Brownsville herald. [volume] (Brownsville, Tex.) 1910-current, 1927-10-31
Mellon Tax Cut
Estimate Lower
Than Expected
Favors War Tax, But
Advocates Estate
Tax Repeal

WASHINGTON, DC. 31.-tPp-Limi-
tation of the prospective tax reduc-
tion to approximately $225, 600, ,000-
a lower figure even than previously
estimated-was recommended today
by Secretary Mellon at the opening
Of the tax hearing by the house ways
and means committee.
The tax reduction program he sub
m;tted follows:
/. Reduction of the corporation tax
from IL l2 per cent to IL per cent.
2. Extending permission TO corpor-
ations with net income Of $4,000 on
less, and with not more than ten
stockholders, TO file returns and pay
the tax as partnership or corpor-
ations at their option.
3. Revisions Of the surtax rates
applying on individual incomes be-
tween $4,000 and $4,000.
4. Repeal Of the estate tax.
5. Exemption from taxation Of the
income derived from American bank
ers' acceptances held by foreign
central banks of issue.
Favors War Tax
Contrary TO expectations, the sec
retary opposed any change whatever
in the remaining war time excise
and miscellaneous taxes. He argued
at length for the retention OF the
present three per cent Ivy on auto
bills and the ten per cent tax on a6.
missions applying to tickets selling
for more than as cents on the ground
that these duties and the excise tar
on tobacco should be continued "in
the interest Of a well balanced tar
system
"Unless we are to rely almost ex.
clusively." he said, "on direct taxes
paid hy few and are prepared TO see
our national government supported
not by the entire body OF our citi.
zens. but by limited class, these are
the kinds Of taxes which should be
retained"
The administration program con.
templated no further reductions il
the normal income rates applying Ia
individuals nor any further increase
in the exemptions allowed individuals
which propositions have been the
backgrounds of past revenue legis-
lative fights. Nor is any reduction
along these lines now planned by con-
gressional leaders.
Estimates in Past Low
Arguing for the limitation Of the
total tax cut to S225. .000, 900 in the
face Of surplus of $685.. 100000 for
the last fiscal year and a prospective
margin of $455. 100000 for this year
Mr.. Mellon insisted that the basis for
the reduction must be the surplus
available in the fiscal year 1929
This. he said, is estimated at $274,-
600 900.
The secretary frankly admitted
that "for a number Of years past the
treasury estimates have under-esti-
mated revenue that was later real
ized," and recognized that the argu-
ment may be made again that the
estimated surplus for 1929 is too low
in view Of the big margins Of last
year and this year.
"The answer is," he said. "that the
surpluses in 1927 and this fiscal year
were in the main due to certain re-
sources which cannot be available in
1929, since by that time they will
have been exhausted.
"Insofar as current revenue Is con-
cerned. il should be noted that the
treasury estimates that the same re-
CENTS will be available in 1929 as in
1923, end as were acually collected in
1927.
Receipts 60 be Smaller
"There is no evidence available 10
Justify the assumption that they will
be larger. There are certain defi-
mite indications that they may be
smaller but the department hopes
that these unfavorable factors will be
offset BY the normal growth OF the
country"
Anticipating the demands which
will be made for larger reductions
on the grounds that estimates Of the
surplus for 1929 are too low in view
Of the fact that past estimates have
always been low. the secretary de-
MED that the underestimates in the
past were the result Of "dliberate in
tention or policy"
Every effort TO avoid a repeti-
tion of this result" he said, "has
been made in preparation Of the esti-
mates here presented. II would be
unwarranted and unwise to assume
that in the present estimates there is
a concealed surplus. In these figures
the treasury has not consciously nol
as n matter Of policy played safe.
IF tax reductions are made or ap-
preparations voted on the assumption
the present figures understate prob
able future receipts, responsibility
for such reductions or appropriations
must be assumed by those who advo-
cate them. The treasury has placed
the probable receipts at the highest
figures compatible with the most de-
pendable forecast and facts which
careful and disinterested investiga-
tion could secure"