Arizona republican., 1922-02-03
MELLON SAYS
BONUS.
FUND BY new
INTERNAL TAX
Secretary Of Treasury OPP
poses General Sales Tax
And Foreign Debt Pay
ments To Finance Bonus
[RepubIIcan A. P. Leased wlrel

WASHINGTON, Feb. Funds to
finance a soldiers bonus must be
raised by internal taxes as it would
be impracticable to depend on pro-
ceeds from the refunded foreign debt
for this purpose. Secretary Mellon
declared today before the house ways
and means committee. Reiterating
his objections to the enactment of
bonus legislation at this time he
said that in levying taxes congress
would have to tap mostly new re-
sources, as the levies now in effect
were abnormally high for peace
times. He opposed general sales
tax, reenactment of the excess prof
it's tax. or an increase in any existing
taxes except possibly those on cigar
cites. tobacco and documents.
New sources of revenue he sug
gested included three cent first class
postage to raise $70,000.000: an in
crease in second class postage rates
to produce $30,000,000; a two-cent
tax on bank checks to yield S30,000,-
600 and q license tax of so cents per
horsepower on automobiles, to pro-
duce $100,000,000.
Mr.. Mellon estimated increased
documentary stamp taxes would
produce $40, 100000 and that an addi-
tional s25,0O0 900 could be had from
an increase of so cents per 1000 on
cigarettes and two cents a pound on
tobacco.
Figuring that the bonus would cost
$425, 100000 a year for the first two
years. the secretary said congress
could pick out other sources of taxes
where the burden would fall with the
least hardship and make up the defi
Ia NF o. hot n
yield from the specific suggestions
he had made and the cost of the
bonus. He called attention that there
had been suggested consumption
taxes on coffee, tea, sugar and other
articles and a tax on gasoline, but
he did not approve such taxes.
AS to the use of any part OF the
proceeds from the foreign debt, the
secretary said the time that returns
would be had from that source was
and that in any event
the ultimate cost would be greater
than if direct taxes We're laid,
He explained that If the interest
were used the government would
have to extend its domestic debt re-
funding operations that much longer
at a cost to the taxpayers, while II
the foreign bonds were sold in the
2ldlSS lHO
have to guarantee interest and the
principal and even then the securities
probably could not be sold at par.
To a suggestion that the treasury
issue certificates of Indebtedness to
raise the 5000, 900 for the first two
years and retire them out of interest
from the foreign debt, Mr.. Mellon
said this would hinder the domestic
debt refunding operations. Tne
amount to be refunded. he asserted
was so large that no additional secu-
rites should be thrown on the mar
ket during the operations. He also
called attention that the government
was facing a deficit Of $500, 100000 in
1928 which must be made up.
Asked as to the imposition or
tax on light wines and beers as
means Of raising the bonus funds.
Mr. Mellon declared that with ne
high tension" in the country on the
prohibition question, it was not teas-
ible to depend upon this as re-
source of revenue.
Brigadier General Lord, budget Of
ficer for the war department, told the
committee that the department had
estimated that If all the soldiers took
ash. the total cost Of the bonus 10
the treasury would be $1,0S2, 100000
but he declared that he and other
officers believed this total too low.
Members of the committee agreed
that the figure probably was small.