Evening star., 1923-11-21
MELLON TAX PLAN
APPLIES TO FUTURE
No Immediate Change in the
Payment Date Is Con-
tempIated.
by DAVID LAWRENCE.

Judging by some of the letters
received from various parts or the
country, some people have the mis-
taken impression that the revision
of taxes which Secretary Mellon pro-
posed would take effect with pay
ments made next March. The fact is
Congress rarely gets to work in the
few weeks of December and the
taxes paid next March will be on the
basis of the present law for all in
come received up to and including
December 81 of this year.
Should Congress revise the present
law it probably would t0ke several
weeks of consideration and 1T might
be April or May before the bill gets
through both houses of Congress and
is before the President for signature.
Mr.. Mellon, however. has suggested
that the new law should take effect
on the incomes received by taxpay-
ers beginning next January and con-
tinuing during 1924, which means
fit of the new law when he pays
his taxes in March, 1925.
"Party Advantage, Discussed.
This has precipitated some discus
sion as to whether there will be any
political advantage for the party in
power when 1t goes before the people
next autumn. The taxpayers will not
have felt any reduction when they
vote a year from this month for Pres
ident and for members of Congress.
They will have before them, If the
Mellon plan goes through, simply the
prospect of lower taxes in the follow
ing March.
There are many people, on the other
hand, who set aside every week or
month the amount of their incomes
that they must ultimately pay the
government. These folks would be
able to set aside smaller sums for in
come tax beginning next January if
they knew then what the reduction
would be. While the law will be writ
ten so as to take effect on income S
received beginning next January. it
Will be several months after that be-
fore the taxpayers will know what
amounts they really must pay in
taxes.
Business Men Interested.
Even business houses which like to
calculate ahead of time on the money
that can be put into expansion or
promotion will not know definitely
how much of the tax burden they
have been relieved of until the spring
or even the summer of next year.
Congress Will remain in continues
session when it meets in December. as
this is what is known as ''the long
session." so there is no limitation of
March to hasten consideration of
anything.
Should the bill be passed in the
spring or summer, however, the busi-
ness world will be able to figure on
the amount of their 1924 income or
profits that must be paid ultimately
to the government, and the expecta-
tion is that if taxes have been re-
duced for the year 1924 there will be
squirt in business because of the
release of capital for productive en-
terprise, which at present is ham
pered by prohibitive tax rates.
Congress could not very we'll pass
law which would affect the pay
ments made by the taxpayers next
March. even if both houses got down
to work in December and made an ex-
traordinary record for speed.
On Ffscal-Year Basis.
The governments financial affairs
are managed ma fiscal-year basis
that Is, from June 80 of one year to
June 80 of the next. Taxpayers, on
the other hand. are obliged to pay
their taxes with the calendar year
from January l to January l. AL
ready the money that has to be spent
by the government from January l to
June 30th next has been appropriated
by Congress out of receipts expected
TO De received next March and June
from the taxpayers who are paying
their bills on incomes received during
1923.
So it is that at present the esti-
mates are being prepared for Con-
Rress for the expenses of the govern
ment running from June 80 next to
June 80, 1925. and Congress will go
ahead with its appropriations so as
to have them ready before June 80
next, when the new fiscal year begins
Theory Governing Congress.
Congress must act on the theory
that a certain amount of revenue
will be available, and already the
Mellon plan contemplates certain
budget for government expenditure
after Jone 80, based on the new
plan of taxation
That is why what the taxpayer
pays next March and in quarterly in
stallments next year cannot be re-
vised even If Congress wished to do,
unless, of course, Congress wanted
to run a deficit. The money which
is due from the taxpayers next March
and thereafter during 1924 has al
ready been authorized for expenditure
in various ways and much of it has
also been spent.