Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-09-27
EARLYTAX.SLASH
CALLED CERTAINTY
Large Treasury Surplus Last
June and Sound Economic
Condition Cited.

Tax reduction at the December ses-
sion of Congress now Is certainty.
Preparations are being made by the
administration to recommend a sub
stantial revision downward in the rates.
The surtax rate is the one likely to
be felt most. as the Treasury feels its
theory has been indicated; namely,
that the lower the SurtaX the greater
the revenue
What makes the reduction in taxes
this year a certainty is the large sur
plus shown by the Treasury last June
as well as the indications that business
is continuing at high level. Perhaps
the best sign of how the Government
feels about the SoundnesS Of the eco
nomic condition of the country Is its
willingness to make substantial re-
duction in income tax rates. For in
figuring what the rates shall be, Gs:
Government must take into account
lean years in the future as we'll as years
of plenty.
Benefits From Speculative Era.
The Government, of course, has hene-
f1ted from the speculative era because
the many thousands of shares of stock
sold from day to day have brought
profits which are translated into In
come tax gains for the Treasury. 1t
has been suggested, too. that II the tax
on stock market operations were re-
duced 1t would lead to proflt-taking and
in the end would make the credit situa-
ton better through easier money rates.
Whether the Congress will take this
into consideration depends on the at
titude of the Treasury itself. Nobody
is aware as yet of what Secretary Mel
lon will recommend, but he has been
the consistent friend of q tax-reduction
policy based not on occasional SURPRISES
but on a knowledge that fundamental
conditions could stand a revision Of
rates.
Also it was Mr.. Mellon who first
bore the brunt OF the criticism that he
was trying to reduce the high surtax
as q benefit to a particular class OF
incomes. 1t has been apparent that
tax-exempt securities and granting of
dividends have developed 4 tendency
toward avoidance rather than evasion
of income tax payments to the Govern
ment. What Mr.. Mellon has tried to
do is to put the rates at such level
that they would not be considered In
making commercial transactions except
in extraordinary instances of large
profits.
Two Reasons Assigned.
Mr.. MELONS recommendations will
DE accepted DS IICSlQeHO L1OOfcA luI
two reasons: First, the Secretary has
had so much experience with fixing
tax rates that his judgment is a con-
trolling factor, and, second, it means
a lot, politically speaking, for the Hoo
yer administration to continue In the
footsteps of President Coolidge in CIV
ing the taxpayers the benefit Of i'm
proved economic conditions.
In fact. with a congressional cam
paign coming almost Immediately after
the next session of Congress is likely
to adjourn, the Republican majority
will naturally make the most Of the
tax reduction policy.
1t is believed the new tax bill may
be ready in the next year. so as to
take effect in the March is payment.
IT. means a saving of expense to have
the reduction take effect with the first
quarterly payment instead of trying to
give rebates on the June payment. II
the bill to be proposed by the admins
tration goes through. it will affect in
comes earned during the present year,
1929. D. L.
Copyright, 1921