Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-11-17
Increased Taxes.

With the Treasury in danger Of fac
ing deficit at the close Of the present
fiscal year amounting to $4,000, o00, 900,
the administration and Republican
members of Congress appear to have
come reluctantly to a decision that an
increase in Federal taxes is inevitable.
Despite the Presidents efforts to re-
duce the budget for the coming fiscal
year and his success in looping off be-
tween 100000 and $500 900 900, it
has become clear there must be revision
of the tax laws if the Government is
not to rely upon borrowed money to
meet running expenses. The pay-as-
you-go plan is the saneSt and soundest
plan for Government and individual
Because of unusual and serious condi-
tions 1t has to be abandoned at times,
as, for example, during a war and more
recently during a great depression Of
business. But system which looks to
perpetual borrowing of large sums Of
money to meet the regular expenses OF
the Government threatens in the end
the credit and stability of government
itself
Secretary Mellon Of the Treasury
already has attacked the tax system
on the ground that 1t is incapable Of
raising sufficient revenue for Govern
ment expenses during periods Of de-
preston. With the income tax the
chief reliance of the Government for
its revenues, it inevitably happens that
when incomes fall of there will be
great reduction in governmental reve-
nue.. This has been the present expert
ence of Uncle Sam.
The situation may be remedied to a
degree by amendment Of the income
tax provisions of law. The surtaXes,
reaching higher incomes, may be made
more drastic The exemptions permit
ted which now are high, may be con-
siderably reduced, making the income
tax fall more generally on the people.
Today only few millions out Of total
of more than 122,0oo000 population
pay income taxes. But even these
changes, if q depression holds, might
not meet the needs Of the Government.
So different basis for part Of the tax
alton at least may be advanced by the
Treasury head and the administration.
A general sales tax has been sug-
gested by Senator David A. Reed Of
Pennsylvania, a close friend of Secre-
tary Mellon. Such a tax Is favored
by other members of the Senate, in
GLIDING Senator Watson, Republican
leader. and Senator Smoot of Utah.
But it is strongly opposed in other
quarters and there is grave doubt that
it would be passed upon favorably by
Congress. Perhaps a modification Of
the sales tax plan, an excise tax on
sales or purchases of So-called nom
essentials, may be undertaken.
In the temper in which the coming
Congress finds itself, however, it seems
inevitable that attempts will be made
to lay the burden Of the increased tax
alton on the wealthy. Undoubtedly the
wealthy can best bear the burden.
Wealth has faculty, however, Of find
ing avenues of escape from taxation
One of them has been investment in
tax-exempt securities, of which bill
lions Of dollars worth are now out
standing in this country. If it we're
not for these same tax-exempt securi-
ties the Treasury would today have
ample funds, despite the depression. A
tax bill is likely also to increase the
number of persons who pay income
taxes, as well as to increase the tax
laid upon those who now pay that
form Of Federal tax. Increased estate
taxes, gift taxes and various forms Of
excise taxes will be proposed. The
Congress should remember that levying
taxes for the sake of taxing Is not the
main idea, and only those taxes which
are essential should be laid upon the
people.