Evening star., 1927-12-04
Considers s4OO,O 600, 900 Re-
GJction as "UnWorthy of
Business Mems Report"
ASSAlLS REVENUE SLASH
ON BASIS OF u. S. FIGURES
Challenges Critics to Show Esti-
mates Compiled by Govern.
ment Are Inaccurate.
By the Associated Press

DS the HsSotIdteu EIeSs
The Chamber of Commerce of the
United States was charged Yesterday
by Secretary Mellon with having pre-
sented a surprising misconception Of
facts and an argument hardly worthy
of business mems report in urging
a S400,000.00 reduction in taxes.
Mr.. Mellon wrote to Lewis E. Pier.
son, president of the chamber. in a
continuation of the controversy that
has arisen between the administration
and the chamber over the size Of the
tax reduction to be made by the Con.
gress which begins sessions on Mon
day. The treasury favors a S225,.
100000 reduction. while a slash of
S236, ,000,0 900 is proposed in the revenue
bill drafted by the House ways and
means committee.
In assail:ng the Chamber of Com
merce program Secretary Mellon fol.
lowed the lead of President Coolidge,
whose view that the chamber was ad-
vocating an unwarranted reduction,
was disclosed recently at the White
House. After this. the chamber re-
iterated its demand for a S400, ,000, 900
tax cut and defended its course in ad.
vocating it.
"Inexcusable Carelessness."
Secretary Mellon yesterday expressed
surprise that the chamber had made
a tax demand in ''the entire absence
of detailed figures as to future rev.
enues and expenditures" and charged
that its estimated yield from the cor
poration income tax represented ''in
excusable carelessness.
BY its own argument, the secretary
said. the chamber disproved the wis.
dow of repeating the excise tax on au-
tomobiles or on admission and club
dues as it would make a too narrow
tax base and force the Government
to rely solely on the income tax on cor
porations and individuals. the tobacco
tax and customs duties.
In conclusion. the Secretary said,
let me take serious exception to the
statement in the chambers report
that there would be no great cause
for alarm even though deficit should,
through unexpected developments.
arise in any year,
For the United States Government
to borrow to pay for current expendi
lures would in my judgment be In
excusable." Mr.. Mellon added. "a
balanced budget is an essential ele.
ment of any sound fiscal system, and
as long as I am Secretary. the Treas
ury Department will resist the under
mining Of this ..inciple and will con
tinue to advocate a tax system ade
quate to produce every year the reve
nues necessary to meet current eX
penditures."
Mr.. Mellon advised the Chamber OF
Commerce that he was in accord with
some of its revenue suggestions, as
serting:
II believe that the corporation tax
rate should be reduced, though cir
oumstances do not permit as sweeping
a reduction as you advocate; and fa
vor the repeal of the Federal estate
tax"
Invites Check of Figures.
Turning to the Administrations owi
tax program. the Treasury head said
Detailed figures have been sub
mitted to the ways and means com
mittee. If the Chamber of Commerce
will point out to me in what respects
these figures are inaccurate, either In
the case of estimated receipts or OF
estimated expenditures. ! shall wei
come their criticism. They were pre-.
Dared after studies made independently
by three experts having access to al
of the facts. The estimates for 1929
as finally submitted to the committee
exceeded the average of the estimates
of these individual exports by over
S45, 100000. ! mention this in order
to disprove the charge that has been
made that the Treasury deliberately
errs on the side of conservatism"
Mr.. Mellon repeatedly challenged
the accuracy of statements made by
n od NJ 70 10
program and emphasized the care with
which he said the Treasury's plan
was determined and outlined to the
House committee.
I'm my statement before the ways
and means committee" he said, 81
pointed out that the revenue from
temporary sources must disappear in
the course of the next year or two.
The report of your committee answers
this argument with the statement
that Similar predictions have been
made in the past only to be disproved
by later Developments This is hard.
ly worthy of a business mems report.
How can receipts be realized from as
sets whic' no longer exist?
Farm Loan Bonds Receipts.
Receipts from Federal farm loan
bonds and other minor securities
amounted to $34,OOO,0 900 in 1926 and
to $63,000,000 in 1927. TIL, Govern
ment holds no more farm loan bonds.
Receipts from the War Finance Cor
poration assets amounted to $19,O00,-
900 in 1926 and to $27 900 900 in 1927.
The War Finance Corporation has
been practit lily liquidated. and not
more than $6.000.000 can be realized
from this source in the future. Re.
ceipts from railroad securities amount
ed in 1926 to $50 .000. 200. in 1927 to
$50 200, 900, and we will receive in
1928 probably S169 10000 But in
1929 not more than $4,000, 900 is an
ticipated from this source. and after
that little or no revenue cGn be eE-
pected under this head, fvs the very
simple and good reason that only
$49 100000 principal amount Of rail-
road obligations will be left out Of the
$3.50 900 900 held on June 80. 1871.
THE Treasury's estimates as to ex-
penditures are based on the figures
furnished by the Budget Bureau,
which submits them after a careful
survey of the needs of all depart.
ments and bureaus and with com.
plete knowledge of the appropriations
to be recommended to the Congress
for the year in question. 1t must be
noted that the estimates of expendi-
lures submitted to the ways and
means committee did not include in
creased expenditures which may re-
suit from new legislation, such as
flood relief.
receipts are based on a careful analy-
sis of ID propable receipts from mis-
cellaneous sources in the light Of past
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