Evening star., 1924-02-01
REcORD:yOTE sure
MELE0NHAN
Ways and Means Committee
to Report Bill With Changes
Already Made.
SURTAx RATE Is PIVOT
Republicans Hope to Compromise
on 35 Per Cent if Secretary's
Figure Rejected.
SURTAx RATE IS PIVOT
BY DAVID LAWRENCE.

L. "
Out of Difference to Secretary of the
Treasury Mellon, the republicans on
the House ways and means commit
tee have decided to report to the
House the Mellon tax plan with the
changes already made.
Mr.. Mellon has insisted on a record
vote in the House on his proposition,
which is taken to mean that he will
not compromise till he sees the ne
cessity for it.
Although the bill as it will be re-
ported to the House provides for a
25 per cent surtaX rate, even the re-
publican leaders themselves concede
it cannot pass the House, and they
anticipate a compromise at 35 pei
cent for the maximum surtax for in
comes of 100000 and above.
Mellon Blocks Compromise.
A few days ago Representative
Longworth, the republican House
leader, began negotiations with the
democrats in the hope of securing
enough pledges to make sure of 80
per cent surtaX rate. Some of the
democrats insisted that they would
like to be assured that the President
and Secretary of the Treasury would
agree to 35, per cent before they would
abandon the democratic program
Mellon would not bulge and the
whole negotiation fell through. So
the only thing left to do was to re-
port the bill to the House as Mr.. Mel
Ion wanted 1t, and the rates will really
be decided by a vote of the House in
stead Of committee action.
The vote III the republican con-
ference among the members of the
ways and means committee was IL
to for the Mellon plan. If the
democrats had been permitted to be
present and cast their votes. their
eleven ballots combined with the
three negative republican votes
would have made the vote IA to IL
against the Mellon plan. But the
three republicans have agreed not to
vote against the Mellon plan when
formal action is taken by the full
committee. as they do not wish to be
In the position Of preventing the
Mellon plan from getting before the
House itself for a record vote.
Hope for Is Per Cent.
When the House has voted down
the 25 per cent maximum surtax rate
"a combination of democrats and
fnsurgent republicans makes that
almost a certainty-the republican
leaders will endeavor to get 35 per
cent rate through: though It is
Mr.. Melons sanction. as he wishes
to make a. final effort to get the
Senate to stand for the % per cent
rate The Senate is not likely to
accept the % per cent rate either. as
the republican majority ID slim and
the, democrats in. the 1uppef- house are
inclined to follow the Garner plan of
a. per cent surtaX rates.
Should it become necessary for the
administration to compromise on a
orYf 70 20 ch n
effort will be made to put the applfca-
tion OF the rate as high as possible
In the upper brackets. The more in
comes that would be subject to a %
ury feels the business condition of
the country will become.
Secretary Mellon is reported to be
disappointed with the action Of the
House ways and means committee in
making the Is per cent reduction on
earned incomes apply only to persons
with an income of $4,000 or under.
He is said to feel that If the principle
of the thing is sound-and that seems
to be recognized by both parties
then there should be no penalty on
brains and no restraint upon indi-
vfdua1 initiative.
Status OF Doctors.
As it stands now many doctors'a and
lawyers and others who have made a
success In their professions will not
get the benefit of the 25 per cent re-
duction on earned incomes. They
will stand on the same. footing as
other individuals who do not earn
their incomes. but clip coupons from
investment Of funds inherited or ac-
cumulated by other persons for them.
The professional man has an aver
age of fifteen or twenty years within
which to build a trust for his family.
He cannot pass his practice or ability
on to another generation, whereas
the man with capital can bequeath
that to another. AS matters stand
now :he doctor or lawyer with an in
come Of $4,000 a year pays exactly
the same tax as the man with an
estate of approximately a million dol
lars, whose annual income from his
Investments is in the neighborhood of
$4,000.
The democrats have proposed a re-
ductton OF one-third on all earned in
comes without limit, but they voted
for the $4,000 maximum in commit
tee, so that unless the House itself
changes the bill as reported from the
ways and means committee that will
be the upper limit for the one-fourth
reduction on earned incomes.