Evening star., 1926-06-04
1928 TAX CUT SEEN
IF PROSPERITY Of
NATION CONTINUES
Mellon, Smoot and Simmons
Think 1927 incomes Will
Be Further Relieved.
BY DAVID LAWRENCE.

The American people confidently may
expect a reduction Of taxes on the in.
comes earned during the calendar
year 1927 and payable in March, 1928,
assuming that business conditions in
the next 1s months show no serious
slump.
This is the consensus given the
writer after interviewing Secretary
Mellon and Senators Smoot of Utah
and Simmons Of North Carolina. the
Republican and Democratic leaders of
the finance committee of the Senate.
All three were agreed that business
conditions alone could cause a change.
and that II things continued as they
are today the next tax cut safely could
be made not later than March, 1925.
MIR. Simmons felt that the tax re-
duction might possibly come sooner.
but this optimism was not reflected
at the Treasury Department or by
Senator Smoot. The North Caro-
lima Senator significantly pointed 10
the corporation taxes as being most
likely to benefit by the next cut, for
he declared the corporations had had
relatively little relief since the war.
Scouts Early Forecast.
MFR. Mellon feels that it is really too
early to forecast just what rates can
be revised, and he points out that a
careful analysis is necessary of the
next l. months tax receipts. While
there will be a surplus Of more than
$500, ,0oo,o in the fiscal year ending
on the 30th Of this month, he thinks.
and Senator Simmons Is inclined TO
agree with him, that there must be
sharp pruning of expenditures in
order to escape a deficit or to make
sure Of a slight surplus in the fiscal
year ending in June. 1927.
But that another tax cut is coming
and can reasonably be expected before
the next presidential election seems to
be assured. The general belief now is
that President Coolidge's indication a
few days ago that a tax cut was not
immediate was not intended by any
means to foreclose the possibility
within the next two years. The new
surplus will be fully explained by the
President on June %, in his speech be.
fore the business organization of the
Government. 1t will be pointed out
that this years surplus takes In tax
receipts collected for nearly nine
months under the old revenue law be-
fore certain indirect taxes were re-
duced. Also. the rapid rise in imports
as we'll as the general outpouring of
funds that had been held in tax ex-
empts for several years had much to
do with the extraordinary income
from taxes even under the new law
Mr.. Mellon feels that most of the
proflt>taking has occurred and that
while lower surtax rates may show
even more productivity than the
present rates there hardly will be the
same increase in income as there has
been in this the first year of reason
ably low surtaX rates.
Sees United States Debt Retired.
Il know there has been discussion
of a possible deficit in June, 1927"
said Senator Simmons to the writer,
''and we cannot, of course, anticipate
what business conditions will be in
advance, but feel confident we will
have a surplus just the same. We
now have payments coming in from
foreign governments and We have a
sinking fund requirement, so that by
using both funds we will pay off our
public debt in less than the Is years
that has been contemplated. Having
given foreign countries So years in
which to pay their debts to us, it
would be outrageous If we in America
continued to pay high taxes in order
to pay OF these debts In shorter
period. I don't think the country
would stand for 1t. There will be
demand for tax reduction.
II think the Republicans always
have counted on a surplus, but moth
ing like the surplus that has come in
this year. And they have felt that
they could recommend another tax
reduction before the next presidential
election.
But the surplus this month may
force them to act ahead of time. 1t
might be difficult to take 1t up In the
short session which begins next De.
cember and ends on March 4, 1927, so
1t seems more likely that the matter
will come up in the Congress which
begins in December. 1927. Thus, the
new law would take effect with the
payments in March, 1928, retroactive
with the incomes of 1927.
Should End Excise Taxes.
II believe the next tax cut should
remove all excise taxes. The corpora.
tions have been paying just as high a
rate while other income rates have
come down. They therefore require
some consideration. II there still is a
surplus after that we ought to make
some reductions in the maximum
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nt0 Small Cor,oo