Evening star., 1924-01-14
SURTAx SOLE ISSUE
j, IN TAX BILL FIGHT
Conflict Centers About Provision
Charged as Beneficial to
Wealthy Class.
NCTrnN IN TAKE STAND
MELLON TO TAKE STAND
Doubtless Will Give Opinion to
Congress Committee.
Ely DAVID LAWRENCE.

Opposition to the Mellon plan for
tax revision has confined itself al
most entirely to the question of sur
taxes. The talk of compromise relates
TO surtaxes. The cry that the rich are
being favored arises out of the pro-
posal to reduce surtaxes. The answer
that business conditions will improve
is based on a belief in the produc-
tlvity of lower surtaX rates.
The truth about new surtax rates
probably will never be learned until
the country actually tries out an
amended schedule. Senator Couzens
OF Michigan, for instance, wants to
know why surtaxes should be 'educed
to improve business when business
isn't at all bad now.
The split in the republican party
over the schedule Of surtaxes by Mr..
Mellon grows out of a fear that to
reduce the surtaxes will open mem
berS to attack from demaEogues who
will say the action favors the rich.
Anything that helps the rich will
never get through Congress. The big
question is whether the new surtax
rates help the rich alone. If it helps
the poor. too. by reducing rents and
making 1t easier to build homes, then
IT will gain friends If 1t helps the
poor by enabling them TO have a still
further reduction in taxes after the
proposed tax law has been in effect
for while, then lower surtaxes Will
gain even more friends.
Mellon VIII Testify.
But who knows? The ways and
means committee is beginning hear
ings Secretary Mellon undoubtedly
will testify. He interprets past ex-
perience and analyzes tendencies
based upon statistics He has shown
already that the government il
steadily losing revenue because the
] capital into taxreSemps seI ts securities. afies
Admitting that to be a tendency, he
must show now that the relief the
country needs will be afforded under
scale of 1 per cent to 25 per cent
on surtaxes. instead of 2 higher
limit of ~ per cent. as the demo-
Gratis propose. or 81 per cent as
those who would compromise are
predominant opinion is In favor of
abandoning the present high limits
Of 50 per cent, which. with the normal
taxes amounts to 80 per cent of all
Incomes above 100000. The demo
cratic schedule of A per cent plus
the normal taxes makes the rate
about so per cent
Treasury Makes Survey.
Mr.. MELONS whole argument is
baseu on the theory that IL doesn't
make much difference what the
opinion may be of the political value
"f IS or IL per cent tax limit.
the important fact to determine is
whether the new schedule of sur
taxes Will get the needed revenue
3tiS experts are at work on the yari-
GUS suggestions and before long some
treasury estimates will be made pub
lie showing the probable sums that
VIII be raised from ~ per cent
surtax and even 35 per cent rate.
There unquestionably has been
some MISUNDERSTANDING of the rela-
Ilonsh1p OF surtaxes to business. The
Treasury doesn't contend that busi-
ness is bad or that it is going to get
bad. 1t simply argues that business
today would be ever SO much better
II net artihclaly restrained by high
surtaxes, and that when business is
booming everybody gets more out of
the world in general. To say that
business at present is satisfactory to
is willing to forego an increase in in
come. Ambition and human desire
have no limits.
The fight against the proposed sur
tax rates is at present political. The
talk in the cloakrooms is only about
political effects. The Treasury is
arguing the case on economic ground
today, just as Secretary Houston and
secretary IlasS, |poth democrats, pre-
sented their recommendations for the
repeal of excess profits and other un-
scientific tax rates because of eco
nomic considerations. The Treasury
has looked at 1t from the beginning
from the latter view point. Congress
IS concerned with politics In the
next few weeks the battle between
politics and economics will be or in ear
nest, with the opportunity for mis-
representation and confusion grow
ing greater every day as the curb
stone economists make their theories
square with political impulses.