Evening star., 1924-01-06

general agreement that the normal
tax rate should be cut to per cent
and either or 6 per cent. as against
the prevailing rates of 4 and per
CENT and the Mellon proposal Of
and per cent.
Discount Coolidge Aims.
The democrats drafting a minority
program said they were prepared to
press for it's enactment fully aware
that President Coolidge was opposed
to any changes in the essential pro-
visions of the Mellon draft, as was
announced Friday at the White
pected to have the support of a.
sufficient number of republican In
surgents and House. members from
the central and far west to put over
their amendments.
In his letter to Secretary Mellon,
Senator Couzens asked for Statistical
evidence in support Of your state
ments that the surtaX revenue of the
government Is shrinking; that ii Is
doing SO on account OF the present
surtax rates. and that it may be ex-
pected to lessen progressively in the
near future unless the rates are re-
duced." He said he also desired
some definite proof of the relation
of the tax-exempt securities question
to surtax reduction"
Apparently your proposal for a re-
CouZens. "is based on your observa-
tions Of the investor--I mean the in
vestor who may buy railroad bonds,
industrial bonds or government, state
and municipal bonds. Every one
knows the return usually received on
these kinds of investments. There
are many people. however, who re-
ceive incomes from bank stocks, and
d. the result of conducting businesses
as traders, Jobbers, merchants or
mn orA
speaking, investors in the same sense
as above referred to. Those latterly
referred to are in more speculative
business, and many of them are re-
ceiving incomes Of from 10 to 100
per cent on their Investment. II
seems to me that your proposal for
reduction IN surtax will give the big.
gest relief to this class, and that is
the class which can best afford to
pay
Mellon Cites Returns.
In. reply MIR. Melien said that the
preparation of income statistics was
a matter OF considerable time and la
DOR ana that those based on the 1922
returns would not be available. He
daciared, however, that in outlining
its tax revision program the Treasury
had used. available statistics which
were most compelling"
Mr. Mellon gave figures to show
comes in excess, of 100000 in rela-
ton to the total surtax had decreased
progressively each year from 66S per
cent in 1915 to 2o.6 in 1921.
1t is not necessary" said Mr.
Mellon, that we consider tax exempt
securities as the means of tax avoid
ance. but the existing tax exempt
securities which would be una anfected
by any constitutional amendment are
the most open and well-known in
vitation TO the avoidance of high
surtaxcs. There are approximately
sll. .o00, 900, 900 of wholly tax exempt
securities outstanding, and the loss
OF revenue to the government over
what 1t would receive If the income
were taxable is estimated at over
$2oo,o00.0O0 year. and the loss
or revenue over similar investment
in productive business at over $500
100000 a year"
Sees Wealth Diverted.
Treasury statistics, said Mr.. Mellon.
SHOW that the percentage of wholly
tax exempt securities to total gross
estate, based on returns for inherit
ance tax purposes. was 1897 in 1923
and the percentage of wholly tax
exempt securities to total bonds and
stocks was 4l.9S. In 1917 the per-
centaSes were 2.21 and 3.26. respec-
lively, increasing TO 9.79 and 1880 in
,,a asZo, IN n, the Isg2; the percentages
o.
Again We have proof" said the
letter to Senator Couzens. "of this
progressive diversion Of wealth from
productive to unproductive business.
Your statement to the effect that
tax exempt securities are not attrac-
tive as compared with bank stocks
and industrialS which yield from 10
to 100 per cent on thier investment
Is misleading If you make your basis
the amount originally invested. The
proper basis is the market value of
the securities. The question is, can
a taxpeyer get more return after in
come taxes out of $1,000 worth of
tax exempt securities or out of $1,000
worth of some taxable investment.
Answers OIL Citation.
II know of no sound bank stock
which yields is high as 10 per cent on
what it can be sold for and the money
put in tax exempts. nor Of any sound
cent on the market value Of the
stock. 1t is true that speculation
gives these. high returns, but 1t is
the very demand for such returns on
account of the high. surtaxes which
has kept capital out of ordinary pro-
ductive business and attracted 1t
only TO such projects as give oppor-
tunity, for. undue profit.
Senator Couzens said In his letter
that in his annual report the Treasury
Secretary had pointed out that tax.
payers paying surtaxes In the highest
brackets would have to have invest
ments yielding about 18.4 per cent in
order to be as attractive as per cent
tax-exempt securities, but that he
had not dealt with the income from
from many industrial concerns.
which. as stated above. pay 10 to
100 per cent, such cases. for instance,
as the Standard Oil dividends of
s13s.423,295 in 1928"
Certainly" added Senator Couzens.
"tax-exempt securities hold no at
traction for them"
Touching on this point Mr.. Mellon
replied:
Rockefeller's Holdings.
Your citation of the Standard Oil
dividends in 1923 as an example of in
preference to tax-exempt securities
is most appropriately answered by
the return of the estate of Mr.. VIII
liam Rockefeller, who was indebted
ly quite familiar with the possibili-
ties of the Standard Oil companies.
The total market value OF his invest
ments in those stocks was less than
$7,000.0o0, whereas the value of his
wholly tax-exempt bonds was over
s44,O00,00e. six times what he had in
the four Standard Oil companies"
Statements were issued yesterday
by four members of the House on the
bonus and tax questions. Representa-
tive. Temple, republican, Pennsylvania,
said ne would oppose a soldfers,i bonus
bill, although he had supported. 1t in
the siast onEress.s. Representative
Magees' also a sFPennsy1vania republic
can, came ont .against the bonus. too,
and declared he was heartily" in
favor of the Mellon tax proposals.
endorsements. of the Treasury's tax
plan was given In addition by Rep
resentative Halves, democrat Mis-
souri,, Representative Keller, repub-
lfcan, Minnesota, came out against
the plan.
BANKERS CALLED TOD. C.