The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1923-04-09
MELLON PREDICTS
LIKELY REDUCTION
IN INCOME TAXES
Secretary of Treasury Says
High Rate Urges Too Much
Tax Dodging

WASHINGTON. April S.-Possible
efforts to have Congress further cut
the surtax rates on incomes were
forecast tonight in statement by
Secretary Mellon
The secretary asserted that March
collections of incomes and profits
taxes, aggregating $463,0oo,o00, had
fully justified his prediction that
downward revision would have the
effect of actually increasing rather
than decreasing the federal revenue.
Coupled with this statement was
declaration by Mr.. Mellon that the
March collections, under such re-
vision as has been accepted, pro
yided a practical answer to the tax
problem. and shows clearly what
course further revision should take"
Create Artificial Conditions.
There is no point in maintaining
high rates of taxation which do not
produce revenue" the secretary con-
tinued, land there is no doubt that
the high income tax rates which are
still in effect are gradually defeat
ing their own purpose. they create
artificial conditions that tend to
hamper business and industry ana
reduce the volume of income sub
ieet to taxation. The surtaX notes,
even under the revenue act of 1921
(the present law) rise as high as so
per cent, giving combined maximum
normal and surtaX of 5S per cent.
and, as the treasury has pointed out
in the past, these excessive rates
produce such heavy pressure on the
larger taxpayers to reduce income
subject to surtaXes that inevitably
they seek every means of avoiding
the realization Of taxable income.
"The high rates sound productive,
but the fact remains that year by
year they are becoming increasing
ly Ineffective and are actually OPP
Grating to reduce rather than in
crease the governments revenue. I,
accordingly, recommended to the last
Congress that the surtaxes be re-
duced to a maximum of 25 per cent,
making a maximum normal and sur
tax of 80 per cent and that, at the
same time, various avenues of escape
from the surtaxes be closed as far as
possible under the law
o O O
Show Better Business.
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 surfaces themselves
to a more reasonable level in order
to reduce the pressure for avoidance
taxes from becoming completely I'M
productive. ] am confirmed in the
conclusion by the March collections
that if readjusted to the maximum of
25 per cent recommended by the
treasury the surfaces would better
achieve their purpose and yield at
least as large and possibly larger
revenues than the existing rates
without at the same time involving
the country in the unwholesome con-
sequences which follow from artifi-
cial conditions growing out of the
present law"
Mr.. Mellon reiterated previous
statements that among other things
the March collections indicated
mark eddy better business" during
1922 than in 1921. Some of the in
crease in general commercial activi-
ty, he said, was traceable to the re-
covery from the postwar slump. but
the relief accorded by the adop-
tion of part of the treasury's rec
concentrations on tax revision had
given new impetus to business and
had opened generally freer flow
of capital into productive enterprise