Evening star., 1924-01-07
GARNER TAX PLAN
DECLARED UNS0UND
Treasury Experts Say It Was In.
tended Only for Political
Effect.
MEANS NO REAL SAVING
Leaves Even Greater, Temptation
+ to Evade Payments.
MEANS NO REAL SAVING
BY DAVID LAWRENCE.

Repre- sentative Gamers plan for
tax revision Is being subjected to
scrutiny today by Treasury experts.
| most of whom pronounce It q plain
piece OF politics which does not take
into account the economic phases OF
the tax problem.
What Mr.. Garner of Texas has
done, In the opinion Of officials OF
the administration, is to take the
taxes that apply to the greatest
number OF individuals and make rad
ical cuts without considering the
main purpose OF tax revision
| namely. to stimulate business and
produce q condition of prosperity
that will enable the maximum num-
ber Of persons to benefit therefrom.
After reaching tho $4,000 incomes
and Up to 100000, tho Garner rates
are the same as In the present law.
On incomes above 100000 the fig
ure Is A per cent surtaX plus per
cent normal tax, total of so per
cent
The purpose Of the Mellon plan is to
meet an economic situation IN which
| the persons with higher incomes are
constantly Withdrawing their capital
| from productive enterprises that mean
| revenue to tho government and are
putting il in tax-exempt securities and
other things that enable them to avoid
paying taxes to the federal government.
Under the Garner plan the Treasury
| is not assured OF any more income; in
| fact, all the statistics would seem to
I indicate. that more capital will be
driven out Of business if the present
rates are maintained than was tho case
| In preceding years. The decline in the
number Of returns above 100000 Is
alarming the Treasury experts. The
Mellon plan is designed to cure this
fundamental flaw in the present system.
The situation OF a man with a
100000 income Is Just this: He can
| invest in productive business or he
can invest In tax-exempt securities.
1t is immaterial what tax he pays
up to the 100000 figure. The ques-
| tion is what is he going to pay on his
income above 100000?
LOSS OF Revenue.
! He can either put his money In q
| 5 per cent municipal bond or in an
| Investment which will yield him 10
per cent and get the Same results
from either. Investments which
| yield 10 per cent are not always
| sound no rare they as easily procured
as tax-exempt securities yielding 6
| per cent. AS a result the money will
not be invested in productive busi-
ness, the prosperity of the business
| world as a whole Is diminished and
the federal government loses the
| revenue 1t hopes to get. Under the
Mellon plan persons with incomes
| over 500 900 would find 1t more at
| tlactive to put their money in busi-
ness enterprises. That's the economic
| problem which the Treasury thinks II
paramount to solve.
[ There is no doubt that the Treasury
could have proposed a plan similar to
that Of Mr.. Gamers for the smaller
incomes, but such scheme was dis
missed from consideration, as II
| doesn't give the taxpayer the indf-
rect benefits, namely, the opportunity
(; to increase his own Income through
better. business conditions.
Fight on Surtax.
| The whole fight, therefore, centers
on the surtax rates. If they are not
changed, and the present law is main
tanned, they will continue to be un-
productive, and the losses that are
anticipated as a consequence OF the
prohibitive rates will have to be