Evening star., 1926-12-12
TAX RELIEF PLANS
DEFINITELY VETOED
BY GROUP IN HOUSE
Ways and Means Committee
Votes to Table All Bills on
Rebates and Reductions.
MELLON PLAN TO APPLY
SURPLUS TO DEBT WINS
Option Offered in Presidents Mes
sage Made Use of by Repub-
lican Majority.

Prospects for tax reduction at this
session went glimmering late yester-
day afternoon. when all proposals for
tax relief, including President Cool
idges suggestion of a tax credit, were
vetoed by the House Ways and
Means committee.
In adopting a resolution by Repre-
sentative Hawley of Oregon, ranking
Republican member, to table all tax
bills. the Republican majority in the
committee voted as a unit. and stood
by the Presidents alternative pro-
posal that a more businesslike way of
disposing of the surplus for this fiscal
year would be to apply it to the pub
lie debt.
The committee. had before it not
only the Presidents two-way surplus
plan of debt reduction, or tax credit.
but. the Democratic tax plan of q
$3.50 100000 out-and-out slash, with
changes in the 1926 act.
Vote Forecast by Tilson.
Action of the committee followed
vain Attempts of Representative Gar
Democrat on the committee, to have
the committee consider his bill en-
bodying the combined suggestions of
Democratic leaders. The committee
vote was forecast earlier in the day
by Representative Tilson of Connecti-
cut, Republican floor leader, who
made a statement against any new
tax legislation at this time.
The Treasury surplus at the end of
this fiscal year. ending June 80, 1927.
which according to President Cool.
idge's latest estimate, will be $685.
079,095, and which provoked the whole
array of tax refund, tax credit and
revenue law revision proposals, will
now, in all probability, revert to the
business of reducing the public debt.
The interest on this debt is the larg-
est single item of Federal expense.
In his budget message to Congress
President Coolidge warned against
tampering with the revenue act now,
held up the great advantages of apply
ing the surplus to the public debt and
said that a tax credit next March and
June would be one way to reduce the
surplus. But he put 1t up to Con.
gress to choose between his two sur
plus proposals. The ways and means
committee chose the Presidents first
second.
Emphasized Debt Situation.
Secretary of the Treasury Mellon
in his annual report to Congress said
substantially the same thing as
President Coolidge. He emphasized
still more strongly, however, the de-
sirability of application of reduction
of the public debt as sound public
policy, and the advisability of main
tanning the Government on current
revenues. Much of the income during
the present and past few years, he
pointed out, had come from. prior in.
vestments of the Government in rail.
roads, War Finance Corporation, and
bonds of the Federal Land Banks.
Heavy back taxes now being collected
would not bring in so much revenue
in the future. the Secretary pointed
out
Both the President and Secretary
Mellon definitely proposed to Congress
the tax credit plan, but it was re-
ported last night from sources unde-
n1ably close to the Treasury and tie
White House that the action of the
Republican majority of the House
committee in rejecting the Mellon
Coolidge proposal was received at the
other end of the Avenue with far
more rejoicing than sorrow.
Prior to the November election both
Secretary Mellon and President Cool.
ldge had insistently and regularly re-
sisted any suggestions of tax relief
and had chung to the idea that the
proper and businesslike way to dis
pose OF whatever surplus may accrue
this fiscal year was to apply it to
the reduction of the debt The 1926
revenue law. they contended, then had
run less than six months. and there
were too many factors of undetermin.
able character ahead to attempt any
tax cuts now. The proposal for a
tax credit was developed by the Presi.
dent and Secretary Mellon following
the election, but they never abandoned
their opposition to any fundamental
change in the 1926 act.
Aids All Classes.
After the meeting OF the House
committee, Chairman Green issued a
statement asserting that Republican
committee members felt the surplus
best could be used to reduce the ma
tional debt rather than for a tax
credit to the people direct.
They recognize that there is much
to be said in favor of this proposal"
he said, "but of necessity the benefit
of this reduction would be limited to
income taxpayers. whereas a reduction
of the national debt insures to the
benefit Of all taxpayers.
Pending the time when the next
general tax revision can be under
taken with safety, they reached the
conclusion that the existing surplus
for the present fiscal year should be
applied to the reduction of the ma
tional debt in accordance with the
sound plan followed by President
Coolidge and Secretary Mellon during
the last two years"
Mr.. Green recalled that President
Coolidge in his message had put it up
to Congress to decide whether credits
should be extended or the surplus ap-
piled to debt reduction. and added
that the Republican committee men,
bers deemed the latter course would
best serve the public interest"
Holds Democrats United.
Garner asserted that the action
showed there was not single vote
n the Republican membership in favor
Of the Presidents tax plan.
Declaring that the. Democrats are
united in support of their BILL" he