New Britain herald., 1923-11-13


to consider what is claimed, and cor
rectly for Secretary Melons plan.
/ Take the case OF the wage Garner or
salaricd man earning more than
$1,000 annually. If he earns $4,000
a year and has a wife and two chill
drcu, his exemptions and credits leave
| $3.50 to bc taxed. He pays, at pres
ent. per cont, or $l4 income tax.
/ Under the Mellon plan he would pay
3 per cent, or $1,000. Then, because
/ he earns his money and does not get
/ it through investment, the Mellon
/ plan would allow him IS per cent Oft
/ this because the man actually worked
I for his money, leaving him TO pay
something less than SIS instead of sl4
as now. The last mentioned reduc-
/ ton of 25 per cent is not allowed
/ those whose income comes from in
vestmcnt or a business. These figures
represent the reduction on incomes up
/ to $1,000. In other words, taking
into account the reduction Of the sur
tax, all men earning their money
would be obliged to pay about 40
per cent less in Federal taxes under
the Mellon plan.
This reduction, of course, would
mean a great desi to the taxpayer
unless the cost of living remained at
least as low as it is today, but it is
claimed that the reduction of the
surtaX rates would greatly encourage
| business investment and reduce living
cost. II is said that 20 per cent OF
| the money saved would come TO the
man whose income is less than
10000.
There can be nothing but good in
the suggestion that the man who is
dependent upon his own daily efforts
for his income should be relieved to
d greater degree than is the man who
gets his income from investment.
| The investment keeps on bringing in
money all the time, while the man
who must be ON the job" practically
/ every day in order to earn his income
suffers loss when illness or any other
incapacity assails him.
1t is true also that the very high
surtaXes have prevented capitalists
from putting their money into indus
! try which, of course, gives employ
ment to so many. They refuse to
take the risk where there is chance
| Of loss and the prospect of paying
high taxes on their profits If they
succeed. These surtaxes would be
/ lifted entirely under the plan TO those
hundreds OF thousands whose incomes
are between $4,000 and $4,000.
Persons who do not earn $4,000 a
year or more may say that this plan
/ tghtens the taxes Of the well-to-do
/ but makes living harder for them.
There is the generally accepted belief
among students OF the matter, how
ever, that reduction in taxes OF such
well-to-do reduces the price Of many
articles and commodities in daily use
by everyone, the rich and the poor.
The industrialists and the bankers
generally favor the plan because, of
course, their taxes will be- reduced.
But ii is true, also, that the cost Of
the articles they manufacture, paid
/ by the consumer, will be reduced,
also. In short Secretary Melons
s,lan is a plan to do business on the
basis Of greater total receipts but
lower margin Of proht-increas the
number Of sales" but lower the cost
TO the consumer.
The one aspect Of the plan that
makes for hesitancy in approving II
is the Statement OF the Secretary that
it can not be adopted if the bonus is
/ approved. The bonus, he declares,
would increase taxes whatever hap
pens. 1t is difficult to follow his rea-
soning, or rather his assumption.
Naturally the Federal taxes could not
be lowered as much as would other
wise be the case il the government
assumes the bonus obligation. But
there would seem to be no reason why
this reduction could not be made en-
tirely aside from any expense in
CURED because Of the bonus. II the
latter is right moral obligation, it
should be adopted. If there is no
I justice in the claim of the former
servicemen the bonus should not be
paid no matter how able to pay IL the
/ government may he. The two are
I separate matters, and it would seem
that only a desire TO kill the bonus
! idea would prompt the statement that
this excellent plan for tax reduction,
entirely aside from any bonus con-
sideration, might not be adopted.