Evening star., 1924-01-06
, DEMOCRATS TAX PLAN
| DESCRIBED BY RADIO
Senator Robinson Sees Propaganda
in Many Appeals for
Melons Proposals.

Senator ,Robinson's radio address
last night on tax reduction follows, in
part
"The impatience Of the public with
government poIicities as they affect liv-
ing conditions is in part reflected in tine
widespread demand for a reduction of
taxes.
Members of Congress daily receive
many communications from their con-
stituents urging support OF the Mellon
plan Many of these messages are
identical in language, while a similarity
or argument runs through large ma
jority of them. disclosing their common
origin. Propagandist influences I'M
doubtedly are at work nevertheless,
overwhelming public sentiment Is behind
the movement for tax reduction, and
this sentiment is based on justice and
sound reason.
Revenues Exceed Expenses.
IF Treasury reports and figures are
to be accepted. a surplus Is accumula-
ting. The total receipts for 1923
were $4,264 ,9O5. 500. while expenditures
on all accounts were $3.SSS,063,062, an
apparent net balance of S275. .s42,5lS s.
Every evidence indicates that this
surplus, under present tax rates. may
be expected to gather volume and to
increase rapidly.
THE correct principles Of federal
taxation, from the democratic stand
point, are expressed in the message
Woodrow Wilson, May 20, 1919, in
which he said =,
81 hope that the Congress will
find it possible to undertake an early
reconsideration of federal taxes, In
order to make our system or taxation
more simple and easy Of adminfstra-
tion and the taxes themselves as litNe
burdensome as they can ge made ana
yet suffice to support the Government
and meet all its obligations.
THE main thing we shall nave 70
care for is that our taxation shall
rest as lightly as possible on the pro-
ductive resources of the country, that
it's rates shall be stable, and that 1t
shall be constant In its revenue
yielding power.
"I can only suggest the lines Of a
permanent and workable system, and
the placing Of the taxes where they
will least hamper the life OF the
people.
Hits State Taxation.
only such taxes should be levied
as may be necessary to meet the ex-
penses of the government when
honestly and economically admin
stored. Revenues should not be so
abundant as to invite extravagent
expenditures or to encourage attempts
to find new and broader spheres for
governmental activity.
THE high cost of government-the
high taxes complained of are not con-
fined to federal laws. Indeed. they
are due in a greater degree to state
and municipal authority. and, of
course. no act of Congress can give
direct relief from these.
Decisive reduction of federal
taxes. however. will start general
movement which will gather momen-
tum and result in reductions down
the long line, and this IN turn VIII
afford some measure Of relief against
the high cost of living, which again
seems to be going up.
..The Mellon Plant''
"The Mellon plan which many
talk about, and which few under
stand. is incorporated in bill pro-
viding for the complete revision OF
the revenue law. Its salient feanures,
aside from the repeal of taxes now
| levied on admissions, telegraph and
telephone messages, and certain mis-
cellaneous nuisance taxes. include;
a. A 25 per cent reduction in the
tax on earned income.
Earned income is to be dehned as
wages. salaries, and professional
fees 1t does not contemplate reduc.
ttonS of taxes on the earnings OF
farmars or small business men VINO
derive their own income from busi-
ness personally carried on with their
own capital
Mr. Melons definition of earned
income may be broadened so as to
i limit may be fixed ont the amount
which will be generous but which
will also avoid any loophole for tax
dodgers.
t2 The Mellon plan proposes where
the present normal tax is per cenl
! to reduce it to 3 per cent, and where
it Is now s per cent to reduce the
rate to s per cent.
Sees Sharper Cuts.
Efforts will be made to secure
still further reductions in the nor
NAL tax, particularly as it applies to
| the smaller incomes.
| "3. Perhaps the most controversial
| feature in the Mellon plan is the
proposal to reduce the surtax rates
| by beginning their application al
$4,000 instead Of $4,000 and scaling
| them progressively upward to max
! imum of 25 per cent at 100000.
| only minor differences arise re-
specting the surtax to be applied to
! the smaller incomes, but a contest
| will occur over the rate as applied
/ to the large incomes
| During the last Congress the
higher surtax was reduced from %
uer cent to, so per cent Fifty per
| cent is now the maximum. and 1t be-
| gins on incomes of 100000 and ap-
plies upward
| IF the principle of a surtax is JUS
| titled, why should not distinction
I be made between incomes of 100000
| and very large incomes ranging as
! high as $2.000,000? True, the pro-
| posed reduction in the rates on large
| incomes is justified, in part at least.
as necessary to prevent tax evasion
| still 1t cannot be demonstrated that
| IS per cent is the one and only rate
, which will diminish investments in
| tax-exempt securities and invite
them into industrial and commercial
| enterprises. In fairness from every
! standpoint should not the individual
| who enjoys an income of S5O0,000,
| $1,000,000 or $2,000,o00 pay a higher
tax rate than he who receives an in
| come of only 100000?
Favors 40 Per Cent.
at is said that the reduction of the
| surtax rate from a maximum of 81
per cent to the present maximum OF
SO per cent already has had the effect
of increasing investments by the
owners of large capital in business
| From what evidence does 1t appear
that a maximum of 40 per cent levied
on income above 100000 will no.
| have a similar. effect to a greater
| degree?
How Tax-Exempt Securities May Be
Reached.
There is a method by which, with.
out amending the CONSTITUTION, TAX
lexempt securities may be reached fol
taxation purposes. This may be ac.
complished by the imposition of trans
fer or inheritance taxes which dis
tinguish between securities that have
lborne their fair share of tax burden:
in the decedent's lifetime and securi
ties of the same class which have not
ct is legal to tax the latter higher
than the former. The Supreme Cour
of the United States in Watson ant
others against the comptroller of tht
state of New York, 254 U. S., page 122