The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1923-11-22
Secretary Mellon
Urges Reduction
ecOntiD Aed from Page %


Snration; sickness or death destroys
if and old age diminishes it, In the
otber the source of the income con-
times: it may be disposed of during
a mans life and it descends to his
heirs. 1t is estimated that this
amendment will mean a loss in reve-
nue of about $97,5OO,OOO a year. the
greater part of which falls in the
lower income brackets.
. Where the present normal tax is
4 per cent reduce it to 8 per cent, and
where the present normal tax is 8
per cent reduce it to per cent
This affects all personal incomes and
the loss of revenues comes largely
from the lower brackets. 1t is esti-
mated that this will mean a loss in
revenue of $91. 100000 a year.
8. Reduce the surtax rates by COM
mencing their application at $4,000
instead of $1,000, and scaling them
progressively upwards to 25 per cent
at 500, O00.-This viii readjust the
surtax rates all along the line, and the
Treasury recommends the readjust-
ment not in order to reduce the reve-
nues but as a means of saving the
productivity of the surtaxes. In the
long run it will mean higher than
lower revenues from the surtaXes. At
the outset it may involve a temper
airy loss in revenue, but the Govern
ment Actuary estimates that even
during the first year, if the revision
is made early enough, the net loss In
revenue from all the changes in the
surtaxes would be only about $780,
100000, and that in all probability the
revenue from the reduced rates will
soon equal or exceed what would
accrue at the present rates, because
of the encouragement which the
changes will give to productive bust
ness.
The readjustment of the surtaxes,
moreover is not in any sense a par
tisan measure. 1t has been recon-
mended, on substantially this basis
by every Secretary of the Treasury
since the end of the war, irrespective |
of party. The present system is a |
failure. 1t was an emergency meas
ure, adopted under the pressure of |
war necessity and not to be counted |
upon as permanent part of our |
revenue structure. For a short period |
the surtaxes yielded much revenue, |
but their productivity has been con-
stantly shrinking and the Treasury's |
experience shows that the high rates
now in effect are progressively be-
coming less productive of revenue.
The nigh rates put pressure on taxpay-
ers to reduce their taxable income tend
to destroy individual initiative and
enterprise, and seriously impede the
development of productive business.
Taxpayers subject to the higher rates
can not afford, for example, to invest
IN American railroads or industries or
embark upon new enterprises in the
face Of taxes that will take so per
cent or more of any return that may
be realized These taxpayers are
Withdrawing their capital from pro-
ductive business and investing it in
stead in tax-exempt securities and
adopting other lawful methods of
avoiding the realization of taxable in
come. The result is to stop business
transactions that would normally go
through, and to discourage men of
wealth from taking the risks which
are incidental to the development of
new business Ways will always be
found 10 avoid taxes so destructive in
their nature, and the only way to save
the situation is to put the taxes on a
basis that will permit busl-
ness to go on and industry to develop.
This, l believe, the readjustment here {
in recommended will accomplish, and !
it will not only produce larger reve
nues but at the same time establish
industry and trade on healthier s
basis throughout the country. The
is a gradual breakdown in
the system, and a perversion of in {
dustry that STILES our progress as a
nation.
The growth of tax-exempt securi- {
ties, which has resulted directly from {
the high rates of surtax, is at the S
same time encouraging extravaganza |
and reckless expenditure on the part /
local securities will ultimately have {
to be paid, principal and interest, out :
Of taxes, thus contributing directly to I
the heavy local taxation which bears I
so hard on the farmers and small |
property owners. There is no imme- '
date remedy for this within the pow {
er of Congress except the readjust- {
ment of the surtaxes on a basis that
will permit capital to seek productive {
employment and keep 1t from exhaust
ing itself in tax-exempt securities.
The productive use of capital in our G
railroads and industries will also tend l
to bring lower costs for transporta t
ton and manufactured products, thus q
helping to relieve the farmer from the '
reimbursement from which he now g
suffers.
q. Limit the deduction of capital T