The Republican. [volume] (Oakland, Md.) 1877-current, 1923-12-27
WHY SURTAXES SHOULD Re
REDUCED

Representative Garner, of Texas.
ranking Democratic member on the
House Ways and Means committee.
which is to handle the tax reduction
bill, has issued a statement in which
he denounces the administration tax
reduction program as being a fraud.
Mr.. Garner asserts that by its pro-
vision for a reduction of high sur
taxes, few very large income surtax
payers will be the chief benefciaries
of the bill. This is demagoguery gone
to seed.
The records of the Income Tax di-
vision of the International Revenue
bureau show that the number of in
dividuals paying income tax on $780,
600 year, or over, are today only
one fifth of the number that made
returns six years ago, yet no one be-
lieves for an instant that the number
of individuals who have large incomes
has decreased. Why, then, this dim
mutation in the number of returns Z?
The answer is found in the high
surfaces, men Of wealth have inves-
ted their money in tax-exempt Sc
curities. This is exactly why Secre-
tary Mellon urges a reduction in the
surtaXes. In his letter to Representa-
tive Green, chairman of the WAYS
and Means committee, Secretary Mel
lon made that point very clear. He
said:
These taxpayers are withdrawing,
their capital from productive business
and investing it in tax-exempt securi-
ties, and adopting other lawful meth
DDS Of avoiding taxable income. The
result is to stop business transactions
that would normally go through, and
to discourage men Of wealth from
taking risks incidental to the develop-
ment of new business. Ways will
always be found to avoid taxes 50
destructive in their nature. and the
only Way To save the situation is to
put the taxes on d reasonable basis
that will permit business to go on and
industry to develop
The fact is, men Of large income
will not be the beneficiaries of re-
duction Of the federal sutaxes. Such
men now escape such surtaXes alto
gether by investing their money in
taX-eXempt securities. Neither Secre-
tary Mellon nor the administration is
advocating lower surtaxes out OF
sympathy for the rich man or any de-
sire to lessen his tax burden. They
are advocating such a reduction out
of desire to attract capital back in
to fields of investment in industries
railroads and business, where the pub.
lie may be benefited by such invest.
ment and the government benefited
by increased revenues.
Secretary Mellon in his report upor
the subject clearly brought this out
He pointed out that "the farmer is
now complaining, and rightly so, Of
the high freight rates and the higl
cost to him of that which he has t.
buy. The railroads of this country
require billion dollars a year of new
capital in order that they may prop
erly maintain their service. s. 8 The
cost of capital is, therefore, one Of
tho lor nf l,
conduct of railroads. Nothing has Sc
contributed to this additional cost OF
capital as the surtaxes which have
driven the large investors from rail
road to taX-eXempt securities"
In another place Secretary Mellon
says: Taxpayers subject to the high
er rates can not afford to invest il
American railroads or industries Of
embark upon new enterprises in the
face of taxes that will take so pei
cent or more of any return that may
be realized"
In the long run the public pays the
high surtax. AS Secretary Mellor
points out, "the demand of capita
for higher return by reason of the
high surtaX rates have raised the
cost of all manufactured products.
In other words, the man who has the
money tied up in industry or business
or railroads and cannot escape tn,
surtaX, merely passes the tax on t.
the consumer.
President Coolidge clearly empha
sized this fact in his annual message
to Congress, in which he said: "Higf
taxes reach everywhere and burden
everybody. They bear most heavily
upon the poor. They diminish indust,
ny and commerce. They make agri.
culture Improbable. They increase
the rates on transportation. They are
charge or every necessity Of life.
The charge, then. gf CongTeesraa-