Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-01-20
BUSINESS CAN FILL
GAP IN TAX CUT
Believed s26OOO,o00 Extra
Loss in Senate Bill
'easy to Meet.
BY DAVID LAWRENCE.

TWentv.SiN millions of dollars rem
reScnts the difference between the
amount by which Secretary Mellon
h.; indicated that taxes should he re-
duc-d and the reduction proposed in
tho bill which the Senate finance COM
mittee reported aS tho compromise
between Democrats and Republicans.
II $40 900. 200 were the only figure
involved there would he little hesita-
tfon 70 take q chance on the next l.
months bringing in more than eSt.
mated receipts. Business conditions
always improve with reduced taxes.
so the $4,000. 900 likely would be
made mp in inCrea sed income. But
the Senate has shown Il disposition
to alter the rates irrespective of the
$3.50 900 200 limit set by the Treasury
Tor tax reduction. 50 it is likely Sec
rotary Mellon will withhold final ap-
rroval till the measure is actually
passed by the Senate and is ready for
conference between the House and
Senate. Then il will he necessary for
the Urea Surv TO state whether the
Senate has gone TOO far and whether
the Urea surv can afford to take the
rSk.
Problem One Of Policy.
The problem is one of policy rather
nounced that ii expected a surplus
OF about $3.50 600. 600 and that the tax
PAYERS should he given the hepetl'
Of that surplus through diminished
rates Judging by past experience
ard the Treasury experts have heen
remarkably accurate in predicting in
comes from particular CroupS-the
now bill prepared by the Senate
finance committee would seem to
Nh = :, %
GOO 600 limit
If no further changes are made in
rates. however, and the bill is not
amended so as TO deprive the Coy
crrment Of more revenue. then il
may he that the present bill will nc
approved in conference and Ivy the
administration generally. For Sc
o"0.o00 item is not large one ana
the better business conditions prob.
ehly would take care of it.
Incidentally the administration looks
with disaproval on the suggestion that
the sinking fund arrangement be
changed so as TO diminish the amount
used to retire the public debt and di
vert some of the money for further
Tax reduction. Senator Simmons. the
democratic leader on the finance com
rlittee. has proposed that the sinking
fund be 81. per cent instead Of .l2.
and that the amount used for debt re
;irement be fixed at 1850 100000
year. apart from money NEEDED for in
forest. Thus he expects $4,000 900
orrt of the payments by foreign gov
comments 10 be used as A part of the
$3.50 900 600. and the difference needed
euch wear would be made up by tax
alton.
Would Take 96 Years.
plan would retire the public debt in
- Years Mr.. Melons plan of using
q $50 600 900 sinking fund. as well
rs all payments from foreign govern
ments and all SURPRISES to retire tha
public debt may do the trick in -
years. The argument of the Urea surH
Is that it would delay passage Of
the bill to open UP the whole question
of changing the historic policy Of IN"
Government on debt retirement. 1t
Is insisted. for instance. that the
American Government had beIteI 1ay
off the debt as quickly as possible
while the dollars is cheap. In other
words, the pUrCha sing power IF the
dollar in 1917, as compared with 1913,
was about 80 cents on the dollar. II
ie little more than So cents now.
IF the dollar should 90 ID par II
would require more effort and IN
crease the burden of taxa on IN re-
firing the public debt. in the opinion
o. Urea surv officials. That's why they
are sticking 10 their plan OF retiring
the bulk of the debt while the dollar
Is relatively cheap.
The administration. Of course. has
always felt that it should have fexi-
bilitv on debt retirement. SO that II
perchance the estimates on receipts
did not come up 10 expectations, due
tn bad business conditions, mere
would be always a cushion TO fali
back on through diminished payments
on the public debt for given year:
setting a $35OoOO.oo0 limit would
make the debt retirement policy
rigid. There are indications. on ire
other hand. that Senator SIMMONS
will explain his views to the senate
IN the hone of converting his col
I.a4ues to the advantages OF the
alternative scheme he presents.
,Coryrlght 1885,