The Birmingham age-herald., 1923-11-12

property owners. There is no im- mediate remedy for this within the power of Congress, except the re- adjustment of the surtaxes on basis that will permit capital to seek pro- ductive employment and keep 1t from exhausting itself in tax exempt se- curities.
 A. Limit the deduction of capital losses to 12h per cent of the loss. The present revenue law limits the but puts no limit on the capital losses It is believed it would be sounder taxation policy generally not to recognize either capital gain or capital loss for purposes of income tax. This is the policy adopted in practically all other countries hay- ing income tax laws. but 1t has not been the policy of the United States. In all probability, more revenue has been lost to the government by per hitting the deduction of capital losses than has been realized by in- cluding capital gains as income. So long, however, as our law recognizes capital gains and capital losses for income tax purposes, gain and loss should be placed upon the same basis, and provision of the 1921 act taxing capital gains at 1214 per cent should be extended to capital losses so that the amount by which the tax may be reduced by the capital loss will not exceed f21s per cent of the loss. It is estimated that this will increase the revenues by about $25, ,000.
 Limit Deductions.
 "5. Limit the deductions from gross income for interest paid during the year and for losses not of a busi- ness character to the amount the sum of these items exceeds tax ex- FFHf. 1921 act provides that interest on in debtedness to acquire or carry tax exempt securities is not deductable. This provision is ineffective, as a taxpayer may purchase tax exempt securities fer cash and borrow money for other purposes. It Is felt also that so long as a taxpayer has in- come which is not reached for taxa tion he should not be permitted to deduct his non-business losses from the income which is taxable, but should be restricted in the first in stance to a deduction of these losses from his non-taxable income. The estimated increase of revenue from this source is $35, 00,000
 G. Tax common property income to the spouse having control of the income. In some states the income of the husband is joint income of the husband and wife, and each, lESTedll6T, IS p6IlIlbttu lO lllS turn for one-half of the income. This gives an unfair advantage to the citizens of some states over the citi- zens of the other states Of this coun- try and this amendment seeks to re- store the equality. It is estimated that 1t will increase revenues by ss,0O0,000. So much for the income tax recommendations which should become effective January i, 1924. In order that you may have before you a clear view of the effect of these recommendations as applied tC incomes in the various brackets, I am attaching a table, prepared by the government actuary, showing the estimated results of the proposed changes in the calendar year 1925, on the basis of the taxable year 1924. The schedule shows a loss of revenue of about $92,oO0,0 ,000, in the brackets under $6,000, and a further loss of revenue of about s52,000,000 in the next bracket of S6,000 to s10,000. In short, about 70 per cent of the re- duction would be in the brackets of s1O,000 or less. and less than per cent would fall in the brackets over S10O,0 ,000. To show the effect of the proposed changes on the income Cf a typical salaried taxpayer, married and having two children, I call your attention to the following compara- tiva fipurac-