Evening star., 1928-04-04

Secretary Melons announcement TO
the Senate finance committee that
Il SSoo00.o 900 should be appropriated
at this session for hood control. the
limit Of safe tax reduction will DC
sIseils.0o0. whereas If that amount
should not be appropriated for that
purpose the reduction may so as Tar
as s20i.il5, 900. puts new aspect upon
the question. The original recommen-
dstion By the administration for tax
reduction was S225, 600 900. named as
tHe limit OF safety. Yet the House
nsssed the tax bill in q shape to pro-
vide q reduction Of s2eo 100000. While
vosns I'D on the figure OF tax reduc-
ton. the House has continued to pass
surropriations at such figure as 10
make that decrease in revenues, ac-
cnrdinr to the administrations ngur-
tnr. productive OF q deficit instead OF
q surplus for the coming fiscal year
With the Senate committee at work
upon the bill. the Secretary OF the
Treasury produces figures to show that
conformity with the House schedule
will be unsafe. Indeed, in view OF these
larger expenditures on general admin
.st-stive objects. without reference to
eood control, the original estimate OF
so2s ooo. 900 as q safe reduction point
Is too high.
There is. Of course, a strong public
desire for further tax reduction. The
action of the House In placing the
figure at s2so.ooo. 900 reflected that
wish. But there should be no yielding
to the demand for additional cuts in
the tax schedule TO the point OF IN
balancing the Treasury books and
Transforming Q reasonable surplus into
q dencit. Once incurred, deficit is
hard TO overcome. II is far better to
have a margin Of funds than lack.
The Treasury Is now engaged IN re-
funding the war debts. and this opera
+son has been attended with remarka-
bic success during the past seven years.
Every hundred million dollars cut on
the debt has lessened the interest
charge. Yet this debt-reduction process
has been accompanied by series OF
tax reductions, but for which the VOL
ure Of liquidation would have been
greatly increased. As IL il. the tax
burden has been doubly nghtened by
large savings in interest and by ma
tersai cuts In the taxes.
This process Of combined debt re-
duction and tax reduction can go on
Systematically If the tax cuts are not
made too deeply and too often. II,
however. for the sake Of political ad-
vantage In O presidential year tar re-
ductson is carried too far, reaction
unfavorable to the continuity OF these
two economies is certain 10 occur. II
a deficit Is created In consequence OF
large appropriations and heavy tax
cut. II will be several years before the
Treasury can safely proceed with both
debt liquidation and tax reduction. II
VII be far better TO accept a moderate
degree Of tax cutting. in view OF the
larger appropriations assured for the
mex. fiscal year. than 10 demand re-
duction Of approximately 100000, 900
more. which would carry the Treasury
below its safety line and would lead
probably 70 deficiency.
II Is true that Treasury estimates are
apt TO err on the side Of conservatism
and that occasionally the prospective
revenue figures prove 70 be too low
II [ "a. possible that In this case the
Treasury has computed a smaller rev
enue than will actually BE- received.
Eut indications are that It's calcula-
tons are sound. The income tax pay
r1ents for the first quarter are almost
Identical with those Of the first quarter
last year. There is no sign of increase
In ether directions There ts, on the
ether hand, q positive indication Of
increased appropriations. The course
Of wisdom. Of good business, therefore,
seems 70 be In the line of the iezs gen
erotls tax cut In order that the Treas
ury may balance is books and may
continue Us iiquidations Of the war
debts and is occasional generous taz
reductions.