Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1922-12-06
MELLON SUGGESTS
SURTAX REDUCTION
Secretary Would Close Up
Ways Of Evading the Fed
eral Statutes
REPORT GOES TO CONGRESS
b. Associated Press

tho present 30 per cent to not more
than % per cent and the closing up 50
fur as possible cf existing avenues Of
escape from Federal taxes are urged
by Secretary Mellon in his annual re.
port, transmitted today to Congress.
No general revision of the revenue laws
is proposed nor are additional taxes
suggested. Mr.. Mellon expressing tn"
hope of meeting any indicated Govern.
mcnt deficit through collection Of bacn
taxes and income from other sources.
The Treasury Secretary informs Con
-ress that to attempt alone to stop the
gaps through which there is an avoid.
anc" of tax payments to the Govern
inCnt will not be cnutgh because the
existing rates of Surtax put such henvy
rC sure on tho larger taxpayers to
reduce their taXablc incomes that new
ones would surely be found. He adds
that the high rates sound productive.
but that the fact remains thar thry are
becoming increasingly ineffective and
are yielding less and less revenue each
year.
Then hlun,ly he tells Congress the
Tim" has come to ''iGrc ,ha facts square
iy" and to corrcc, the artificial condi-
lbl'~ WuIl'h IIi'N It''NII ana WNitU. II''
asserts. are rot Wholesome from tn
point Of view nf business cr industriu.
development, and. at the same time. arr
unpairing tho revenues of the Govern
M"nt.
The more important oi tho methods
Hseh by the taxpayers 10 reduce the
amount uf iEcom" subject to taxation
are listed hy Mr.. Mellon - follows:
Deduction Of losses on sales Of cari =
tai assets. with the failure I" realize
on capital Gins: exchanges of rropcrt
and spruri, ,us 50 nS to avoid taXabl,
gains: invc>tnrn, IN TAX exempt secur
rii'". and division "i property. Crea
;ion of trusts and the like.
Not all of thes" things can bc con =
lrci"d tv law or by rcguiation.' he
continued. "and most nf them lead ia
unnatural and Frequently harmful
economic results. 70 reach the evil
the thing most necessary is the reduc-
tion Of tn" SirtaN rates themselves. in
rl,lcr to re'llir" the prcssur" for avoid
anc" and maintain tn" revenues derived
from the surtay.
II utl sOmc such read iustment Is
made thn Weld OF the higher surtaxr-
will tend. in the ordinary course o,
events. to- drop toward tho vanishing
poimt. The wis" course Is 10 reform
"a" surtaXcs now while the system still
fjnrtions and ut the same tmr :" cloF"
81 far as possible. til" @Hr> which NO"
exist. On this bn-i: IL" rtvi~ipr ca,
be made without loss "f rcvcIu.r. aud.
in Oh" long run. Wit! material bci!"ii'
to To" rc"rnucS.
70 SUPPORT Iii, arghnent thnt tn
high surfaces sraGualv are 'defcAtin.
their own purpose. he calls attentio'
that while nee incomes Of &il ciasSe
during the period FROM 1!lG to 1872,
ncrnn sod fro1 So .I> 81 $40 in 1915 II
500. 10 G23. -. in 1879. AMI thr u,im.
bar Of r" urn from EtI .u:ii in lnlG I,
, 7.oI!.:G4 ia 1920. the number ii re.
iurnS of incomes over SHh'.IHD da
creased durin- IT," sam" period from
1895 in 1916 t" ~; in 1920. aud tn
amount Of ircnn!"s over $3.50 coo frNr
S0H2 n72.nSi IN 1915 I" S-ti."Ii Us
in iH-O.
In "rarncsg'y Grging" prompt ndol
ton oi the proposed c"nstitutiuria
am"uIm"nt against III" further is,uanc
"f tax exempt securities. the Treasur
Secretary says these securities. no,
reaching he mArke; at tho rate o
about 81 1.O0r. 900. .nW annually. fnr,
III" 'outstandinG avenue OF escup
from the surfaces.
poirtiuy mt ,rnt ,ho nres.u, Inv
limits tho fax on noin in ,y,nitol trans
a,tions to III, rrr cont NJ snrh ro;r
hrt nu,s rr limi, ON th. dednr, ion .
IN. Sos in S,ch transactions. Mr. N.lIo,
urrc. Thar in. o,,nnn, hy wLi,I IN
tax may Lc rr,ur"J ON nccnnnt nf Josse
from tho sale nf Genital n,,.ls SIN,
rot exceed ~. per cont OF the amoun
III such loss.
This would. +" - largo cxton'.
Il" asserts. "chcck one ni the method
widely used by taxpayers at the ,,rcSnu
time for Decreasing thrir yearly income
Tn" aIt"rnatv" l. 80 reius" to r"cog
me either capital gain or capital i",;
for income lax purposes. nnd If th
present situation j. allowed I" con
time thcrc IS no doubt tha, it woulr
save revenue to adopt this course. Th
j.. in fact the practice which has beel
fnll"wrd in England for many years.
Til" last twelve months. Ii" says
have boon marked by further liuuIa
ton and recovery from depression. and
more recently. by substantial revvn
If business. Erices OF commodities hav,
risen materially. III" volume Of busi
ncS> has been mounting to higher level
and labor throughout the country i
again fully employed.
.'The year is closing with bountiiu
I,. ,,,,,.r,