Evening star., 1924-06-03
President Holds Tax Measure
UnsOlu1d IN Basic Provisions

bound by formal rules Of evidences
snd procedure. In each case a formal
record must be prepared and all oral
Testimony In cases involving more
than $4,000 must be reduced to
the findings of fact and a decision
must be written A taxpayer is en-
titled to appeal to the board before
any assessment can be made The
bers of the board from $4,000, as
recommended by the Treasury. to
$500, and the reduction of tho term
Of office of the original appomtees
from the ten years recommended 70
cure for membership on the board
men with training, experiences and
ability. This board of tax appeals,
unable to secure the proper type OF
men for membership, hampered and
burden ed with rules of procedure and
evidence and forced to prepare
record, a finding of fact and a de-
cision in practically every case. will
be unable to handle the business
will be greater delay in the final
settlement of tax cases and may ulti-
mately result in the complete break
down of the administrative ma
chinery for the collection of taxes.
The purpose of tax bill is to pro-
and the primary consideration on tax
reduction is the probable receipts and
expenditures of the government after
the bill becomes, law. We shall
close the fiscal year ending June so
next, with a surplus. but it is the
next fiscal year that must have con-
sideration. By far the greater part
of the loss of revenue which will be
brought about by the bill is in in
come taxes. Aside from the 25 per
cent credit in 1924 taxes the bill
applies to incomes received in 1924,
the tax on which is payable in the
calendar year 1925. So this income
tax reduction will not be felt until
the last half of the fiscal year 1925.
Under these circumstances. after CIV
ing effect to the bonus law and the
reduction contemplated by the bill.
and provided no further commit
ments in large amounts are made by
the Congress-, the Treasury may rea-
sonably expect to conclude the fiscal
year 1925 without deficit.
Tax Laws Of War TiAe.
Looking beyond 1925 to later years.
there are certain factors which de-
serve consideration. The excess
profits and income tax laws of the
war period were new in principle
and exceedingly complicated in prac-
tice. The Treasury has not yet be-
come current in the ascertainment of
tax liability and collection of taxes
for this period. We must, therefore,
consider the establishment for the
future of such-a policy of taxation
IS will insure the maintenance of
the sources of taxation without the
aid of these reservoirs which will
soon be empty. This means that the
policy must be so framed that 1T will
encourage the creation of income
subject to tax. will close the most
obvious methods of avoidance. will
not diminish by excessive estate
taxes the very values upon which
the federal and the state govern
ments must rely for revenue, and
Will bring about a reduction in the
high cost of living as a means of
meeting world competition. OF the
ITO. 100000 people in this country.
less than 100000 pay income taxes
directly The remaining 106.000,000.
VINO pay no such direct taxes. are
given no relief from what they pay
indirectly in everything they buy.
They too must have tax reduction
These conditions the present bill
does not meet.
Adopted as War Measure.
High taxes were adopted as a war
measure in 1918. We have had but
six years experience under them and
their detrimental effect upon our fiscal
structures is not yet fully appreciated
To the intelligent observer tenden-
cies are already apparent which in
dicate the stress to which this struc-
ture is being put. l mention as an
instance the increased cost of capi-
tai for new industrial enterprises
These influences are being felt even
in our present prosperity. During the
after-the-war period of adjustment,
the other great nations of the world
have been disturbed more than this
country. They are not yet restored.
AS consequence, we have been re-
lieved of much of the world competi-
ton. When other countries return
to productivity and become again the
serious commercial rivals of our
people, and when we experience those
periods of depression, which nor
mally follow periods of prosperity,
by so esta blishing our tax system
that it's economic effects will be bene-
fetal and not harmful. The bill rep
resents tax reduction. not tax reform.
If we are to maintain the American
standard of living and hold our place
in the world, we must adjust our
taxes upon an economic and not a
political basis.
The bill comes to me for considera-
tion less than two weeks before the
gress, and it provides for a credit on
1924 taxes which should become eff
fective before June Is next. No diff
ferent bill can be passed before ad-
1OuTnInenl ne question OelOTo me
is the present law or the bill in the
shape it has passed Congress. AS it
stands, in it's administrative features
generally, it is an improvement on
the existing law. 1t will meet the
needs of revenue through the fiscal
year 1925, and probably be sufficient
for some time il no unforeseen ex
penses arise. The Immediate relief
by credit on 1924 taxes Of IS per cent
is due, is expected by the people. and
should be properly given. and the de-
termination of the taxes to which
1924 incomes will be subject should
be made certain while the income is
still being received.
These opinions are supported by the
Treasury Department.
AS I have said, the bill does not
represent sound permanent tax
policy and in its passage has been
subject to unfortunate influence which
ought not to control fiscal questions.
Still, in spite of it's obvious defects.
it's advantages as a temporary relief
and temporary adjustment Of busi-
ness conditions, in view of the uncer-
tainty of a better law within a rea-
sonable time, leads me to believe that
the BEST interests of the country
would be subserved If this bill be-
came a law. A correction of its de-
fects may be left to the next session
of the Congress. / trust a bill less
political and more truly economic may
be passed at that time. To that end
shall bend all my energies.
The White House, June ., 1924.