Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-01-27
HOPE OF TAX CUT
FOR &c IS ENDED
Reduction Is Virtually Ger
tain to Be Made on 1927
Earned incomes.
BY DAVID LAWRENCE.

| All hope of any tax reduction or
tax credit on incomes for the year
1926 having been definitely abandoned,
the country can he assured that on
incomes earned during the calendar
year 1927 a reduction is virtually GER
tain to be made.
In other words, business concerns
and individuals who usually set aside
reserve for income tax payments
can figure on a reduction that will
be felt when the income tax returns
are made out a year hence.
The corporation taxes are certain to
be reduced to their original l21s per
cent basis. And the graduated scale of
SurtaXes on incomes below 500. 900
are also sure to experience a down
ward revision. Some tax reduction is
likely for every bracket of the sur
taxes, though in the higher brackets,
the percentage of change will be rela-
lively small
Sentiment in Congress.
This is a summing up of sentl
ment IN Congress at the moment and
these changes would have materialized
II the parliamentary situation had per
mltted tax revision at this session of
Congress-
The Presidents plea for a tax cred
1t was shelved largely because the
Democrats wanted to revise the whole
tax bill. though, to he sure, many of
the Republican leaders were unwill.
ing TO allow the tax question to in
terfere with the legislative program,
believing that everything would be
delayed and an extra session forced.
Then there was the thought that IA
substantial tax reduction could be
made in the session beginning in De
Cember, 1927, and ending in the Spring
Of 1928, which would be just before the
presidential and congressional cam
paigns.
Tax reduction has always gone
hand in hand with a prosperous condi-
ton of the country-in fact, some
economists have thought tax reduc-
ton stimulated business by releasing
large sums which would otherwise
have been paid to the Government.
Thus it is estimated that the amount
of the next cut will run from $780,
000,0 900 to $500, 900, 900. Another fac
tor is the confidence in the bust
ness situation which tax reduction
usually implies, for the Treasury has
always indicated that if the business
outlook were cloudy. a tax reduction
would be unwiSe.
Cut Causes Increase.
Secretary Mellon has from the start
hoped that a surtax down to IS per
cent would be more productive than
any rate which the Treasury has been
compelled to impose since the war
Every time the rates have been re-
vised the receipts have been material
IncrPa ThQra
opposition in Congress and there was
TO low rates on big incomes because it
has been apparent that methods of
avoidance, especially in the purchase
of tax-exempt securities, can be prac-
ticed and thus deprive the Govern.
ment of needed revenue which other
wise must be made up by keeping the
small taxpayers rates high
The truth is the material reduce
tions that have been made on in
comes below $4,000 have been in
large part due to the fact that the
Government by lower surtax rates
has been able to count on a heavier
revenue from persons of large in
come.
Chairman Madden of the House
appropriations committee, after con-
ference with President Coolidge, has
significantly warned Congress not to
exceed budget recommendations so
that the program mapped out for the
December session will not be i'm
periled. The talk of tax reduction
now, therefore, is with the object
of impressing Congress in the next
few weeks with the need for con-
tinued economy.
Copyright. 1927