Evening star., 1926-11-09
By the Associated Press.


The political whirligig of tpe Capi-
tai revolved today around Presfdent
| Coolidge's proposal for individual and
| corporation tax returns from the Gov
ernment fiscal surplus.
! Secretary Mellon. after a White
House conference. suggested that the
J proposed income tax refund be erect
| ed by crediting the payer on the nrst
two installments to be paid next year
| on this years income. the credit oe
| ing made as high as 12l1 per cent OF
next years total taxes.
No sooner had this plan become
public than ,umblings of disapproval
were heard from the Capitol at the
other end Of Pennsylva MIA avenue.
| Senator Smoot. Republican. Utah.
chairman Of the finance committee,
which would handle any tax bill. In
dicated that he did not approve the
| general proposition. but cautiously
| refrained from comment pending
| more complete study.
Norris Enters Discussion.
Accusing both Republicans and
Democrats with playing politics WIN
! the tax question, Senator MOTIFS Ne
braska. Republican insurgent leader'
declared that any Treasury surplus
should ID devoted to>retiring the pub
lie rSe Sset aomment of Senator slea.e.
Damocraf. South Carolina. on the
Presidents plan was limited 10 one
word-"Bull."
Az the White House conference
Secretary Mellon convinced the fresi
dent that an immediate refund from
Income taxes collected this year Wouid
| be too expensive from an ad1nln,s.,a
tive standpoint. but ne accepted .iio
nronosal to divert his surplus away
from debt retirement ana lhto 'ne
nocket Of American taxpayers.
M MelIon. however, increased 10
a refund of 12h per cent. the fresi,
dents proposal of between 10 ana ~
per cent.
Total Of $3.50. 100000.
rhe credit must be taken In the
first two installments. the March anu
June payments, to enable tho oVs
s,nnoent to adjust it's books by the
close Of the fiscal year on June ~.
The refund would total approximately
! $3.50 .0OO, 900, the amount the surplus
is expected to reach at that tlne.
Secretary Mellon emphaslzeo ina.
he did not approve any genera A* ~
rav,sion at the December session OF
C,onrrass. explaining that under Presl-
6ent Coolidge's 8 plan. with the Treas
NV and the taxpayer both protected
Do can fairly await further experi.
snce under the revenue act OF 1870
The Secretary's statement 1oiloWe'
.The Federal Government In time
of neaoe should meet its expenditures
from current revenues. The source Oh
a governments revenue Is taxation.
1ation must be sufficient to carry
out the policies which the feoe,al
Government deems essentlai 1oc INC
welfare and happiness OF It's cltizens'
It is the duty, therefore, or the 1os.
ernment to determine WnA Ponc.eS
should be essential. and II they can
ha wore than met over a series or
Years from taxation. to reduce taxes.
Conversely, If the governmental rev
onres are not sufficient. then IL 10 the
duty Of the Government to increase
taxes
War Results Cited.
"After every great war abnormal
expenditures can be reduced. out AZ
the same time there is an opposing
tendency Of normal expenditures 70
tncrease due to the growth OF the
country and the increase In govern
mental activities. This latter increase
tends to neutraliZe ana ultinlaleiS
oyercomes the reduction Of war ex-
| penditures even with the economies
in government which this administra-
tion has enforced. Total expenditures
chargeable against ordinary receipts
| OF six billion In 1920. the first real
peace year, dropped to three and one.
half billion in 1924. but. by reason OF
| the increased activities Of the Gov
| ernment, further decreases In ex.
penditures have not been possible ana
the tendency has been for these
expenditures to increase slightly In
spite of the very considerable saving
in interest on the public debt through
its retirement and refunding at lower
!. interest rates.
"The suggestion has been made that
the expenditures Of the Government
could be decreased by altering the
sinking fund provision and the use OF
the proceeds Of repayments OF foreign
loans. These provisions were adopted
bv Congress during and after the war.
and on the faith of them every Gov
ernment obligation sold by the Treas
ury since that time has been taken by
the American people. / need not
again express my opinion that the
United states will never repudiate a