The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1924-01-19
MELLON TAX
PLAN GOES
BACK YEARS
Facts and Conditions From
1919 to Present Lie Behind
Proposal.
Times Washington Bureau,
1922 New York Ave.

XVII ASHINGTON, Jan. 19.-They
IWI talk of the Mellon tax plan"
- but Secretary of the Treasury
Andrew Mellon is not as important
a figure in the tax plan as is popularity
thought.
Mellon was neither the architect nor
the carpenter in this plan. He was
merely the man for whom the house
was built by lesser figures in the
Treasury Department. He made some
changes here and there before he &C.
cepted, but that is as much of the
credit or discredit that Mellon should
get.
But as this tax question is the most
prominent measure now before Con-
gress, let's get something of it's back
ground
Go back to 1919 and 1920 and recall
the after-war prosperity and the wild
spending. The buyer cared nothing
about prices. All he wanted was some.
thing to buy.
Taxpayers Didn't Care
Taxes were heavy then. but big tax
payers didn't care. They just passed
Some of them even got a little profit
out of the process. The consumer
paid the bill.
There came tendency toward
economy and what was known as a
buyers strike" The consumer had
gorged himself, and took a rest
Prices then became important factors.
Instead of being easy, 1t became
difficult to pass along the income and
excess profits tax. Business began
TO cry for tax reduction. Taxes were
cut and business revived, because
prices were reduced
But business had to be sustained
during 1924, too. If the Republicans
were to re-elect a president. And
New York flnanciers. railroad mag
mates and members OF President Cool. |
idges Cabinet began figuring to
sustain business.
Passed Tax Buck
last year, 1929 business passed |
along practically all It's tax bill. 1t |
was another buyers year, one Of the |
greatest business years in our history |
Prices were not vital factors. although |
they did count more than in 1919 and |
1920.
Now the big idea is prices must be
slightly reduced II business is to be
sustained for 1924. To cut prices. |
the first thing necessary was to cut
taxes.
That's one OF the big reasons for |
this Mellon tax program.
Another one is the soldier bonus.
Practically every fnancier and, in |
fact. almost every student OF econom- /
les. has been at heart against the |
bonus.
Secretary Mellon and most Of his |
subordinates in the Treasury have
been against It from the outset The /
bonus might be killed of by a nation.
wide cry for tax reduction.
The so-caled Mellon plan was pre-
pared with that thought and in time
to get 1t to the country and get a re-
action on Congress before the bonus
bill could be considered.
Another motive behind the Mellon 4
plan was that decision Of the Su. /
preme Court holding stock dividends ,
untaxable. The only persons that I
ever supported the courts reasoning !
were those who were getting stock /
dividends.
Corporations Dodge Taxes
Since that decision, It has been i'm /
possible to place corporations anu
partnerships on a parity with In
dlviduals in applying the income tax.
Corporations had found in the de-
cision q most successful and an easy
method OF avoiding the tax collector. I
individuals are incorporating them |
selves to enjoy the opportunity to
dodge taxes legally
In that process OF tax lodging, how |
ever. business piled up huge profits |
and huge surplus accounts. Business |
would not distribute this money or
invest II where It would be subject |
to taxes, And every financier and /
business man knows there Is a point
where a surplus can become a tremen.
dous burden. The money Ehould be
out working to develop profits and to
pay the interest on carrying that very |
money.
There you have tho background Of
the Mellon tax plan.