Evening star., 1925-09-16
RECORD TAX CUT
CHANCES BRIGHTER
Figures Issued by Treasury
Show Slash Is Practical
Proposition.
BY DAVID LAWRENCE.

Every time the Treasury issues
set Of statistics on the income tax
payments Of the fiscal year ending last
June there is more and more evi-
dence that tax reduction in greater
degree than ever before not only is
mathematically possible, but is a prac-
ttcal proposition.
When the last cut in taxes was
made the experts figured on a total
loss in revenue of around $3.50 900 900
when the new rates were put into ef-
feet. The total loss now appears to
have been around S212 900, 600. The
experts were not wrong in their
theory of how much revenue each
rate would bring in, basing their ideas
on incomes Of the previous year, but
they could by no means calculate the
increase in incomes due 10 better busi-
ness conditions as well as TO the OPP
portunity of the investor or business
man to expand his enterprise under
lower tax rates.
More Optimism Likely.
Making up an estimate Of probable
income can be fairly accurate using
past figures and allowing for a rea-
sonable improvement in business con
ditions. Now the Government knows
what can be done and there is no
doubt Congress will be even more
optimistic about tax reduction than
is the Treasury today.
Figures speak louder than theories
and the policy of the Treasury in
permitting the facts to leak our
gradually as the returns are tabu
lated and ana1yzed is designed To-
show members of Congress what the
probable limits of a tax reduction
bill can be.
The fact that incomes dropped only
$80,000000 over the preceding year
is regarded as the most remarkable
thing about the statement just issued
by Commissioner Blair of the Internal
Revenue Bureau. The biggest loss
due Ito decreased rates was in the
miscellaneous taxes. incidentally
this is the class in which there is
the greatest pressure for further tax
changes. Businesses which feel the
Federal tax when added TO their
selling price are most anxious to see
everything repealed which the con
sumer has to pay.
Two Views Held.
While the consumer feels this in
directly, the total amount of the tax
is SO widely distributed that in Con
gress there are two schools Of
thought-those who think indirect
taxation Is a just and equitable bur
den and those who think the indirect
taxes affect many more millions of
people than those who pay individual
income taxes. Congress has leaned
toward the repeal of indirect taxes
and a big cut in this group may be
expected in the next session.
On the amount cut off depends 10
| a large extent what Will be left for
the individual income tax rates. But
the fact that individual incomes drop
ped a relatively negligible amount.
namely $50 900, 900, when it was fig
ured that the loss would be twice If
not three times as great, especially
If the business depression was TO
have been greater this past year, is
considered most encouraging and will
be the basis of the Treasury's argut
ment for a lower surtax and normal
rate.
If individual incomes can keep up
their productivity under low rates the
tax scale can come down materially.
Cut Under Treasury Figures.
1t begins to look as if the contest
will not be this time between the
Treasury's recommendation and a
higher rate, but between the Treas
ury's recommendation and what some
members of Congress in their optimism
are going to consider is a possible re-
duction. And some members are cut
ting below the Treasury's suggested
proposals already. Outside of the sur
tax proposal the latest figures revealed
will tend to develop a sentiment for
greater reduction on smaller incomes
and for further repeal of indirect
taxes. The surtax and inheritance tax
problem Will have to bear the brunt Of
compromises to keep a large number
of Senators and Representatives from
voting for cuts that will be regarded
by the Treasury as altogether too low.
Copyright. 1925D