Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-12-07
TAX DODGERS
RObb|NC i. g.,
SAYS MELLON
Economic Evil Becom-
ing Widespread, An
nual Report Ayers.
Slash in Surtax Rates Is
Advocated to Appease
Men Of Big Incomes.

Washington, Dec. 6.-Reduction OF
the present so per cent to not more
thar % per cent and the closing up
so far as possible of existing venue
of escape from federal taxes are
urged by Secretary Mellon in his an
nual report, transmitted Wednesday to
congress. No general revision of the
revenue laws is proposed nor are I'D
ditional taxes suggested, Mr.. Mellon
expressing the hope of meeting any
Indicated government deficit through
collection of back taxes and income
from other sources.
The treasury secretary informs con
gress that to attempt alone to stop
the gaps through which there is an
avoidance of tax payments to the gov
eminent will not be enough because
the existing rates of surtax put such
heavy pressure on the larger tax
payers to reduce their taxable in
comes" that new ones would surely
be found. He adds that the high rates
sound productive" but that the fact
remains that they are becoming IN
c~reasingly ineffective and are yielding
less and less revenue each year.
Then bluntly he tells congress the
time has come to face the facts
squarely" and to correct the artificial
conditions which now prevail and
which. he asserts, are not wholesome
from the point Of view of business or
industrial development. and, Mt the
same time, are impairing the
Of the government.
The more important of the methods
used by the taxpayers to reduce the
| amount of income subject to taxation
are listed by Mr.. Mellon as follows:
Deduction of losses on sales of
capital assets, with the failure to
realize on capital gains.
Exchange of property and Sc
~curities so as to avoid taxable
gains.
Investment in tax-exempt Sc
CurIties; and
Division OF property. creation
of trusts and the like.
Not all of these things can be CON
trolled by law or by regulation, he
continued, land most of them lead to
unnatural and frequently harmful
economic results. To reach the evil
the thing most necessary is the re
duction of the surtax rates themselves,
IN order to reduce the pressure for
avoidance and maintain the
| derived from the surtax.
Until some such reimbursement is
! made the yield Of the higher s%urtaxes
| will tend, in the ordinary course OF
events. to drop toward the vanishing
| point. The wise curse is to reform
| the surtaxes now while the system
| still functions and at the same time
to close, 50 far as possible, the gaps
which now exist. On this basis the
revision can be made without loss Of
revenue. and, in the long run, with
material benefit to the
To support his argument that the
high surtaxes gradually are defeat
ing their own purpose" he calls Mt
tention that while net Incomes Of all
| classes during the period from 1916 TO
1920 increased from $685. .620 in
1916 to S23, 35.529. 1873 in 1920. and
the number of returns from 437.036
in 1916 to 1855, 944 in 1920. the num-
Der of returns Of incomes over
100000 decreased during the same
period from 1896 in 1916 to 1876 in
1920, and the amount Of incomes over
100000 from $992,0T2,9 S6 i'll 1916 to
S24G ,354,5S5 in 1920.
In earnestly urging prompt
adoption of the proposed constitu~
| tlOtHi dIlitIitlIiltiit uStih%t hifF - htA'f
issuance of tax exempt securities. the
treasury secretary say these secufi-
ties, now reaching the market M the
rate of about 81. 900. 000.00 annually,
form the outstanding avenue OF
escane from the surfaces.
with these securities available for
investment, fully exempt as they are
from federal income surtaxes,' Mr..
Mellon continues. Investors h
would normally put their surplus
funds into productive enterprise, are
automatically driven under the pres
sure Of high snrtax into investment in
~tax-exempt securities, with the result
that the federal government loses the
revenue. business and industry lose the
capital. and funds badly needed for
productive purposes are diverted into
unprodnctive and frequently wasteful
expenditure.
This * a situation which can not
be permitted to continue without
grave danger to our economic struc.
ture, as well as our system OF
Anxo4;,n