Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1924-02-14
Garner and Mellon Plans,
Differing Widely, to Be
Threshed 0ut-Cut This
Year Provided

D. SenleU 10 Tue mousse tpddN ny hiSht-
| bers of the ways and means com,
mittee.
The measure, which has occupied!
more than two months of the com
mittees time, is expected to provide
at least months debate in the
/ house, where a change in the rules
will premit its amendment from the
/ f1ocr.
! Chairman Green, in submitting the
! committee report, which was adopt
! ed by a strict party vote in the com
mittee-although three of the Repub,
/ leans, including Mr.. Green, are
| known to favor its amendment-de.
| clared the income tax reductions pro
vided for in the bill as submitted
will bring an annual saving to tax
payers estimated at $341 ,440, 600 after
it is in full operation, as compared
with the estimated 1928 income re
I turns. together with an estimated re-
duction of $3.50 ,750,O 900 in 1923 per
sonal income taxes payable this
| year.
The reduction in estimated reve-
nue. will be distributed as follows:
| Normal tax, sol 500 900; surfaces,
| SOL 800 900 earned income, $S9 800
! 600, and miscellaneous or WAY excise
! taxes, many of which were repealed,
! sos, 040 900. This will be offset DV
increases resulting from limitations
! put upon capital losses and certain
| deductions limited to taX-free 10
come, which, it is estimated, will
! briag in $40. 500,0 900 additional reve-
nue. annually.
How Reduction Works
The normal tax on the rirst $4,000
| of taxable income is reduced from
per cent to per cent and Ipon the
remainder of the taxable income
from 8 to 6 per cent. The initial
surtax rate of | per cent is made
to apply at $4,000 instead of 5000
and is increased gradually TO % per
| cent on incomes of 100000 and over.
Mr.. Green said "the bill gives ma.
! terial relief to all income taxpayers
! and the amount of the reductions
and consequent loss to the treasury
| IS larger in the lower brackets than
| in the higher, though the percentage
! of reduction, of course, is much
larger in the higher brackets than in
| the lower"
Explaining the reduction in the
maximum sur tax from so to % per
cent. Mr.. Green referred to Secre
! tary Melons argument that this
rate Should be considered the point
at which they (the sur taxes could
! be applied effectively Or the unit OF
! maximum productivity" He added,
! however. that cit is impossible to
accurately determine at what rate
| Of tax this point is reached. but it
| seems to be generally conceded that
/ "A SO per cent sur tax has a constant
| ly increasing effect in creating eva
sions and that it is inadVisable for
| other reasons.
Referring to the provision for 25
| per cent reduction in the tax OF;
earned incomes the chairman said
tine definition that at least $4,000
! of the taxpayers income shall in all
cases be considered earned amply
provides for the small taxpayer.
such as the farmer and merchan-
whose income is derived in part
| from personal services and in part
! from capital, and apr caches exact
/ Justice as near as it is possible with
! out making the law unavoidable anG
impossible of administration
EOOphOles Stopped
The following changes were cited
! as designed to prevent the avoidance
| of the income tax.
THE existing law provides that
! the amount by which the tax is in
creased on account of the r"'n from
the sale of capital assets shall not
| exceed - II per cent of the sam,
and in the proposed bill 1t is pro
Vided that the amount by which the
tax is reduced on account of losses
from the sale Of capital assets shan
| not exceed . IL per cent OF the
loss.
The provisions of the reorGa MIA
/ ton section have been rewritten TO
prevent the use of the section to
escape proper taxation by increas-
inc the basis for depreciation or de-
Epletion or by increasing the basis TOR
determining gain or loss from the
sale of assets transferred in con
nection with a reorganization or DN
distributing as capital gains what
are in effect dividends out of earn
ings.
'.Where the grantor of a trust re-
talNS the power VI leNoC'tph tl9
income of the trust is to be taxed to
him.
1.-The penalty imposed by Section
22O upon corporations aValled of to
avoid the imposition of surfaces on
the stockholders is now based upon
all the income of the corporation
which would be taxed in the hands
of an individual, and the presump-
ton is created that any investment
company is availed of for the pur-
pose of avoiding the imposition or
surtaXes on stockholders.
Les Exemption Limited
1.-THE deduction for interest paid
on Indebtedness (other than interest
paid or incurred in connection with
the trade or business of the taXpay-
ers) and the deduction for nop-busi-
ness losses are allowed only to the
extent that the sums of these items
exceeds the taX-aNempt income or
the taxpayer"
The report of the eleven Reoub.
licans of the committee was the
same as Chairman Green's except
for considerable additional argu
ment defending the cut in surtaXes
to a maximum of % per cent. 1t
pointed out that the high rates were
becoming increasingly unproduCtlNe,
citing that incomes OF over 500. 600
constituted 29.5 per cent of the total
income reported in 1916 and 5.+ per
cent and As per cent, respectively,
in 1920 and 1921.
The only way that the income