Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-12-18

SoA VI NUd6A Cos pIOLiIlSCS w ~
a spirited contest over certain aspects
of federal taxation. During the war
period. when the public understood
that the country faced an emergency,
less attention was paid to what might
be called the scientific equilibrium OF
taxation. The public knew the gov
eminent needed money to keep up its
vast war expenditures and the taxes
were paid, generally without very much
question. With the war over and the
people showing a growing tendency to
analyze such matters, the various taxes
are coming in for close scrutiny to de-
termlne their fairness and their rela-
tive wisdom.
Three vital points will be up for dis
cussion during this winters session,
and, in all probability, there will be
legislation on some if not all of them.
They are: First, the question of sur
taxes; second, the tax exemption of
municipal and state securities, and,
third, the ~taxability of undivided sur
pulses. On every one of these CUES
lions, members of both houses are d.
vided, SO the session promises to pro-
duce some lively tax contests.
The question of surfaces is one in
volving the economic law Of diminish
II [1AutASI way Oh stulIAlS
the matter is to say it involves killing
the goose that lays the golden eggs.
Surtaxes are paid only by compare
lively wealthy people and by great cor
porations. To become liable for sur
taxes meant that a large income is
being enjoyed. There are two schools
of thought on the question. One is
that the people and corporations who
are getting big incomes should oe taxed
to the. limit. The opposing theory is
, that such taxation is a discrimination
and will inevitably defeat itself by pro-
voking all manner of legal evasion of
taxes. This theory is that a rich man
or corporation will pay a good round
tax if he thinks it fair and the gov
eminent will get much revenue out of
such payments. but that if he thinks
the tax is unfair he will do everything
he car to defeat its purpose. Secre-
tary Of the Treasury Mellon declares
that the government will get Il bigger
revenue out of q moderate surtax than
out of what may be regarded as an
| extortionate surtax.
Many Ways to Evade Surtax
One of the highest officials Of the
government recently boosted that he
knew a hundred ways to evade the sur
taxes. This in all probability was no
exaggeration. 1t is possible, for in
stance. for a rich man to hand his
property over to his heirs, thus d.
viding it up into SO many parts that
no one Of them will have to pay much
surtax. BY such u method. the aggre-
gate of the taxes on the several parts
will not be equal to what the tax would
be on the whole income if kept IN the
name of one man. Trusts may be Gre
ated and scores of other legal evasions
can be resorted to which bereaye the
treasury of the tax income.
The secretary cites statistics to Il
| lustrate his point. He shows that in
1919 the sum OF $500, 1000, 900 was col
lected in s~urtaxes. In 1920 this had
declined to $500, 100000; in 1921 TO
$50. OOO, 600 and the estimated surtax
return for 1922 is placed by the sec
retary Mt only $3.50, 900 1000. These
diminishing returns from the surtax,
in spite Of the fact that the rate has
remained the same, prove, In the sec
retary's opinion. that in spite OF every
thing the internal revenue bureau can
| do. taxpayers are finding out each year
more ways to avoid the payment or
taxes. The secretary insists that this
constitutes the killing Of the goose
that lays the golden eggs.
On large Incomes tue IdltS, iiihAaAiiS
surtax. amount to IS per cent as a
maximum-more than half a mans in
come. No man, the secretary asserts.
no matter how wealthy, likes to see
more than half of his years income
taken away. He is urging congress to
fix n maximum rate of about ID per
cent.
It NAV be recalled that during the
war Raron Astor paid an income tax
of about l25 per cent, according TO
reports then printed. That is, he had
10 tnrn over TO the tax collectors every
single cent he made during the year
and. in addition, dig down into his
rocket and find 25 per cent more. This
arose from the fact that he was amen
able to both American and British
income taxes. deriving income from
both countries.
While such an arrangement is en-
durable in time Of war, it is illogical in
peace times, in the opinion of Secre-
tary Mellon and other advocates Of
surtax reduction. They assert that
enterprising men who assist in develop
ing the business Of the country viii be
discouraged and stop doing business.
If q newsboy makes SO cents a day
and has it all taken away from him.
or even half, he will shortly say it's no
use doing all that hard work for nothing
and will cease his efforts. Advocates
Of revision say the principle holds true
Of the rich man or the active corpora
ton as we'll as Of the hewshoy.
Tax Exempt Securities
The principal ayenu of evasion OF
taxes is presented by tax exempt Sc
~curities of states and municipalities.
The annual report Of the secretary Of
the treasury shows that S11,000,000, 600
| Of such securities now are outstanding
in the United States. This means that
the income Of this vast sun is free of
any federal taxation. Conseryatively
estimating that a rate of 10 per cent
would apply on an average to the in
come from these securities were they
not exempt from taxation, it is seen
that a revenue of 81, 100, 900. 900 would
accrue to the treasury.
This exemption is permitted by the
constitution. which provides that the
federal government may not interfere
with the rights of states and cities to