The Washington times., 1927-12-06
SUGGESTS NE VI
TAX PLAN
BY EDWIN J. CLAPP

American.)
NEW YORK. Dec. Sit ought
to be possible to reconcile the
views on tax reduction held by
the Administration on the one
hand, and by the United States
Chamber Of Commerce on the
other.
Already the House Ways and
Means Committee has provided
tax cut of $235, ,000, 900 a year.
This includes a reduction OF the
corporate income tax from 1S15
to liz per cent, involving a loss
of $166, 100000 a year in Gov
ernment revenue.
President Coolidge and Secre-
tary Mellon say that this is
enough. In fact they say 1t is
too much. and that $226, 1000, 900
Is all that ought to be cut OFF.
The United States Chamber OF
Commerce says that the corpora.
ton tax ought to be reduced at
least Ia per cent more. making
It 10 per cent. This would in.
volve an additional revenue cut
of $125.000,000 a year. making a
total of $3.50, ,000,0 900 il added to
the tax cut already approved.
There Is no disagreement as to
the ability of the Government,
during the current fiscal year
ending June 80. 1928. to stand
tax reduction at the rate Of
$3.50. 1000, 900 annually.
Since this tax reduction could
not become effective until Jan.
uary / at the earliest, not more
than half the annual total.
namely. $3.50, 900, 900, could appear
as reduction of revenues in
this fiscal year. Seeing that the
surplus in the current fiscal
year Is estimated by Secretary
Mellon at Sass 100000. it is ap.
parent that the Government
would have a surplus of $275,-
900, 900 on next June 80, even
IL the $1S0,0OO,000 were Topped
off.
The Governments anxiety is
with regard to the fiscal year
ending June 80, 1929. for which
Secretary Mellon estimated a sur.
plus of only $274 100000 on the
present tax basis. That surplus
he says. could not stand a $780,.
600, 900 tax cut.
Four considerations suggest
themselves:
/. The President and Secretary
Mellon may be Understanding
the revenue during the current
and the next fiscal year. The
current years. surplus was Off.
cially estimated by the Treas.
ury Department as 1897 900. 900 on
last June 30. On October 81.
four months later. Secretary Mel.
lon estimated it at $45S, 200, 900.
Last October, in the budget
message to Congress, President
Coolidge estimated the 1927 sur
plus at this same figure. S455,-
100000, and the surplus turned
out to be $635. 900, 900.
2. Wise tax rate reductions in
crease tax revenues, as this Ad-
ministration knows. As a result
of drastic reductions in tax rates
and increase in exemptions, the
number Of citizens paying income
taxes for 1925 was only $500, 900,
compared with 4,500,0 900 In 1924.
Yet the lesser number of taxpay-
ers paid $735, 900, 900 in taxes, com.
pared with $704, ,000,0 900 the year
before.
3. What reason is there why the
Treasury cannot keep as a reserve
fund 5000, 1000, 900 of the surplus
which will admittedly accrue this
year, even II corporation taxes are
reduced TO 10 per cent? Why need
this sum all be thrown into debt
reduction, which will proceed at
the rate of over $500, 200, 900 per
year without this assistance? If
the Treasury wants to protect
itself against a deficit in 1920, this
looks an easy way to do it.
4. Foreign governments last year
paid us $150,O00.000 in interest on
their war debts, and they paid us
SAG. 100000 in repayment of prin.
cipal. Obviously, the principal re.
payments should be used to retire
Liberty bonds. And that is re-
quired by law. There is no SINH.
lar requirement for use Of the in
terest payments, though in the
absence of such requirement the
Secretary Of the Treasury is using
this sum for debt retirement.
There seems no good reason
why Congress should not order
these interest payments of $780,.
100000 year put into the gen.
eral funds of the Treasury. It
would serve tc alleviate the bur.
dens. Of American taxpayers who,
even with this help. will be pay.
.ng more than half the interest on
the $4,000, 10000 loaned to the
allies.
The writer realizes that the al
lies make interest payments to us
partly in the form of American
Government securities. But these
securities when received could be
sold to the sinking fund and the
proceeds put in the Treasury.
This aid would more than take
care of the $125,000, 900 extra
debt. reduction which is the issue
between the Administration and
business men represented by the
United States Chamber of Com
m0rCe