The Birmingham age-herald., 1924-01-09
skY TAX BILL WILL
 PRECEDE BONUS
Republican Leaders Confi- dent Mellon Bill Will Have -efE Right Of Way

to a vote before action is had on the soldiers bonus. Opposed to giving priority to the bonus-a question ex- pected to come to a showdown at a conference of House republicans Thursday night-Eepresenta Longworth. the majority leader, mo- tified the group of former service men who are demanding vote on adjusted compensation ahead of tax legislation that no effort would be made to dodge the issue. For an hour MT. Longworth was in confer ence with Representatives Johnson Of south Dakota, Fish of New York and Andrew of Massachusetts, who .,weF. active in having the conference 'tealIed. He told them that we have day night"
 The discussion was had after it had been announced at the White House that President Coolidge was 3n hearty support of plans to give tax leg islation right of way over the bonhs. At the same time, White House spok esman, in discussing the tax situation. said the President con sidcrcd that tho surtaN schedule carried in the Garner democratic substitute for the Mellon bill. would tend to discourage the investment Of capital in business enterprises rather than in tax c&empt securities
 0 o O
 Soldier Bloc solid.
 The opposition of organization leaders to it> proer;..4 failed to alter the plans oi the rep"6lican soldier bNoc. Those who went over the sit nation with MT. Longworth later held . coEserenue and determined 10 go Into ;nr party conference prepared A.. ,,n ht qreg.ion.
 Another meeting of members of the Rroup will be held before Thursday nieht's me atine. At that time it will De de, ,idcI wAat sort Of resolution will be presented. Leaders in the novcme1t tonight declared they would either call on the ways and means committee to report q bonus kiu by January 2l ur recommend it's passage as soon as it completes con Sideration of the administrative fea- lures of the Mellon tax bill.
 If d resolution. offered by the war veterans, is rejected by thc confer once, bonus proponents plan 10 bring Eheir fight to the floor of the House. Such a step, they contend, would be Dos ssible, as new House rules, which gre expected to be adopted next week, Undoubtedly will make provision. they predict, for the discharge Of GOmn.lLtceS.
 A motion to discharge the ways and means committee from consideration 0f the Mckenzie bonus bill, which Is Essentially the same as the compensa- 6on measure vetoed by President Harding, would bring about. rec erd vote in the House. republicans Shvoring the bill counting upon the support of democrats to put the measure through.
 MT. Longworth. declaring he was in thorough accord with the admlnlStra- tion tax program. said he and other party leaders had not been consulted as to the feasibility of holding Thurs day nights conference. Today's meeting with the three former serN- fee men was at their suggestion, he said, adding that there was no doubt in his mind that the country was de manding action on tax reduction ahead of the bonus.
 Showdown Thursday Night.
 At Thursday nights conference Mir Longworth will propose that the ways and means committee be in structed to complete consideration or all features of the tax bill. report it and then determine whether rassage of a bonus bill should be recom- snended. He declared today that once reported, the tax bill would be given priority on the House legisla- tive program. He made the predic-' tion that barring instructions to take action on the bonus. the committee would have the revenue measure ready for the House by February l. or shortly afterwards.
 The ways and means committee is considering the tax bill under an agreement to pass first on it's ad- miniStrative features, which are now under discussion. then to reach q de- ,ietE.r If ttlt. .1I1 finally to take up proposed revision of tax rates. Some members of the committee have indicated a willing ness L. divide the tax bin into two mcasures--onc containlhS purely ad- m.nistrative provisions and tne other katc clanscS-and to report them Sepa:atrIy with the bonus bill sand wic'lcd in between. q program which hr. l.ouefvorth opposes.
 The> committee intends tomorrow to iaAc lin tho sub comm ttt'o report Mhicn approved treasury reroini1en- hationS for Il c"onstitutional an cnd- ncrt uvnhihtins further issuance of ta% cAcn If securities.
 ,in lcttcr to representative Frcar pf Wis 'onSin, q rcpubiIcan membe" pf tne committee. who has introduced a bill providing for tn" taXine of in come from state and muniriral bonds now in existence and requiring tha' y clared unconstitutional hy the su- prenle court without concurrence of kt least all but ono of the justices. hiI. Mellon declared there could lc m argument as 10 the injustice of such proposal.
 McIi0u Answers Frea-,
 @T" sunimarizc,' his letter said ffir3i your hll makes an indcfcnsi- blc discrimination between securities ,fssucd by state and municipalities ana ee, e,.uritics issued under authority of vii bout compensation, property alues which have been paid for by thr investors. Third, it would seri- pusly disturb the state and federal government finances, and finally. the entire proceeding would most proba- ply he vain and the time utterly wasted.
 T agree with you that the proposed constitutional amendment, because it does not reach the $1l,000,00 900 q fn1ly tax exempt securities already in existence, is not complete remedy. have therefore, recommended such Seduction in surtaXes $ to make fur kher investment in tax exempt secur- eties less desirable, for the most com polling reason in the world, that is because the investor will be given en opportunity to make more money PHt of productive business than out 8k unproduct!Ve tax exemptS.
 'sUpon the present basis of sur taxes, a 41z per cent municipal bond gives as much for man with large income as he would receive after taxes from an investment returning him II per cent. No prudent investor will consider an II per cent invest ment the equal in safety to a muni cipal bond and will not go into pro- ductive business on those terms.
 Under the recommendations which have made, the return an 14A per cent tax exempt would be equalled by a taxable investment yielding about 6IS per cent. Returns in excess