Evening star., 1926-06-02
DEMOCRATS PLAN
TAX CUT DEMANDS
Argument for Extension of U.
S. Debt Raises Question of
Benefit to Business.
BY DAVID LAWRENCE.

President Coolidge may not see any
tax reduction for a few years. but q
good many members Of Congress A.
And. what's more, they are getting
ready to dema nd II. ANY time there's
surplus in the Treasury contro-
versy arises as to whether II should
he applied to the public debt or tax re-
duction. Now that the administration
has given France, Italy. Great Brit
ain and the other countries about 81
wears in which 10 pay war debts, the
argument Of those who will insist on
tax reduction is that the American
people should not be compelled to pay
the public debt In 20 years, as had
been contemplated.
The present session did not settle
this point foe the rea sOn that many
members did not wish TO block tax
reduction with an academic argument.
Senator Simmons of North Carolina,
ranking Democratic member Of the
senate finance committee, feels that
the public debt is being retired fast
enough without devoting all of the
surplus to II. II the congressional
elections should result In Democratic
Senate Mr. Simmons would he the
leader Of the ma jOrity party and
would make fight for tax reduc-
tion. AS 1t is. he may win sufficient
support from the insurgent Eepubli-
cans to bring about tax reduction
in the next session, which begins in
December.
Gives Democrats Point.
MIR. COolidge's outspoken opposition
to further tax reduction until few
years have Ella psed has, in other
words. provided the Democrats with
q talking point and perhaps an issue.
The Democrats will use Secretary
Melons own arguments. MIR. Mellon
has contended that lower surtax is
more productive of revenue than a
high surtsx. The receipts thus far
prove Mr.. Mellon Is right. for the re-
turns OH surtaxes have been unus-
ually high. So II will he argued that
MIR. Melons original plan for 10 or
IL per cent surtax would be even
more productive.
As for retiring the public debt, the
present law calls for about $3l5. 900
900 to be applied out of cumulative
sinking fund. In addition To this IT,
is the Governments intention to add
between $275. .006. 900 or $3.50. 900 900
which is about what the surplus will
lie at the end Of the fiscal wear which
terminates on the thirtieth day Of
this month. So nearly $500. 900 400
will be chopped off the public debt.
Next year at June 3Oth it is estimated
there will he a surplus Of about 5000
600 900, which when added to the $315.-
600 900 provided by law would make
total of about 36I5, 900 600, and it
may be even higher.
Cite Business Stimulus.
The point at issue IL that $780,
900. 900 given back to the American
taxpayers just now will stimulate
business and produce more returns
from miscellaneous sources than it
will do good toward retiring the pub
lie debt Of approximately 100000. .O00.-
900. The Treasury, on the other hand.
contends that every cut in the public
debt mea ms lower interest charges and
thus saving to the taxpayer. The
whole question is how big shall the
saving be and under which process
is the saving greater?
1t can lie put down for certainty
even at this early date that il business
conditions continue as they are today
and there is no sign of a diminished
revenue from taxes the Democrats will
force their Republican colleagues TO
bring about further tax reduction in
the next session of Congress. II is
too simple a political issue for the
Democrats to miss and too difficult
for the Republica ms to ignore. II is
possible that Mr.. Coolidge himself
will announce a change of attitude
next December. when more figures
are available and he has sized up the
situation that will confront him i'm
mediately after the congressional
elections.
1t Is reliably reported that Presi-
dent Coolidge's attitude this week was
ind,epcad hy tho situation that has
arisen in Congress on farm relief.
When those who were advocating
big appropria ton for farm relief read
published reports of a big surplus
they suggested that the argument for
economy had been upset. The Pres1-
dent, ii is said. felt 1t necessary TO
answer those who were clamoring for
further appropriations at the same
time that he answered those who
raised the question of a tax reduction.
When the farm relief measure is out
Of the way. the whole problem may
he viewed differently.
Copyright. 1929