The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1923-04-14
REDUCING THE sUPER-TAXEs

REDUCING THE SUPER-TAXEs
Those who, on account of his private
financial affiliations, are inclined 20
look askance upon Secretary MELONS
Recommendation that surtaXes on in
comes and excess profits be further
modified should remember that similar
recommendations were made by Sec
rotary McAdoo before his retirement,
by his successor, Carter Glass, by
President Wilson, and by President
Harding. When too heavy a burden
is placed upon wealth it has ways of
evading the responsibility and of hid
ing, which not only defeat the pur-
| pose of the tax, but also withdraw
capital from support of business and
industry. Whenever tax becomes
confiscatory, the returns diminish and
the total collection falls. Of course,
during such a national emergency as
war when these taxes were imposed,
their necessity was perceived and the
attempt to evade them was not at that
time pronounced. When the emer-
gency was over and the tax still re-
manned high, in spite of official re-
quest on the part of secretaries of the
treasury and presidents that they be
cut down, there was deliberate pro-
gram of avoiding the tax by withdraw
ing the capital from taxable invest
ment and placing it in tax-free secur-
tiles and in other hiding places. Not
only was there this deliberate with
drawal from the range and province Of
taxation, but there was also an imme-
date and pronounced decline in both
incomes and excess profits as result
of capital withdrawal.
Secretary McAdoo predicted such
withdrawal; Secretary Glass corrobo-
rated his view, and Secretary Mellon
pointed out the actual process to an
oblivious and unobservant congress- To
be sure, there was some modification
in the super-taX, but the Wanted Re-
publican schedule of tax revision was
so obviously a compromise between
sense of duty and fear for political
safety that even the Republicans do
not boast of it as heartily as other
wise they might have done. Besides,
they cannot boast when their own sec
rotary of the treasury comes out and
says openly that the revision fell short
of the purpose, just as it fell short of
the original recommendations. To CO.
incide with Mr.. MELONS views is to
criticize the Republican legislative
record with respect to tax revision.
That the excessive rates bring in adj
ditional revenue is denied by Mr..
Mellon: "There is no point in
maintaining high rates of taxa
ton which do not produce rev.
enue, and there is no doubt that the
high income tax rates which are still
in effect are gradually defeating their
own purpose. The high rates
sound productive, but the fact remains
that year by year they are becoming
increasingly ineffective and are &C
tually operating to reduce rather than
increase the governments revenue"
There is reported an increase in in
come and excess profits tax collections
which is attributed principally to the
downward revision authorized by con-
gress early in the present administra-.
ton. There is perceived a still fur
Their total increase in revenues arising
from the adoption of lower rates.
Otto Kahn, the banker, criticizes en-
cessive surtaXes, but advocates PRO
gressive income tax," that is, rate
that increases with the size of the in
come, so that wealth shall bear pro-
portionately heavier share of the public
burden.
The principle is accepted that wealth
can afford to pay higher rate than
moderate circumstances, but when the
rate is so high as to penalize big in
comes and profits, then there is a re-
sulting depression which affects every
body and places upon the most moder-
ate taxpayer a burden of financial
loss many times greater than his
heaviest tax. In this connection, it
should be mentioned that Mr.. Mellon
follows Democratic predecessors IN
asking the repeal of tax-exemption
statutes. Let there be now definite
policy of seeking out those who are
deliberately and illegally escaping their
tax responsibilities, in order that the
burden may be equitably distributed
among all.
] TOO L ITrI Z Clio An E0a A CENT