Evening star., 1923-12-23

securities into business channels where
1t Is urgently required in order to
stimulate industry and commerce.
Though business is prosperous, there
| is feeling of uncertainty. One of the
| chief causes of this is the high rate
OF income taxation, which discourages
the investment OF capital in business
enterprises and induces taxpayers to
withdraw their capital from productive
enterprises, availing themselves Of the
more favorable opportunities provided
by the ever-increasing issue of govern
mental tax-exempt securities
Corporation Taxes Cited.
Careful study of the complete tax
returns for the year 1921, republican
members Of the ways and means com
mittee emphasize, shows the adverse
effects Of heavy national taxation
Take the income tax statistics filed by
some 356o00 corporations. These in
dustrial concerns showed a gross in
come Of more than $50, 900, 900 900 Out
OF the total number of corporations re-
porting, 171.000 showed net incomes
amounting to more than "a, 900, 600, 900.
while more than $4,000 reported no
income, but deficits amounting TO
nearly $4,000, 100000. The total taxes
paid amounted to more than $780,
100000 composed of 1856, ZOO, 900 of in
come taxes and $685., 900, 900 in war
profits and excess profits taxes
In the previous year the corporations
returns totaled 345, 900, of which 200, 900
reported net income totaling nearly
$4,000, 100000. with aggregate taxes
amounting to more than s1625, 900
The income taxes from individuals
showed similar drift.
That excessive high taxes unoues-
tionably tend to reduce revenue is in
dicated by the fact that for the wear
1920 the approximate total net income
on which the individuals paid amount
ed to $4,000. 900, while for the year
1921 1t dropped below $50. 900, ,ooo, 900.
In 1916 the number of individuals re
porting incomes Of 500, 900 exceeded
$500, while in 1921 the number had
dwindled to 1900
This decrease in taxable incomes was
not due to actual loss of income bv
the individuals reporting. but was un
doubtedly due to investments made by
them in tax-exempt securities in order
| to escape the burden of excessive tax
! alton occasioned by the very heavy
SurtaXes.
Twelve RecOmme nd atfons
| Twelve specific recommends tions
| by Secretary Mellon for the reduction
| of taxes and Improvement of the ma
tional tax administration will prob
ably be adopted, as follows:
l. A 25 per cent reduction on
earned incomes as distinguished from
| incomes from business or invest
munts.
?. A reduction of the normal 4 per
cent tax on net incomes up to $4,000
to per cent, and from per cent to
6 per cent in the normal tax on net
incomes above $4,000.
3. Reducing the surtax rates by
commencing application OF them at
$4,000 instead of $4,000 and scaling
! them progressively upwards to 25 per
cent at 100000.
4. Limiting the reduction of capi-
tai losses to 121a per cent of the
| loss. The present law limits the tax
| on capital gains to 121a per cent, but
puts no limit on capital losses.
.. Limiting the deduction Of gross
income for interest paid during the
year and for losses of a business
character to the amount that the
| sum of these items exceeds tax
exempt income Of the taxpayers.
s. Taxing community property in
come to the spouse having control OF
the income, to cure a condition in
such states as Arizona, California,
Idaho, Louisiana, New Mexico, Ne
vada and Texas.
z. Repeating the tax on kilograms.
| telephones and leased wires.
8. Repeating the tax on admis-
sions.
9. Repeating miscellaneous nui-
sance taxes which have a small bear
ing on the general revenue of the
government.
10. Recommending amendments
(now being considered) to strengthen
, the administration of the federal tax
system and eliminate methods used by
taxpayers to avoid imposition of
taxes.
IL. Recommending the establish
! ment of board of tax appeals, inde-
pendent of the bureau Of internal
| revenue, to hear and determine cases
involving assessments of internal
revenue taxes.
IL. Recommending simplifcation
in administration of the federal tax
system SO as to make the law more
readily understood and permit of
prompt determination of tax liability.
Sole Stumbling Block.
The sole stumbling block to the
adoption of the Mellon plan for i'm
!; to-
| administration and in Congress say,
is the agitation for a federal sol
diers' bonus"
Listen to Chairman Green of the
| ways and means committee, who
says that the proposed reduction OF
taxation:
/, "Will actually mean in the end a
greater economic gain to the soldiers
and their families and their neigh
bors families in the general averag-
ing of results in everyday life, in
the ultimate reduction in the cost of
living, than the few hundred dollars
they would get out of the bonus"
In all this it is constantly empha-
sized that disabled veterans should
receive the most generous considera-
tion from the government"
Republican leaders-in the admin
istration and in Congress-express
the belief that a sound financial con-
structive policy for the American
government will in the long run af-
ford the best basis for extending
needed assistance to Europe and for
the revival of the prosperity and
expansion of domestic business on
constructive lines.
ut Is q consummation deyoutly To-