The Mena weekly star., 1922-02-09
MELLON OBJECTS
 TO SOLDIER BONUS
Says Must Be Raised by Internal Taxes, Proceeds From Refunded Foreign Debt Being Impractical
 Laws Already High.

Washington, Feb. Funds to f. nance a soldiers bonus must be rais- ed by means of internal taxes as it would be impracticable to depend up- on proceeds from the refunded for eign debt for this purpose, Secretary Mellon declared today before the House ways and means committee.
 Reiterating his objections to the enactment of bonus legislation at this time, the treasury secretary said in laying taxes Congress would have to tap mostly new sources, as the levies now in effect were abnormally high for peace times. He opposed gen. eral sales tax, re-enactment of the excess profits tax, or an increase in any existing taxes excepting possibly those on cigarette, tobacco and docu- ments.
 New sources of revenue suggested by the secretary include three-cent first class postage to raise $70,000,- GOO; an increase in second class post age rates to produce $30,D00,0O0; q two-cent tax on bank checks to yield &, ,00O, 900 and a license tax of 50 cents per horsepower on automobiles, to produce $100,000,000 Mr. Mellon estimated that increased documentary stamps taxes would produce $40,000,- 900 and that an additional S20,0O0,- GOO could be had from an increase of 50 cents per 1000 on cigarettes and two cents a pound on tobacco.
 Figuring that the bonus would cost S425, ,000, 900 a year for the first two years, the secretary said Congress could pick out other sources of taxes where the burden would fall with the least hardship in order to make up the deficit of $125,000,000 as be- tween the yield from the specific sug gestions he has made and the cost of the bonus. In this connection he called attention that there had been suggested consumption taxes on tea, coffee, sugar and other articles, but he did not approve such taxes.
 As to the use of any part of the proceeds from the foreign debt, Mir. Mellon said the time that returns would be had from that source was problematical and that in any event the ultimate cost to the government and the country would be greater than if direct taxes were laid. He explained that if the interest was used the government would have to extend it's domestic debt refunding operations that much longer at cost to the taxpayers while if the foreign bonds were sold in the United States the government would have to guar antee the interest and the principle and even then the securities probably could not be sold at par
 To a suggestion that the treasury issue certificates of indebtedness to raise the $S50,000,000 for the first two years and retire them out of in- terest from the foreign debt, Mir. Mellon said this would hinder the do- mestic debt refunding operations up- on which the treasury soon must em- bark. The amount to be refunded, he asserted, was so large that no ad- tional securities should be thrown on the market during the operations. He also called attention that the govern ment was facing deficit of $300,0OO,- 900 in 1923 which must be made up.
 Asked by Representative Garner, Democrat, Texas, as to the imposition of tax on lght wines and beers as a means of raising the bonus funds, MT. Mellon declared that with the "high tension" in the country on the prohibition question it was not feas- ible to depend upon this as source of revenue. Chairman Fordney sug- gested that there was a constitution al inhibition on Congress in permit ting the sale of beer and wine.