San Antonio light. [volume] (San Antonio, Tex.) 1911-1993, 1924-03-11
SUBSTITUTE TAX THEORY

In an interview with Congressman
John n. Garner. published in the Sat
urday Evening Post of March s and en-
titled. "Your Money" several assertions
credited to the gentleman from Texas
logically invite particular analysis. Per-
haps the most provocative is the follow
ing:
Il would be perfectly willing to agree
to something approXimating Mr.. Mel
Ions maximum surtaX OF % per cent
ii all the earnings of corporations were
distributed to individuals, but when an
individual pays only % per cent sur
tax on the small amount that is given
him in the form of dividends by a cor
poration. then I disagree. Many cor
poration is today declaring a small divi-
dend, but retaining in its business a
large surplus. 1t is difficult TO say
that this surplus shall not be retained
as a measure of safety. but Congress has
the right and the power TO tax all earn
ings, whether distributed or not, and If
Mr.. Mellon had proposed some such
scheme so as to enable us to apply the
maximum surtaxes on all the earnings
Of a corporation his proposal would have
met with far different reception"
If this represents the length and
breadth of Mr.. Gamers opposition to
the Mellon plan-and in another para
graph he is .quoted as saying that the
only material difference in the Mellon and
the Democratic substitute plan is "all
in the surtax rates"-then would it be
impertinent to inquire why he didn't
propose an amendment designed to REM
edy the alleged defect in the treasury
heads measure? Or, that being unsatis-
factory from a partisan standpoint, why
didn't he simply write a substitute bill
containing, in addition to the admitted
virtues of the Mellon plan, the allegedly
vital feature missing from the latter
measure?
Instead OF taking either Of those easy
courses, Mr.. Garner wrote bill pro-
viding not only for a much higher maxi
mum surtaX rate, but for vast en-
largement OF the class to which the
maximum rate applies.
Does Mr.. Garner expect 10 preclude
the alleged defect OF the Mellon plan
by aggravating the very condition which
obviously causes large corporations TO
retain their earnings in "the business
Or. if his bill is designed to enable the
government to collect taxes on the total
earnings of corporations, rather than
upon whatever part OF their earnings
they may see tit to distribute, why
couldn't the Mellon bill have been 50
amended as to achieve the same end
Unwittinglv perhaps. but none the less
plainly. Mr. Garner indicates the correct
answer to all these questions. Whether
the interviewer consciously tried tC
make it so appear or not. the article
as a whole, consisting mostly OF para
graphs directly quoting Mr.. Garner
might easily seem to have been inspired
~ one WAC was striving to avoid Great
ing the impression that he had been in
fluenced by political considerations. a
any ratc-minimv or MAXIMUM
such an effort WAS consciously made
it must fail OF its purpose.
At one stage OF the interview the IN
terviewer neatly trippcd Mr. Garner OF
ono OF his major assertions. "N ell. tn,
crux OF the situation said Mr. Garner
is that Mr. Melons plan is base,
upon anticipation but not proof OF wha