Evening star., 1927-10-31
MELLON PROPOSES
$225,000,0)D LIMIT
FOR TAX REDUCTION
Recommendation Made at
Hearing of Hc--se Ways and
Means Committee.
FIGURE is LOWER THAN
PREVIOUSLY ESTIMATED
Would Cut Corporation Levy and
Revise surtax on $4,000 to
100000 Incomes.
By the Associated Press.


reduction to approximately S225,000,.
O0o-a lower figure even than previ.
ously estimated--was recommended
today by Secretary Mellon at the
opening of the tax hearings by the
House ways and means committee.
The tax reduction program he sub.
mitted follows:
1. Reduction of the corporation tax
from 1874 per cent to IL per cent.
2. Extending permission to corpora.
tons with net income of $e5,00O or
less. and with not more than 10 stock.
holders. to file returns and pay the
tax as partnership or corporations at
their option.
8. Revision of the surtax rates
applying on individual incomes be.
tween $4,000 and 100000
4. Repeal of the estate tax.
D. Exemption from taxation OF the
income derived from American hank.
ers' acceptances held by foreign cen.
tral banks of issue.
Would Keep Auto Tax,
Contrary to expectations. the secre.
tary opposed any change whatever in
the remaining wartime excise and
taxes. He argued at
length for the retention of the present
$ per cent levy on automobiles and the
io per cent tax on admissions apply.
ing to tickets selling for more than
20 cents, on the ground that these
dutles and the excise tax ON tobacco
be kept ''in the interest of a
well balanced tax system"
Unless we are to rely almost ex.
he said, ION direct taxes
PAID by few and are prepared to see
our National Government supported.
not by the entire body of our citizens.
but by limited class, these are the
Kinds of taxes which should be re.
The administration program con.
tempiated no further reductions in the
normal income rates applying tn in.
dlviduals, nor any further increase in
the exemptions allowed individuals.
which propositions have been the bat.
tie grounds of past revenue legisla.
tive fights. Nor is any reduction along
these lines now planned by congress.
sional leaders.
Explains Previous Estimates.
Arguing for the limitation of the
total tax cut to S225 900 900 in the face
of surplus of $685., 1000, 900 for the
last fiscal year and prospective mar.
gin of S455,000,000 for this year, Mr..
Mellon insisted that the basis for the
reduction must be the surplus avail.
able in the fiscal year 1929. This. he
said, is estimated at S274. .000. 900.
The Secretary frankly admitted
that for a number of years past the
Treasury estimates have UNDER
estimated revenue that was later
realized" and recognized that the ar
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.
No Evidence of Increase.
sin so far as current revenue is con.
cerned, it should be noted that the
Treasury estimate that the same re-
ceipts will be available in 1929 as
in 1928. and as We're actually col
lected in 1927.
There is no evidence available to
justify the assumption that they will
be larger. There are certain definite
indications that they may be smaller,
but the department hopes that these
factors will be Offset by
the normal growth of the country"
Anticipating the demands which
will he made for larger reductions on
the grounds that the estimates of
the surplus for 1929 are too low in
view of the fact that past estimates
have always been low. the Secretary
denied that the underestimates in the
past were the result of deliberate
intention or policy"
Every effort to avoid a repetition
Of this result" he said, has been
made in preparation of the estimates
here presented. 1t would be unwar.
ranted and unwise to assume that in
the present estimates there is any
surplus. In these figures
The Treasury has not consciously, nor
as matter of policy, played safe.
Figures Called Reliable.
eff tax reductions are made or ap-
voted on the assumption
he present figures understs.te prob
ible future receipts. responsibility for
such reductions or appropriations
,ate Them The Treasury has placed
he probable receipts at the highest
igures compatible with the most de.
,endable forecast and facts which
'areful and disinterested investiga-
ion could secure.
AS far as expenditures are con.
the estimates have been fur
1ished by the Bureau of the Budget.
It should be remembered that esti-
mates do not include an expenditures
hat may be incurred by reason of
new legislation. The Treasury be-
ieves that tax reduction should rot
n any event be in excess of approx.
nately $225 ,O00, ,000."
While normal receipts and expendi-
ures were calculated to be approx
ately the same for this year AMI next.
he differences between the estimated
surplus of S445, ,00O, 900 for this year
md S27i.000. 900 for next year was ac-
ounted for largely by an estimated
of S256 ,0O0,0 next year in
pecial receipts, including those hack
AK collections, over those received
his year.
The loss in revenue which would be
ccasioned by each of the proposals
recommended was estimated as
ollows:
Reduction of corporation tax
135 900 900.
New classification for corporations
With income of $4,000 and less, $780,
100000 to $4,000, 900
Revision of surtax rates, 0,000, 900.
Repeaei of the estate tax, $7,000.000.
Mr.. Mellon then outlined his argu-