The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1922-02-03
INTERNAL REVENUE
ONLY WAY TO RAISE
FUND SAYS MELLON
Opposes General Sales Tax Ex-
cept on Cigarettes, T0bac-
cos and Documents.
WILL COST S25 MILLIONS
FOR THE FIRST TWO YEARS
Calls Attention to the S300,000,-
900 Deficit in 1928 Which
Must Be Made Up?
Csy The Associated Press,

WA211lAN1LoANB w EDs - NtAAN@ ~
finance a soldiers bonus must be
raised by means Of internal taxes as
it would he impracticable 10 depend
upon 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 en-
actment OF bonus legislation at this
time, the treasury secretary said that
in laying taxes, congress would have
10 tap mostly new sources as the lev-
les now i'm effect were abnormally high
for peace times. He opposed gen
eral sales tax, reenactment of the ex-
cess profit tax, or an increase IN any
existing taxes except possibly those
on cigarettes, tobacco and documents
New sources of revenue suggested
by the secretary included three cent
first class postage to raise $1O,Ooo,ooo;
nm increase on second class postage
rates 10 produce $30,000,000. q two cent
tax on bank checks to yield sS0.0o0.0OO
ana license tax OF 80 cents per horse
power on automobiles TO produce
s1OO. 900. Mr.. Mellon estimated
that Increased documentary stamp
taxes would produce s40,000,0oO and
that an additional $20,000,00o could be
had from an increase OF 30 cents per
$1,000 on cigarettes and two cents a
pound on tobacco.
Figuring that the bonus would cost
s425 .OOO. 900 a year for the first two
years. the secretary said congress
could pick out other sources OF taxes
where the burden would fail with the
least hardship in order to make up
the deficit OF $125.OO0,ooO as between
the Yield from the specific suggestions
me had made and the cost Of the bonus.
In this connection he called attention
that there had been suggested con-
sumption taxes on tea, coffee, sugar
and other articles, but he did not ap-
prove such taxes.
AS to the use of any part Of the pro-
ceeds from the foreign debt, Mr.. Mel
Ion said the time that returns would
be had from that source was proble-
maticai and that in any event the ul-
innate cost to the government and
the country would be greater than If
direct taxes were laid. He explained
that II the interest were used the gov
ernment would have to extend its do
1nestic debt refunding operations that
much longer at cost to the tax-pay-
ers. while IL the foreign bonds We're
sold in the United States the govern
ment would have to guarantee the in
terest and the principal and even then
the securities probably would not be
sold at par.
10 a suggestion that the treasury
issue certificates OF indebtedness to
raise the $3.50. 0.00o, 900 for the first two
years and retire them out Of interest
from the foreign debt, Mr.. Mellon said
this would hinder the domestic debt
refunding operations upon which the
treasury soon must embark. The
amount to be refunded he asserted,
was so large that no additional Sc
curities should be thrown on the mar
ket during the operations He also
called attention that the government
was facing a deficit Of s3oo,0oo,0oo In
1928 which must be made up.
Asked ny Representative Warner,
democrat, Texas. as to the imposition
Of tax on light wines and beers as q
means OF raising the bonus funds, Ms
Mellon declared that with the high
tension" in the country on the prohiH-
ton question it was not feasible to de-
pend upon this as source OF revenue
Chairman Fordney suggested that
there was a constitutional inhibition
on congress in permitting the sale OF
beer and wine.
Brigadier General Lord. budget Of
fleer for the war department, told the
committee that the department hac
estimated that II al the soldiers took
cash the total cost OF the bonus to the
treasury would be s1.Oss, 100000, but
he declared that he and other Officers
believed this total too low. Members
u the committee agreed that the fig
nre probably was small and Rspre'
sentative Longworth republican, Ohio
said it would be better for the com
nittee to follow the 1850. .Oo0. GOO esti-
nate contained in the senate finance
committee report on the bonus bill.