The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1922-10-23
FREAR ATTACKS
MELLON anew
ON TAX RULING
Wisconsin Republican
Says Treasury Secre-
tary Overthrows
Action Congress
tBs' Associated Press


WASHINGTON, Oct ec-secretarv
Mellon was charged today by Represen-
tative Frear. Republican. Wisconsin.
with overthrowing the action of con-
gress by his ruling that Section 220 Of
the revenue law designed to reach large
surpluses accumulated by corporations
to prevent the payment of individual
surtaxes was not applicable in the case
Of projected 400 per cent stock dividend
Of the Standard Oil company Of New
Jersey.
The charge was made in a letter to
Mr.. Mellon made public by the Wiscon-
sin representative. The communication
was in response to one written by Mr..
F'rear early in the week calling atten-
tion to the reported stock dividend and
urging that the penalty provision be in
voked. Mr.. Mellon wrote that Section
220 had no relation to such stock divi-
dends as that proposed by the New Jer-
sey oil company but added that there
had been and would be no laxity on the
part of the treasury in evoking that sec
tion wherever there is any basis for
so doing"
Statute Ignored.
Your letter." replied Mr.. Frear un-
der date of today. ignores and msap
prehends the plain reading and purport
of the statute and your ruling assumes
the prerogatives of the supreme court
when it sets aside this law.
Il trust that you are not under a mis-
apprehension as to the question square
ly presented to you because the press
has been filled with announcements that
the purpose of the stock dividends to be
issued by the Standard Oil company,
and the proposed stock dividend Of $500
600 600 in United States Steel in which
You are supposed to be interested, is for
the purpose of avoiding the surtaxes
which wouiG apply if these enormous
amounts aggregating over Sis0oo,00o,-
Oo0 were distributed as cash dividends.
involved Personally.
Naturally as a man of great wealth,
interested in sixty or more corporations
affected by the ruling on stock divi-
dends and taxation, you will find your
personal interest involved in any de-
cision, but l assume in your position as
a public officer you will be governed by
the law and the interests Of the public
rather than by any personal considera-
tion.
In Your letter TO me you. say the cor
poration has paid its full tax. This re-
fers, I take it, 10 section ESQ. but the
penalty of 25 per cent is imposed by
congress in order to reach the unwar-
ranted surpluses that are held by cor
porations and not distributed as cash
dividends in order to evade the tax pay
uent under the individual surtax law
That is the distinction so clearly made
by congress that it cannot fairly be ms
understood. It is another way of reach
ing the tax on undistrlbuted proIlts
which is undoubtedly permitted under
the law and the decision of the supreme
court in the stock dividend case.
Your efforts to protect the govern
r,ant treasury in the past have not been
directed toward collecting a tax upon
large and powerful corporations and IN
the present emergency your action IN
overruling the express act OF congress
will result in a loss to the treasury .,
an amount reaching several "uiiui &"
million dollars annually
"I trnst that YOU will reconsider Your
ruling