Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-21
INCOMES INCREASE
AS TAXES ARE CUT
New Slash Urged by Mellon
Would Put 8-Year Total
at $1,000, 900, 900.

BY the Associated Press.
A total reduction of nearly $4,000, 000,-
600 in the taxes of the Nation since 1921
will be accomplished If Congress adopts
Secretary Melons recommendation that
the rates on incomes for 1929 be low
cred by / per cent.
The reduction made by Congress since
Mellon took office in 1921 were through
the revenue acts of 1921. 1924, 1925 and
1928. The first slash became effective
in 1923 and cut 1868, 100000 off the to-
tai collections.
But as the tax rates of the Nation
were reduced, taxable incomes increased,
with corresponding benefits for the
Treasury. In 1922 the total income and
miscellaneous taxes collected by the
Government amounted to $3,197,4 ,083
and the next year, despite reduction OF
1868 900 900, the total collection was but
$87 900 900 below the 1922 figure and
included a considerable increase from
some sources.
Increase Is Estimated.
In 1924 the tax collections amounted
to $2,796,l 79,257 and though Congress
that year cut S5l9,000,000 of the eSti-
mated tax payments, the next year saw
only a drop of $212. 100000 in the coll
lections, which reached total Of 81 ,584,-
l40, 268 This sum with the cut was
regarded as showing an actual increase
OF approximately S400 900, 900 from the
same sources as compared with the year
before. Tax collections continued to
mount in 1925 and 1927, showed slight
fVN itNnp nf
600, 900 in 1929, despite another tax cut
that took 1922 200, 900 more off the total
taxes.
Secretary Mellon, in recommending
tax reductions to Congress, maintained
that reduction in taxes invariably in
creased revenue and explained that this
resulted from funds that were held in
investment becoming active because the
surtax and income tax was not so heavy.
1t also caused an expansion Of business,
he said, which increased the flow OF
revenue for the Government.
L. S. Expense Cut Is Cited.
Reduction in the Governments ex-
pendltures played great part in max
ing tax reduction possible. These eX-
penses have been reduced from $6,482,-
100000 in 1920 to $3,848. 900 900 for the
fiscal year of 1929 ending last June 80.
The first tax-reduction BILL effective
in the fiscal year 1923, repealed many
burdenSome wartime taxes. Personal
exemption for heads of families whose
income was not in excess Of $4,000 was
increased from $4,000 to 81, 500, credit
for each child or dependent increased
from 5000 to $4o0, surtaXes decreased
from IS per cent maximum to so per
Cent maximum, and the excess profits
tax was eliminated. The bill also elimi-
mated most of the transportation tax,
reducing it by $273 100000
The Government went further in 1924
and reduced the levies on small incomes,
cutting the rates from 4 and per cent
to and and per cent, while the sur
taxes were revised so that the rates
ranged from l per cent on net incomes
in excess of $4,000 to maximum Of
40 per cent on the largest incomes. The
amount of personal exemption in cases
of heads of families was increased to
$4,000 in all cases, and deduction Of
IS per cent on earned incomes up to
$4,000 was allowed. At the same time
the new law repealed many other taxes.
such as those on telephone and tele-
graph messages and a SAG, 804, 900 slash
on the admissions tax. Certain ex-
on automobile trucks and bodies, while
Scientific Reforms Provided.
The revenue act of 1926 provided
what were termed scientific reforms in
the tax system. The rates on normal
income were reduced from 2, 4 and 6
per cent to ~. and S per cent, and
the maximum surtaX was cut from 40
per cent to 20 per cent, while the ex-
emptions were increased to $500 for
married man and $500 for single
person. This alone freed about two
million persons from paying any tax.
The 1926 law also removed the excise
tax on manufacturers and dealers
sales. except those on pistols. revolvers,
passenger automobiles and motor cycles,
while some of the stamp taxes were re-
moved.
The 1928 revenue act further lifted
the national tax burden by reducing
the corporation tax from 1872 per cent
to IL per cent, and granted additional
relief to small corporations having let
income of not over $4,000 by increasing
the credit from $4,000 to $4,000. The
excise tax on automobiles was repealed
and the tax on admissions OF So or less
removed.