Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-14
Tax Reduction.

Plans OF the ADMINISTRATOR AOI
$16O, 900 900 cut in the Federal income
taxes, announced last night by Secre-
tary Mellon, who spoke with the full
concurrence Of the President, give en-
phatic assurance of the stability Of busi-
ness in the United States. Coming as
it did after the stock market has
reeled from repeated liquidations, the
announcement may aid in stabiltxing
trading on the exchange. While the ad-
ministration made no mention OF the
stock market situation in its announce
ment Of the proposed tax reduction, IN
the public mind the connection seems
inevitable. It was q bold stroke, well
played and calculated to restore public
confidence.
1.-THE indications are that business
profits, dividends, interest and wage
payments in 1929 will considerably ex-
coed those Of the year 1925" said Sec
rotary Mellon in his recommendation
for tax reduction. "Our estimates indi-
cate that the Government should close
both the fiscal years 1890 and 1891 with
a surplus"
In the midst Of the crash Of prices on
the stock market in recent weeks 1t has
still been obvious to those who stop and
think that the business condition Of the
country is sound; that the Nation is pro-
ducing as never before; that employ
ment is good and wages are high; that
the railroads Of the country have broken
all records in the matter Of Transports
ton Of goods Of all kinds. The last In
itself is an evidence of real conditions Of
business activity.
Individuals and corporations both will
benefit from the proposed reduction Of
income taxes. Indeed, the adninistra-
ton has devised the most simplifled
plan for tax reduction that has ever
been presented to Congress. 1t Is to lop
off per cent Of the normal tax on In
comes. Such d reduction will result in
the Governments collecting $l60,000,-
600 less in taxes during the calendar
year 1880 on incomes received in 1929.
Practically, the proposal will reduce the
normal tax on the FIRST 1000 Of taxable
income Of individuals from ~ per cent
to "a per cent On the second $4,000
from per cent to per cent and on
the balance the rate WIN be reduced
from s to 4 per cent. The corporation
tax will be reduced from Ia per cent 70
IL per cent. It is quite clear that the
proposed tax reduction is one that will
give relief to every citizen and cor
poration whose income Is taxable under
existing law.
If the plans Of the administration
are carried out the proposal will be
translated into legislation soon after
the regular session Of Congress as
senbles n December. Already the lead
ers Of the House and Senate have been
sounded out eD6 khere Is agreement
that the measure sllan be expedited.
Little can be gained, from q political
standpoint, by opposing reduction OF
the Federal taxes when the Treasury
Department shows that such reduction
can be safely made. Doubtless IL Will DC
necessary to hold appropriations OF
Government funds to levels Of the past,
but neither can economy in government
expenditure be Justly criticized II the
country Is amply safeguarded.
The proposal Of the administration
for tax reduction will be welcomed by
the entire Nation. Several weeks ago
it was clearly intimated at the White
House that q recommendation looking
to q still further cut in the tax rates
on incomes would be submitted to Con-
gress by the President. The Govern
ment moves in these matters with de-
liberation, and properly SO. 1t is neces-
sary to know that the margin Of safety
in Government finance shall not be
passed. The action Of the President
and the Secretary Of the Treasury in
making the announcement now, instead
Of waiting until the actual assembling
Of Congress, more than two weeks hence,
comes at q psychological moment and
is q wise move, calculated to inspire
confidence.