Perth Amboy evening news., 1922-12-18

no exagEeration. 1t IS POSSIBLE, lor
instance, for a rich man to hand
his property over to his heirs, thus
dividing it up into so many parts
that no one of them will have to pay
much surtax. By such a method, the
aggregate of the taxes on the sew
eral parts will not be equal to what
would be on the whole income IL
kept in the name of one man.
Trusts may be created and scores of
other legal evasions can be o
ed to which bereave the Treasury
of the tax income.
The secretary cites statistics to IL
lustrate his point. He shows that
in 1919 the sum of $4,000 600 was
collected in s~urtaxeS. In 1920 this
had declined to $3.50, 000, 900; in 1921
to $3.50, 600, 900 and the estimated
surtax return for 1922 is placed by
the secretary at only $35O,OOO,O 900.
These diminishing returns from the
surtax, in spite of the fact that the
rate has remained the same, prove,
in the s~ecretary's opinion, hat in
spite of everything the Internal
Revenue Bureau can do, taxpayers
are finding out each year more ways
to avoid the payment of taxes. The
secretary insists that this constitutes
the killing of the goose that lays the
golden eggs.
On large incomes the rates, in
! Guiding surtax, amount to SO per
cent as a maximum-more than half
a mans income. No man, the sec
rotary asserts, no matter how
wealthy, likes to see more than half
Of his years income taken away.
He is urging congress to fix a maxi
| ~ 7, ~ ro+a - about Q q mar cont
1t may be recalled that during the
war Baron Aston paid an income tax
of about 1875 per cent. according to
reports then printed. That is, he mad
to turn over to tax collectors every
single cent he made during the year
and, in addition, dig down into his
pocket and find rs per cent more.
This arose from the fact that he
was amenable to both American and
British income taxes, deriving in
come from both countries
While such an arrangement is en-
durable in time of war, it is illogical
in peace times, in the opinion Of
Secretary Mellon and other advo-
Gates of surtax reduction. They as
sert that e~nterprising men who as
sist In developing the business of
the country will be discouraged and
stop doing business. If a newsboy
makes so cents a day and has 1t
all taken away from him or ever
half, he will shortly say its no use
doing all that hard work for nothing
and will cease his efforts. Advocates
of revision say that the principle
holds true of the rich man or the
active corporation as well as Of the
newsboy.
Tax-Exemptiop Securities
The principal avenue of evasion
l of taxes Is presented by tax-exempt
H securities of states and municipali-
ties. The annual report of the secre-
tary of the treasury shows that SILL
4 900, 000, 900 of such securities now
4 are outstanding in the United States.
This means that the income on this
vast sum is free of any Federal tax
alton. Conservatively estimating
that a rate of 10 per cent would ap-
ply on an average to the income
from these securities were they not
exempt from taxation, it is seen that
accrue to the treasury.
This exemption is permitted by the
constitution which provides that the
Federal government may not inter-
fere with the rights Of states and
cities :; declare their ecu titles ex-
empt from taxation. Secretary Mel
lon has recommended 10 congress
that the constitution be amended so
that the Federal government ma!
interfere to the extent Of levying
the income tax On the incomes from
| such bonds
About $1,000. 900, 900 OF fresh Sc
curities of this class are issued by
states and cities every year, so the
volume of tax free income is in.
creasing rapidly. Such a tendency
makes the people who do not owr
such securities pay a higher rate as
in effect they must make up tbs
share of which the holders
OF the tax exempt securities avoit
paying.
The third taxation problem Is tina
presented by undivided surpluses o
corporations. The supreme cour
of the United States and the treasur,
department have held that distribu
ton Of these SURPRISES which hav
been accumulated yer a number o
years, are not directly subject t
the income tax in given circum
stances. This has provoked niue
criticism. Representative James A
Frear of Wisconsin Is championin
slnsw lsg1elatiop which clearly EAl ds