Evening star., 1925-07-08
PRESIDENT STARTS
TAX FIGHT EARLY
Counts on Public Aid in Get
ting Surtax Rate
Reduced.
BY DAVID LAWRENCE.

SWAMPSCOTT, Mass, July S.
President Coolidge has fired the open
ing gun in the battle for tax revision
and he has fired early enough so that
opinion may crystaliZe long before
Congress convenes in December.
Usually the administration does not
disclose its recommendations 50 far in
advance, fearing the attacks of the
opposition or the cooling of the ardor
of advocates through protracted de-
bate. But there is significance to the
bold declaration by the President of
his belief in as low a surtax rate as
possible. When 1t is disclosed that the
President will sign a bill carrying
maximum surtax rates of less than
rs per cent, even IL per cent If the
Treasury experts say the surplus can
stand 1t, this means that the admin
istration has taken stock of the
strength of it's opponents and finds
them diminished in numbers as well
as influence since the Mellon plan of
% per cent maximum was first pro-
posed nearly two years ago.
Surtax Crux of Reform.
The truth about surtax rates is
that the President still feels they
constitute the crux of scientific tax
4
which was, of course. taken on the
advice of Secretary Mellon, that un-
less surtaxes are equitably distrib-
uted the indirect burdens of taxa
ton are not reduced, is a thoroughly
sound one.
The presidential references to the
cases of the man of small income,
who might get five dollars taken off
his total tax bill of $35, as contrasted
with more employment and financial
opportunity in a business world
stimulated by lower surtaxes, simply
mean that the battle will be waged
along the same lines as 1t was when
the Mellon plan first came out, ex-
cept that now the Treasury is forti-
fed by facts and figures taken from
the returns that have come in within
the last two years.
1t sounds fallacious. but the whole
argument of the administration. that
the lower the surtaxes on great
wealth the more revenue the Govern
nnent gets. The reason is that under
high surtax rates there is avoidance
of taxation and turning to invest
ments that are exempt from taxa
ton. whereas under low surtax rates
securities and investments that are
taxable really prove better invest
ments even when the tax Is deducted.
In other words, since 1t has proved
impracttcable to abolish tax exempt
securities by constitutional amend
ment, because of the length Of time
it would take to have such a pro-
vision enacted and because this could
not affect the billions of dollars OF
tax exempt securities already issued
the only policy that can be followed
he "a
more attractive than they have been
TO men of wealth.
Congress- View Changed.
Some revenue is better than no
revenue, according to the tax experts,
and the furnishing of capital for pro-
ductive enterprises by men who would
under high surtax rates withhold
their funds is a better stimulus to
business and the prosperity of the
average man than any single reform
that could be applied in taxation.
That is the line of thought which
the President is endeayoring to in
calculate in the minds Of the .Ameri-
can people. And he is doing ii thus
early because he and his advisers
have been visibly impressed by the
change in the attitude of individual
who two years ago wouldn't think of
a surtax maximum of rs per cent, but
who today are frankly conceding it
would be wise legislation.
II public opinion can bring a
change so quickly-and two years Is
considered short time for such a re-
versal of attitude-then something
more can be accomplished in the same
direction in the few months that
elapse before Congress really comes
to a vote on the next tax bill. 1t Is
confidently expected that the Treasury
will recommend a surtax maximum
of from Is to 1S per cent. While the
administration would be satisfied with
a. compromise of % per cent, the pro-
posals of the Treasury will be made,
not with the idea of trading but be.
cause of a conviction that the coun.
try's finances can actually stand
lower surtax maximum.
1t will be the consistent effort of
those who favor this school of
thought to keep hammering away for
lower surtaxes even after the new law
ia passed.