Twin city review. [volume] (Champaign, Ill.) 19??-1929, 1922-12-29
Taxes and Melons
Observation-Disclosures

| Inc HrSt concern OF the muItl-mll-
| lionaife secretary of the treasury in
making his annual report is the re-
| duction of the maximum income sur
tax rate from the present 80 per cent
to not more than 25 per cent. Sec
rotary MELONS argument for reduc-
ing the tax on multi millionaires is
that men of wealth evade taxation
because of the high rates and they
would not take advantage of the gov
eminent if the rates were reduced.
Consider the implication of this
recommendation: that multi-million-
aires and their wealth are above the
law and that they will only contribute
to the expense of government on their
own terms! Such argument is in line
with a contention that tariff duties
should be decreased to eliminate
smuggling. Yet we know that as long
as there is tariff there will be
smuggling and as long as there are
taxes there will be people who evade
them. Secretary MELONS vision is
apparently clouded by his own money
bags.
Secretary Mellon tells of four
means used to reduce the amounts of
income subject to taxation:
|. Deductions of losses on sales of
capital assets, with the failure to
realize on capital gains.
z. Exchanges of property and
securities so as to avoid taxable
gains.
3. TaX-exempt securities.
a. Other avenues of escape, such
as the division of property, the crea-
ton of trusts, and the like.
While the secretary of the treas
ury recommends certain steps to stop
these leaks, he fails to mention the
greatest leak of all. the stock divi-
dend craze which has swept the
country during the last month and
which he, himself, inaugurated, ac-
cording to the statements of financial
journals. Billions of dollars of profits
are going into the pockets of security
holders of the United States without
being subject to taxation by means
of the stock dividend trick. In the
last few weeks the Standard Oil
companies alone have declared a bill
lion dollars worth of stock dividends.
Every day increases the total. In
dustrial companies and financial in
situations are rushing to join the pro-
cession. Instead of declaring cash
dividends, the money remains i'm the
Golfers of the big corporations and
nothing is available for investment
in new enterprises.
Under the law fifty per cent of
these profits going to multi-millioh-
aires would be payable to the United
States in income taxes. This in it. |
lie ltff irtn 10 Al 4.
crease of 81 TAI 900, 900 in income and
profits taxes received by the United
States during the past year. And still
Secretary Mellon talks of reducing
the. surtax. Must the people of the
United States admit that they are
helpless in the hands of our multi
millionaires
Ii anything is obvious, it is the
fact that Congress must consider
earnestly every possible means of re-
covering some of the taxes that have
been evaded during the past year.
1t can not longer permit the wool to
be pulled over its eyes. Mellon helped
to repeal the excess profits tax with
loss to the Treasury annually when
added to surtax reductions of APP
proximately half billion dollars.
He opposed any tax on undistributed
profits intended to reach the enor-
nous SURPRISES that have been ac-
cumulating in the treasures of the
companies that have been engageg
In stock dividend orgies during the
last few months. He opposed any
inheritance tax or gift tax that would
reach gigantic mushroom estates. |
He: is the greatest exponent in the |
administration of the principle that to |
those who have shall be given-even
unto ship subsidies-and nothing
shall be taken away. From those |
who have nothing shall be taken away
even the wages they receive. Con-
gress will be justified in considering
any of his financial recommendation
with suspicion.
1t has come to pass, as Justice
Brandeis and Clark of the u. S. Su-
preme Court said in a dissenting
opinion in the stock dividend case.
that IF stock dividends representing
profits are held exempt from taxation |
under the 10th amendment, the owner
OF the most successful businesses in
America will be able to escape taxa
ton on large part of what is actual
ly their income. -. That such a
result was intended by the people of
the United States when adopting the
10th amendment is inconceivable."
But what is the intent of the peo-
pie among -millionaires as long
as they retain control of the govern
\ l.