Evening star. [volume] (Washington, D.C.) 1854-1972, 1923-04-09
MELLON TO URGE
] LOWER SURTAXES
Points to Gain in Collections
Last Month Because of
! LiberaIizing Act.

Secretary Mellon may again go be-
fore Congress proposing further re-
duction of surfaces. This was indi-
Gated in formal statement last night
from the Secretary, pointing out that
the March collections of income and
profits taxes. totaling s463000. 600.
had indicated him in taking the posi-
ton that "the higher rates of income
surtaxes put constant pressure on
taxpayers to reduce their taxable in
come, interfere with the transaction
Of business and the free flow of
capital into productive enterprise and
are. rapidly becoming unproductive.'
The March collections this year, the
Secretary explained, were under the
lower rates of the new law or under
such revision as has been accom-
plished." The results. he said. pro
vided a practical answer to the tax
problem and show clearly what
course further revision should take.
He mentioned that although higher
rates were in effect in March. 1922,
the collections at that time were $40
100000 less than in the same month
this year. a circumstance which he
regarded as proof that the downward
revision had acted as a stimulant to
business.
Act Greatly Liberalized-
In addition to the reduction in the
surtaX rates Mr.. Mellon recalled that
there had been many other liberallZ-
ing provisions included in the present
law, as compared to the previous act.
Yet he said, in the face of allowances
for Increased exemptions for depend
entS. limitations of the tax on capital
gains and other simplifying proVi-
sionS, there has been an increase over
the corresponding period a year ago.
Al nf hn AA1 nal ~ u
niiicant commentary on the revision
urged by the Treasury.
There is no point i'll maintaining
high rates of taxation which do not
produce revenue" the Secretary con-
tlnued, and there is no doubt that
the high income tax rates which are
still in effect are gradually defeating
their own purpose. They create arti-
fetal conditions that tend to hamper
business and industry and reduce the
volume of income subject to taxation.
The SurtaX rates. even under the rev.
enue act OF 1921 (the present law
rise as high as 80 per cent. giving a
combined ma mum normal and sur
tax OF 5S per cent and, as the Treas
ury has pointed out in the past, these
excessive rates put such heavy pres
sure on the larger taxpayers to re
duce income subject to SurtaXes that
inevitably they seek every possible
means of avoiding the realization of
taxable income.
High Rates Not Productive.
THE high rates sound productive.
but the fact remains that year by
year they are becoming increasingly
ineffective and are actually operat-
ing to reduce rather than increase
the governments revenue. | accord
1ngly recommended to the last Con-
greSs that the SurtaXeS be reduced
to a maximum of % per cent. maxi
ing maximum normal and SurtaN
of 33 per cent. and that. at the same
time, various avenues of escape from
the surtaxes be closed as far as
possible under the law.
Congress has already acted to
close some of the gaps, but for the
most part the evil still remains. and
the only effective way to reach it is
to reduce the SurtaXcS themselves to
d more reasonable level in order to
reduce the pressure for avoidance of
taxable income and keep the sur
, taxes from becoming completely I'M
productive. | am confirmed in the
conclusion by the March collections