Evening star., 1925-10-19
Secretary Lays Plan Before
House Committee-Estate
and Gift Levy Repeal Is
Recommended at Hearing.
$500, ,0O0,C9O SURPLUS
Is SEEN BY TREASURY
Publicity Elimination Advoca ted.
Opposition to Raising Exemp.
tions to $500 and $5,000-Re-
duction in Auto and Miscella-
neous Levies Proposed.
By the Associated Press.

By the Associated Press
A tax reduction of S250,000.OO0 tc
S300000000 was recommended to
Congress today by Secretary Mel
lon.
Without tempting to lay down
definite schet ules, he suggested that
reduction in surtaxes to 20 per
cent in place OF the present 81 per
cent would not cripple the Treasury
This would reduce the maximum
tax, surtax and normal, levied or
the largest income, to 25 per cent
1t now is A. per cent.
The Secretary also advocated
these additional changes:
Repeal of the estate tax.
Repeal of the gift tax.
Reduction of automobile taxes by
repeal OF the lcvies on trucks tires
and accessories.
Repeal of a number of miscel-
1aneous taxes, such as that on works
of art brought from abroad
Repeal of the publicity section of
the income tax law.
He opposed repeal of the tax on
tickets TO theaters and other places
of amusement and various other pro-
poSals for amendment of the present
law. including any extension in the
Jurisdiction of the board. of tax
appeals.
The SecTetary'S recommendations.
based on the conclusions of Treasury
officials that a surplus of $3.50 900, 900
is in prospect this year in Federal
revenues, was submitted to the House
WAYS and means committee at the
opening of it's hearings on tax re-
form.
Hits Tax-Exempt Bonds.
He made reference in his statement
to an inequality in taxation" pro-
duced by the earned income exemption
allowed in the present law, but he
added that if the 20 per cent maxi
mum surtaX is accepted the Unequal
ity fostered by the clause giving credit
on incomes below $4,000 as earned in
comes will not be so pronounced"
The Treasury Secretary also renewed
his advocacy of a constitutional amend
ment abolishing taX-eXempt securities.
He observed, however, that the amount
of outstanding tax-exempt securities
now is so large-he estimated them at
$4,000, ,O0O. .0OO-that the Government
should attempt taking away the "arti-
fcial" advantage held by those securi-
ties. Enactment of the proposed 20
per cent surtax will do the work, the
Secretary added.
The gift tax was chara cterized by
the Secretary as one of great
many artificial restraints and ine-
qualities now in the taxing law. He
declared the excuse for the gift tax
would entirely disappear" If the 20
per cent maximum on incomes Is
adopted.
Cites Road Work Aid.
Mr.. Mellon told the committee that
neither the tax on admissions nor the
bulk of automobile taxes constitute
burden on tax payers. The Govern
ment is contributing s90,000,000 a
year toward road building and the
automobile taxes. including those on
trucks tires and accessories. are
yielding annually about S125, 100000.
THE s35,0O0,O0O might be taken
off" Mr.. Mellon said, but so long
as the Government is contributing the
$50. 900 900 a year to the roads on
which these automobiles run they GER
tainly ought to pay their way
He warned that it was not we'll to
cut receipts beyond reasonable"
needs. The Treasury, since the war,
he said, had been living partially
upon capital" as constituted by re-
turn of the investments made through
the War Finance Corporation, repay
ments of loans to railroads and sale
of surplus war supplies.
LAS these sources give out" he con-
tinued. I'VE will have to pay our cur
rent expenses out of revenues"
Defends Debt Policy.
Mr. Mellon sought to defend the
Treasury's debt retirement policy
which has been attacked by sor1e
Democrats on the ground that if the
debt were retired less rapidly, greater
cuts could be made in taxes.
While, taking the people as a
whole. ii is immaterial when the debt
IS paid" he said, still, as between
the different classes of people the in
Nesting class holding the bonds and
the producing class from whom a
larger part of our taxes are collected, |,
inequality exists. We should not tax
too heavily the producers to pay the
security holders. 1t Is for this reason
that we have sought balance be-
tween debt reduction and tax reduc-
ton.
Discussing the suggestion for a
maximum surtaX of 20 per cent, Mr.
Mellon asserted there had been a
stimulation to business every time the
surtaX rates had been reduced. In
those instances, he said, there had
been an evident increase in tax
sources, and the increased income
has made up a great part, If not
all, of the loss in revenue from the
higher incomes"
Shows Ratio of Gain.
I'm 1922" the Secretary continued,
with the maximum normal and sur
fayeS of "a Der cent the total income
collections, personal and corporate,
were 1,501 ,000.0 In 1923. under
the 1921 act. with maximum sur and
normal taxes of 50 per cent, the
collections were 81, 1926, ,000, 900.
I'm 1924, with the % per cent credit,
but before the effect of the reduction
of surtaxes could be reflected in tax
able income, the collections were
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