The Washington times., 1924-01-01
SPENT INCOME
TAX IS NEW
PLAN
Savings Of Rich, II Invested h
Productive Industry.
Would Be Favored.
CONTINUED from First Page.)

Continued from First Page.l
income taxes. Under the Mellon
plan he win pay only some $4,000.
He win save approximately Silt 900
year. Mellon says he will put
1t into productive Industrial enter
prises. That In what Mellon says
he viii do. But how do we know
that he actually will do It? There
10 nothing to prevent his spending
Il on more motor cars and more
country houses and more trips TO
Palm Beach and the Riviera. Mellon
says he win spend IL on industry,
but we see nothing to prevent him
from spending It simply on luxury"
To these observations the friends
Of the Mellon plan are beginning
to have to reply. They are De-
ginning to have to try to prove
that large incomes do indeed go
principally into industry and only
really in very small part into
luxury.
Statistics Prove Obstacle.
They encounter, however, a great
obstacle in the statistics brought
forward by the enemies Of the
Mellon plan regarding vast expendi-
lures on golf clubs, hunting pre-
serves. picture galleries, foreign
| travels, and other undertakings ana
pursuits called unnecessary by the
mass Of the members of Congress.
In these circumstances a proposal
has arisen to apply Senator Shoots
sales tax" idea to the incomes Of
people in the upper brackets"
The sales tax" hits all expendi-
lures for Consumption" 1t does
not hit expenditures for invest
ment." It is suggested in various
developed and that q distinction be
come devoted to living expenses
and, on the other hand, the surta1es
on income devoted to investment
and to the general promotion Of
business.
Aid for Investors.
If, for instance, man with an
income Of 100000 a year, spent all
of it on living expenses, he would
pay the normal tax and full set Of
standard surfaces. II, however, he
spent only 500, 900, on living ex-
penses and put the remaining $780,
600 back into active business, he
would pay the standard surfaces
only on the $100,O0Oi, while on the
remaining 100000 he would pay SUR
taxes deliberately put very nuch
lower.
It is argued that In this way .
strong impetus would be given to
the very development which Mellon
wishes to foster. Melons ultimate
object is to stimulate business and
industry. 1t is argued that IL ex.
penditures on immediate personal
living expenses were relatively pen-
allied and IL expenditures on bust
ness and industry were relatively re-
warded by the Federal taxation gys.
tenn, the result would be that luxury
expenditures would be discouraged
and investment exper ditures would
be promoted and enlarged.
Makes Partial Converts.
The educational campaign con-
Quoted by Mellon in the matter Of
taxation and industry has already
carried conviction to many legisla-
tors to the following extent:
They recognize now more clear.
~, and they admit now more free.
ly, the fact that it is wise and In
deed necessary to encourage the flow
Of money into productive instead d
into unproductive expenditures.
They claim, however, that luz.
ury expenditures are just as un-
productive as taxes. They claim
that money spent on living ex-
penses flows away and disappears
just exactly like money spent on
the salaries Of employees in Govern
ment departments. They admit
many Of them-that IL would hea
good thing to relieve the rich from
the higher surtaxes in order 70
enable them to put their saved
money into industry; but they want
to have soue reason to think that
they will In fact put It there.
Hope For Compromise.
They accordingly begin to speed.
late on the possibility Of injecting
into the revenue law itself q die.
couragement Of high expenditures
on luxurious living and special
lower set OF Surtaxes on money
given to the permanent capital Ok
the business of the country.
Some Of them hope that through
some such plan they may be able
to satisfy both the Congressional
friends Of business development and
the Congressional enemies Of large
luxurious fortunes.
Copyright. 1924. by Washington
Press Servioo)