The Birmingham age-herald., 1924-06-03

| WASHINGTON, June 2.-1n state ment issued just after he signed the tax bill, President Coolidge said:
 "The passage of a new revenue bill was required fer two reasons: The re. duction of taxation and the reform oi taxation. The bill as passed provides 8 certain amount of tax reduction. Ii | improves some of the features of ad, ministration. But it is not only lacking in tax reform. it actually adds some un- desirable features to the present law As a permanent expression of govern. ment fiscal policy this bill contains pro. visions which, in my opinion, are not only unsatisfactory, but are harmful to the future of this country.
 "The reduction of high surtaxes from 50 to 40 per cent is quite immaterial to accomplish real improvement in the law. The resolution for a constitutional amendment giving to the states and the federal government reciprocal rights of taxation on securities issued by the other, which was urged in my annual message to the Congress, failed of pass age. Fail To Reach Abuse
 '"The suggestion of reaching in part the abuse of tax exemption by limiting the deduction for interest of a non- business character to the amount that such interest exceeds the tax-exempt revenue of the taxpayer, has not been adopted. With some $12,000, ,000, ,O00 of tax-exempt securities now outstanding, and $1, ,000, 100000 of new issues each year, it is idle to propose high surtaxes. A man with large inherited or accumu- lated capital is told he must pay one half of his income to the government if he invests it in productive business. but he is invited to be relieved of all tax by the simple expedient of with drawing from business and investing in tax-exempt securities. This does not mean that wealth in existence is taxed 1; it is not. It escapes. It does mean, however, that initiative and new enter prises are throttled.
 Increasing Failure Claimed
 While the inconsistency of high surtaxes existing side by side with a lawfully authorized means of avoidance is obvious, it is not simply through tax exemption that high surtaxes are un- economical. The experience for the few years under high surtaxes shows the in- creasing failure of these taxes as a source of revenue. There are many means of escaping the tax. and with the settlement of conditions abroad we may anticipate the movement of capital from this country to other parts of the world where income is not so penalized. Ways will always be found to avoid taxation inherently excessive. We are presented, then, with a plan of taxation which punishes energy and initiative and must decrease revenue. Such a plan will ultimately work. harm to the country and should not be permitted to con- tinue much longer. The cure does not lie in attacking the symptoms by other unsound penalties worse than the dis ease itself, such as an undistributed surplus tax, but in correcting the cause. The remedy is such reduction in the peak of the surtaxes as will attract capital to new enterprises and prevent the continual diminution of taxable in- come in the higher brackets. In this way alone can high living costs, the in direct tax paid by all of the people, be reduced and the productivity of a graduted income tax maintained.
 Same Principles Apply
 "The principles applicable to high surtaxes apply similarly to high estate taxes. The bill raises the estate tax to 40 per cent. As concomitant is added gift tax which is a further invasion of the rights of the citizen, both un- usual in nature and of doubtful legality. When there is added to this the in- heritance taxes levied by the states, there amounts to, a practical confisca- tion of capital To meet these taxes executors must realize cash on forced sales of property, with general lower ing of all values upon which the credit structure of our country is based, and diminishing the very source from which this revenue comes. It is proposed to take capital and to use it in the ordi- nary operating expenses of government. We are thus to live, not on income, but on principal, and to that extent we ex- haust our resources and prevent the in- dustrial expansion essential to our in- creasing population and our high stand ard of living. Heretofore estate taxes in the federal government have been war measures. It is now proposed to use these reserves in times of peace. They should be kept for emergencies.
 States Hit By Bill
 "1'he states have very real interest in this tax. Inheritance taxes consti- ute a material part of state revenue, They are comparatively small factor in federal revenue. As the federal gov ernment invades this sphere, belonging primarily to the states, it will cut down the flow of income to the states from this tax, and thus force the states tO higher taxes from other sources, which will mean increased land taxes Eol