Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1924-03-27
PENALTY IS LEVIED
bN EARNED INCOMES
UNDER LATEST PLAN
lawrence Reveals Senate
Committee Rejected I'M
portant Clause of Mellon
Proposal in Monday Action
By DAVID LAWRENCE
.eaSed Wire Service Ia The Journal. u
ll'IA.A,.,.i.rlnt 1n.ll !

he revenue bill by the senate finance
published reports last night. In
tead one of the principal recommen-,
ations made by the secretary of the
treasury has been temporarily, at
east, turned down. 1t relates to
armed incomes and affects more in
ividuals than the other parts of the
1ellon plan which were approved.
What the senate finance commit
ee did by 4 vote of to was to
dept the Mellon rates on the sur
aXes, approving % per cent sched-
lie as maximum instead of the
Longworth bill passed by the house
roviding for a 81 IL per cent max
mum.
But the Mellon plan itself as origi-
ally recommended was a carefully
alanced scheme. Wealth was to be
liver. certain reductions but
oupled with those were reductions
the taxpayer of small income. The
enate finance committee has given
he wealthy investor the reductions
5anted but has deprived the man OF
mall income who earns his liVeli-
God without capital and with only
he energy of his hands or his mind
he concessions proposed by Secreta-
y Mellon.
TIE house ignored the Mellon rec
smmendation for flat % per cent
eduction on all earned incomes and
i aid it should apply only to in
ZONES below $4,000 a year. The
enate finance committee, despite
=lr. Melons advice, has cut it still
urther to $4,000.
Melons View
"There is, of course, absolutely
o reason" Mr.. Mellon told the SEN
tie finance committee for $4,000
imitation on earned income. If the
distinction between unearned income
: nd earned income is good, it is good
h every bracket. II the tax one
}nearned incomes in excess of $780,
= 90 is at the proper rate then the
anne rate is too high for earned
Incomes"
Stating in another way what MI.
lellon meant was that d man who
armed $4,000 as q doctor, lawyer
|alesman, business executive, music
COMPOSER, inventor or any profession
HI which brains are the sole capital
sed, should not be in the same posi-
Ion as a man of inherited or accum-
4 lated capital who clips investment
coupons and gets an income of $2o'-
loo. People in the latter class, fol-
Instance, have approximately $780,
loo of capital, which at per cent,
Iarns for them $21, 900 a year. Thew
law the same rate of taxes as the
Professional man, yet when he is sick
LIS income stops, and when he dies
he can not bequeath his law practice
la gh the man with the capital can
10 away from his place OF business
Ind spend a life of leisure and still
traw the same income. He can be-
sueath it to another person when he
lies. Technically he doesn't earn his
income in the same sense as the per-
lon who works with his mind or his
hands.
MIR. Mellon says that if the senate
kinks the rate of taxation for a man
be $40, 900 income should be fixed at
certain rate then the man with the
kther kind of income should not have
|he same advantage.
Little Fellows Protected
Mr.. Mellon incidentally has agreed
hat all income below $4,000 should
be considered as earned" so that
Widows and orphans and others who
HAY be unable to earn q livelihood
hall not be penalized. Five thousand
kollars is the average income on an
Estate of approximately $4,000.
The house bill further complicated
matters by providing that the detini
lion of earned income" should in
Elude in cases where the income is
The result of the use OF capital in
connection with personal services, an
kmount representing reasonable
Ealary for personal services render
Id. Mr.. Mellon criticises that pro
Vision thus:
1.-The treasury department. for the
years of excess profit taxes expert
knced the greatest administrative
difficulties N determining what was
nj S0t in IF 81
|y.owned corporations. The present
definition means that in every case
where there is any personal service
the department must
determine what IS Il reasonable sal
kry for those particular services.
|rhis would bring up for determine
ion by the department several hun
hred thousand separate cases each
Eear, and you can easily understand
the difficulties the department. will
have in NdminiSterin" such Il law
Justice Made Expensive
Mr.. Mellon might have added
about the difhculties. Of
he taxpayers Who would have TO
Eourney 10 Washington or hire law
hers TO prove to the government
what is and what is not n reason
bile salary with the consequent re.
Eult that it will be cheaper to ac
Eept Injustice than to pay the eX.
bense obtaining Justice.
The senate finance committees &C
lion is, OF course, not final and there
hre indications that the whole mat
ter of rates Will be opened UP aSain
before the revenue bin is reported.
Persons who earn their incomes,
however. have thus far been SiveC
ess faVorGble treatment by the house
han Secretary Mellon recommended
Rpd The senate committee has car
rietl tnA dfsyfss,NinnriA n.,liEST p3rn.