The Washington times., 1924-12-04
UBL|C|TY
PROVISION
IN LAW
HIT
Secretary Says Effect Has
Been to Send Wealth Into
Exempt Securities

Declaring that the revenue act
of 1924 has failed to provide neces-
sary changes in the tax system
that will assure national pros
perity, Secretary of the Treasury
Mellon, in his annual report to
/ Congress today, recommended q
far-reaching program of reform.
While the real fight of the
new Coolidge Administration for
its reorganization of the taxation
system is not expected to be
launched until the Sixty-ninth
Congress, Mellon took occasion to
outline to the short session what
he considers the dangerous flaws
in the 1924 law.
Flaws in 1924 Law.
These provisions, said i. to be lin.
consistent with economic laws" fol.
low:
| H IACCS0AS6 SuEt&hA E6tGBs
2. C0nfiscafOry estate tax rates.
3. unwOrIEable gift tax alleged %
"unduly hamper legitimate bus1.
ness"
4. Publicity provision Of law
| characterized as "a mistake Of
policy" and detrimental 10
revenue.
Although devoting his principal
attention to the tax program, Secre-
tary Mellon urged greater economy
in government, recommended various
| fiscal, banking and currency re-
forms, described efforts at reduc-
ton of the public debt and obliga-
tons owed to the United States.
Hit Opposition to G. o. p.
Mellon slapped the Republican
opposition in the recent Presiden-
tial election. Asserting that the
United States is perhaps the first
nation to pass through the recon.
struction period successfully.
Prices are Stable.
Mellon painted an optimistic pic
ture of business recovery since the
complete disorganization of our
economic structure in 1920 and early
1921. He said that prices have
been comparatively stable for two
or three years, production has in
creased 20 to % per cent, employ.
ment to 10 per cent and bank de.
posits six to eight billion dollars
since the low point in 1921.
The maladjdstment between az.
riculture and other industries has
been removed and the farmer il
rapidly being restored to his proper
status in the economic system"
Mellon said.
In his tax recommendation Mel.
Ion particularly assailed the 37h
per cent surtax on large incomes.
He stood for a reduction to a point
lying between Is and Is per cent.
on the ground that such a, tax
would yield the Government q
greater income and likewise have
tendency to stimulate private
business.
Effect Of High Surtnx.
Mellon reiterated his view that
the high surtax drives the posses.
sors Of high incomes into tax.
exempt securities, at the present
time totaling 81, 2s4, 600, 900 and in.
creasing billion dollars a year.
IF these higher brackets become
| unproductlVe, the revenue can be
made up only by higher taxes in
the lower brackets and by decreAs.
ing the present exemption so that
tax will apply to smaller incomes"
Mellon declared.
The inevitable result of uneco.
nomic taxation is to raise the price
level so that 81 per cent of the
people who pay no income tax di.
rectly, must make their payments
indirectly in what they buy"
On Tax Publication.
The publicity feature Of the 1921
revenue act makes tax avoidance
inevitable, according to Mellon.
| He declared that Immediately up.
on the recent publication of income
tax lists the newspapers reported
stimulation in the market for tax
exempt securities
Mellon recommended repeal of
the publicity clause because he
said 1t would result in decrease
in taxes.
No attempt was made by Con.
gress to reconcile provisions of the
Continued on Page 2SO