The labor world., 1922-12-30
TAXES AND MELONS.

| TAXES AND MELONS.
The first concern of the multi
millionaire secretary of the treas
ury in making his annual report is
the reduction Of the maximum in
: come surtaX rate from the present
so per cent to not more than 25 per
cent. Secretary MELONS argument
for reducing the tax on multi-mil-
lionaires is that men of wealth evade
taxation because Of the high rates
and they would not take advantage
of the government if the rates were
. reduced.
Consider tho implication of this
recommendation that multi-million
aires and their wealth are above the
law and that they will only contri-
butte to the expense of government
on their own trims! Such argument
is in line with a contention that tar
If 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:
1. Deductions of losses on sales
of capital assets, with the failure to
realize on capital gains.
2. Exchanges of property and Sc
curities so as to avoid taxable gains.
8. Tax-exempt securities.
4. Other avenues of escape, such
as the division of property, the cre-
alton 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
dividend craze which has swept the
country during the last month and
which he, himself, inaugurated, ac-
,cording to the statements of finan-
cial journals. Billions of dollars of
profits are going into the pockets of
security hold ers 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 billion dollars worth of stock divi-
dends. Every day increases the total.
Industrial companies and financial
, institutions are rushing to join the
procession. Instead of declaring cash
dividends, the money remains in 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-million-
aires would be payable to the United
States in income taxes. This in itself
IL sufficient to account for the de-
crease of s1,141, 100000 in income
and profit 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 null
ti-millionaires?
If anything is obvious, it is the fact
that congress must consider earnest
ly every possible means of recover
ing 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
a loss to the treasury annually when
added to surtax reductions Of ap-
proximately half billion dollars. He
opposed any tax on undistributed
profits intended to reach the enor.
nous surpluses that have been &C.
cumulating in the treasures Of the
companies that have been engaged
in stock dividend orgies during the
last few months. He opposed any in.
heritance tax or gift tax that woul6
reach gigantic mushroom estates. HI
Is the greatest exponent in the ad
1ninistration of the principle that t.
those who have shall be given-eve,
unto ship subsidies-and nothing
shall be taken away. From those VIII,
have nothing shall be taken ava.
even the wages they receive. Con
gress will be justified in considerin.
any Of his financial recommendation
with suspicion. ~ s.s
= It has come to pass, as Justice
Brandeis and Clark Of the U. S. Su
s. pre1ne Court said, in dissenttn
opinion in the stock dividend case
b that ''if stock dividends representa-
profits are held exempt from tax
alton under the 18th amendment, tn
5Is nvvnor NJ tho most aYcc cSf111 h11Si