Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-08-15
PRESIDENT HOLDS
TAX SLASH KEY
Low Surplus Estimates May
Preclude Possibility of
Cut This Year.
BY J. RUSSELL YOUNG.
staff Correspondent of The Star.


STATE GAME LODGE, s. Oak,
August 15-Since the announcement
here Saturday following the confer
ence between President Coolidge and
Brig. Gen. Herbert NJ. Lord, director
of the budget, that the estimated
surplus of the budget for the next
fiscal year Is considerably under the
amount which administration leaders
have hoped to reduce taxes. there
is considerable speculation whether
these hopes for further reduction will
be defeated.
It Is realized that much depends
upon the decision of the President,
and he has made no expression since
the Summer White House revealed
that the next years budget which
was approved Saturday estimates a
surplus of only S214.O00,O00.
Deficit Is Dreaded.
What adds to the belief that the
prospects for another tax slash next
year are not as bright as they were
before this revelation Of such a sur
DTlSlISly SIIldil SUI pluS, 10 tiC MN" ~
fact that President Coolidge probably
breads nothing more than he does a
deficit or a threatened deficit. In fact,
he has always made it evident when
discussing surpluses that he has a
horror of even running dangerously
near the wrong side of the margin.
Just what the President thinks
about these prospects is not known.
He has never said at any time that
he would recommend a further tax
reduction to the incoming Congress.
He has, indeed, been very careful
not to commit himself. He has
listened attentively to what many of
the party leaders have had to say on
the subject, but he has withheld his
own decision. He Is known, however,
to have warned others that it must
be kept in mind in figuring on the
possibility of another tax revision
that the revenue law cannot be writ
ten from the standpoint of a single
year.
Would Confer With Green.
Although he has not committed
| himself in the matter, those who are
close to the President said today
that while he has not conceded that
| hopes to cut taxes in the next Con-
gress will have to be abandoned he
would prefer to let a surplus ac-
cumulate for use in debt reduction
rather than apply them for the pur-
pose of tax reduction if there is any
apparent danger of bringing about a
deficit in the national Treasury.
It is known that President Coolidge
| prefers to await until he has conferred
| with Representative Green of Iowa.
chairman of the House ways and
means committee. before attempting
to figure out whether another tax cut
will be possible next year. He has
been advised by Mr.. Green that he is
making close study of the financial
situation confronting the incoming
Congress. 1t is the Presidents under.
standing that Mr.. Green will come to
the Summer White House for a long
talk before the latter heads back for
| Washington:
While recently at the Summer
White House, Senator Smoot, chair.
man of the Senate finance committee,
and in whose judgment the President
is known to have great confidence.
said that it would be possible to make
another slash of $300,000,000 in the
taxes. Representative John Q. Tilson
Of Connecticut, Republican leader OF
the House, while here a fortnight ago
| was of the same opinion about another
reduction, and Representative Timber
lake Of Colorado, member of the ways
and means committee, who was q
| recent visitor, thought a reduction OF
at least $450,000.000 would be possible
Estimated Surplus Too Small.
But if the surplus of S214 900 900 for
next year has been correctly esti-
| mated, it is thought obvious by asso.
| ciates Of the President that there is
| little hope for reducing the tax burden
as has been planned by Republican
| leaders. 1t is pointed out that the
| $c14,000,000 estimated surplus is not
only too small in itself to permit much
Of q slash in the taxes, but it would not
be able to stand up under drafts Con-
gress will undoubtedly make upon it,
which have not been accounted for in
| the budget Of estimates. For in
stance, there is the farm relief bill
| the administration leaders are said to
| have prepared, which calls for a
$500, 100000 revolving fund; Secretary
Hoover's f1ood-control plan would call
for at least $15,000,000 annually for
the next few years; the Boulder Dam
| and the Great Lakes-St. Lawrence
seaway system will eat heavily into
the Treasury, as we'll as other appro.
priations which are likely to be made
by Congress which are not included in
the budget.
Associates Of the President while
discussing the subject today thought
1t likely that If it Is possible to bring
about modified plan for reduction.
the corporation tax would receive
preference. It was explained that this
Is the one income tax that was raised
in the last revenue bill, and it Is held
by some tax experts that a reduction
Of this tax would not reduce revenue
to the same extent that similar cuts
In other taxes would. It was added,
In explanation of this, that when sur
taxes were reduced in 1926 the Treas
ury profited by the reduction.
Three Cuts Would Eat Surplus.
According to Senator Smoot, when
he was visiting the President. II the
corporation tax is reduced from it's
present maximum Of 1914 per cent to
IL per cent the cut would amount
to about $3.50, 100000.
1t was pointed out that II that cut
is actually made. there would be only
$64 100000 remaining Of the $214.OOO.-
900 surplus for 1929.
II the proposal to cut to half the
tax on passenger automobiles should
be carried out also. that would take
$50 200, 900 more from off the surplus,
which would leave only $14,000,000.
Moreover, if the nuisance taxes are to
be eliminated, as is proposed. there
would ho apofher oft of S27 0C0 0C0