Evening star., 1924-04-02
MELLON OPPOSES
HIGHER ESTATE TAX
Says 40 Per Cent Rate Would
Confiscate All Wealth in
Few Years. !.

The increase in the estate tax
rates made in the revenue bill by the
House was denounced today by Sec
retary Mellon before the Senate
finance committee as economic sui
eide
The estate tax is a levy on capital
primarily and carried to an excess
differs in no way from the revolu-
tionists Of Russia" Mr. Mellon said.
He argued this form of taxation
should be left principally to the
states.
The estate tax rates were increased
from a maximum of 20 per cent to
40 per cent by the House. Chairman
Smoot said today there was consider
able sentiment among the committee
members to change this tax to an
inheritance rather than estate tax.
making the levy upon recipients of
estates rather than on the estate of
a decedent before it is divided. This
was done by the Senate in 1921, but
turned down by the House.
Ii his statement Mr.. Mellon asked
that in a discussion of the estate tax
as a revenue measure there be cast
aside any question of the tax as a
means of furnishing wealth or as in
some way for the social good of our
civilization
Splitting Up Fortunes.
THE social necessity of breaking
up large fortunes in this country
does not exist" Mr.. Mellon argued
tomary for estates te be divoded
equally among the children, and in
few generations any single large
fortune is split into many moderate
inheritanceS, and the continuation
through generations of a single for
tune has been proven To be impoS-
sible.
1T should always be borne in mind
that estate taxes are levied upon cap
ital. that they are used for current
operating expenses. and that they
amount. therefore, to a destruction of
capital in the country Yet the House
amendment would make this inhe-
rently unsound increase in taxes for
the sake of mere s12,000,000 of ad
ditional revenue. In the course of
few years this additional revenue will
disappear and even the original rev.
enue will be depleted
Return insignificant.
THE whole return from the estate
taxes, some $4,000. 900 under pres
ent rates, is insignificant in compari-
son with the general receipts of the
government. 1t is but slight por-
tion of the government revenue, but
it is a large and important part OF
state revenue. To destroy values
from which the states receive income
is to force them to resort to higher
taxes on land. The federal govern
ment should keep estate taxes as a
reserve in times of national distress.
All prior inheritance taxes have been
war taxes.
at is only now that Congress pur-
poses to destroy this reserve in time
when revenues from other sources are
not only adequate, but in excess of the
nations need.
Assuming that all inheritances,
large and small, were taxed at 40 per
cent. it would be only two or three
generations until private ownership
of property would cease to exist.
Since these taxes are used in the cur
rent operation of the government the
result would be not that the govern
ment had absorbed the wealth of the
country but that the wealth had been
spent and none was left"
Secretary Mellon will continue his
testimony tomorrow.
Chairman Smoot announced today
that the motion of Senator Reed, re-
publican, Pennsylvania. to amend the
bill making incomes from state and
municipal securities taxable would be
reconsidered.
Assurance Given.
Assurance that a tax reduction bill
would be enacted into law at the
present session of Congress was given
in the Senate yesterday by Senator
Smoot of Utah, chairman of the finance
committee now considering the bill,
and by Senator Walsh of Massachu-
setts, democratic member of the COM
mittee. Senator Walsh said that it
had come to his attention from
many sources that a feeling existed
in the country that dilatory tactics
regarding the tax bill were being
used by Congress. and that business
was hating because of this feeling.
He declared that "a sweeping tax re-
duction bill' would be passed. and
called on Senator Smoot to give simi-
lar. assurance to the country.