy on corporations
approximately Is per cent
when We remember" he writes.
that the great bulk of the business
of the country, both large and small.
is carried on under corporate form
and that the net income must largely
be distributed in dividends. and that
these dividends are then in turn sub
jcct to surtaX in the hands Of per-
sons receiving them, it is at once
seen that the resulting taxation to
persons engaged in productive bust
ness is very heavy. For instance
stOckholder subject to surtax at 10
per cent really pays about 2J per cent
on his dividends, while a stockholder
subject to a so per cent surtaX would
be taxed about IS per cent on such
profits"
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 cs-
tates," Mr.. Mellon says much of what
he has said respecting the high sur
taxes applies equally to the estate
taxes. Another objection he sets
forth is that in many instances a
forced liquidation Of estates to OBJ
tain the necessary money to pay the
taxes results in loss to the estates as
we'll as "tO everyone else who is in
tcrested in these properties. especial
ly if at the same time they desire to
or must SELL"
Referring to the oft-repeatcd state
ment that the tax laws need simplify
ing, Mr.. Mellon declares that the
greatest simplifcation that can be
made is in the reduction of the
| rates"
So long as the rates We're low. he
asserts. "there was not much diff
! Guilty in the law: even though the
system was entirely new and the or
ganiZntion administering it unfaml-
lar with the operation Of such a 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 D,nney, and
which means that each possible Ques-
ton is contested by the taxpayer and
by the government, with resulting de-
lay in the collection of the revenue.