Evening star., 1925-06-25
SYSTEM Of TAXES
CALLED OBSOLETE
Finley Makes Plea for Re-
vision Before Bankers of
South Carolina.
By the Associated Press.

GREENVILLE, 8. c.. June 25.-
The Treasury, like the business
world. views taxation largely as a
business problem. 1t is interested
primarily in the extent to which rates
actually produce revenue" said David
e. Finley OF the War Loan Staff of
the United States Treasury. address,
ing the twenty-fifth annual conven-
ton of the South Carolina Bankers
Association here today.
The Treasury official then pointed
out that I'VE are still operating under
an obsolete system of taxation evolved
during the war to meet conditions
that no longer exist"
Secretary Mellon, said Mr.. Finley,
In urging tax reform, sis actuated
solely by the conviction that our
present system is unnecessarily COM
pltcated, inefficient as a revenue pro-
ducer and threatens to become drag
on business and development"
Democrats Are Quoted.
Mr.. Finley read to the bankers
quotations from Senator Carter Glass
Of Virginia, a former Secretary of the
Treasury; former Secretary Houston,
Senator Oscar Underwood Of Alabama
and the late President Woodrow
Wilson to the effect that excessive
surtaxes are a distinct disadvantage
to any government.
In 1919 President Wilson reported
to Congress that there Is a point at
which in peace times high rates of in
come and profits taxes discourage en-
ergy, remove the incentive to new en-
terprlSe, encourage eXtravagant eX-
penditures and produce industrial
stagnation, with consequent unem-
ployment and other attendant evils
hn pra
dent Coolidge's address in New York
last year, from Undersecretary Win
ston's talk in Chicago a year ago and
from the speech of Secretary Mellon
to the Richmond bankers in March,
to show that the Republican tax plat
form differs little from the expressed
Democratic views.
Touching on the tax question with
particular reference to the South. Mr..
Finley said:
I'm the South it is vital that capital
should seek business investments and
build up cotton mills, railroads and
other productive enterprises, rather
than lie inactive in county and mu-
nicipal bonds.
Capital Leaving Business.
"At the present time capital is more
and more tending to leave business
investment. This is on account of
the combination Of higher surtaxes
and taX-eXempt securities.
There are only two remedies for
this situation. The first is to pass a
constitutional amendment prohibiting
future issues Of tax-exempt securities.
Secretary Mellon and the Treasury
have frequently recommended the pas
sage OF such an amendment.
ny iS iy,r lot
OF a constitutional amendment being
passed.
Under these circumstances. there
is obviously only one course to pur-
sue-that is, to reduce surtaxes to a
point where capital will find it worth
while to remain in active business and
pay the tax rather than go into tax
exempt bonds.
Death Tax Revision Needed.
The second objective in tax reform
involves revision of the death taxes.
Both the Federal and the State gov
ernments are attempting to exploit
this field of taxation. The result is
that estates, with widely scattered
assets, are frequently subjected to
overlapping and coniscatory taxes. re-
Sulting in a depletion of capital, which
must ultimately have a serious effect
on the country's development.
THE Inheritance tax is essentially
one which should be levied by the
States. The property taxed Is located
in the States, and it's transfer to heirs
at death is governed by State, not
Federal laws.
Both President Coolidge and Secre-
tary Mellon have advocated that the
Federal Government retire from the
field of death taxes and leave those
taxes to the States"