Evening star., 1925-06-18
REED FOR SURTAX
OF EIGHT PER CENT
Pennsylvania Senator's Step
Is Believed a Move to
ForestaN Radicals.
BY DAVID LAWRENCE.

Maneuvering for position by the ad-
vocates and opponents of high sur
taxes has begun. Senator Underwood,
Democrat, opening the campaign for
a surtax of 10 per cent, now Is fol-
lowed by Senator David Reed of Penn
sylvia MIA, Republican, who advocates a
maximum of only per cent, and de-
clares that with the normal tax re-
duced to per cent the entire tax
should not be more than 10 per cent.
Mr.. Reed is an intimate friend and
ally of the Secretary of the Treasury,
Andrew w. Mellon. and would not
have used the figures mentioned if he
did not believe them practical
Frequently Mr.. Reed reflects the
Mellon viewpoint. but in this case it is
not generally believed his utterance
forecasts the Treasury recommends. :.
lions on the subject.
There is significance in The state
ments made. however. by the two Sen
atorS. who represent the conservative
wing in Congress. even though one is
a Republican and the other a Demo
crat. The significance lies in the fact
that this time the fight for surtax
maximum will take into account con-
gressional compromises. Mr. Mellon
originally placed the figure at 25 per
cent because, while he believed a 10
per cent maximum was feasible. he
did not feel as safe about it then as
he did the higher figure. Congress did
not give him % per cent, but stopped
at the halfway mark between the Mel
Ion figure and the existing ma ximum
compromising at 37i2 per cent.
Taking into account. therefore the
necessity of meeting the various
viewpoints in Congress. the agitation
for a 10 per cent tax and even
lower rate than that is calculated to
have an effect on the radicals who
would never swallow the recommenda-
tionS of the conservatives in any
case. Instead of placing the rate at
25 per cent and making It possible
for the radicals to insist on 80 per
cent OF Whereabouts. the proponents
of reduced surtaxes are starting In
at Is. Mr.. Reed of Pennsylvania has
coupled his recommendation for an 8
per cent surtax maximum with the
statement that he believes the small
taxpayer could, at the same time, be
given corresponding reductions in
taxes.
Plan Considers Radicals.
This much is certain-the tax re
ductionists are not going TO confine
themselves TO a plan which revises
only the surtaXes, for this would be
meat for the radicals, some of whom.
like Senator Borah of Idaho, already
are saying the small taxpayer should
get the benefit of the greatest re-
duction When Congress gets TO
voting il usually adopts that view
for political, If not for economic
reasons. and the Simmons-Garner
plan, which was embodied in the last
bill as finally drawn, took cognizance
of that principle.
With a possible surplus of $500 600
600 the advocates OF lower surtaXeS
are optimistic that there will be
enough money available TO cut exist
ing rates materially in all cases. What
they will insist on in the future as in
the past is that lower rates are pro-
ductive of more revenue than high
surtaxes. The statistics would seem to
bear out this assertion, and Secretary
Mellon has said that in pre-war days
the relatively low surtaX paid brought
in better returns than the surtaXes
since adopted. The competition be-
tween taxable and non-taxable invest
ments is going TO become much more
keen as the Treasury plan develops
for Mr. Mellon has become convinced
the only way 10 strike at the tax
exempts is not by constitutional
amendments. which would not afford
immediate relief but by making tax
a BILE securities which WELD high rates
of interest actually more profitable un-
der the new surtaS plan than exist
ing taX-eXempt securities which pay
less rates of interest.
Copyright, 1922