Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-09-02
Administration Decision Unlikely Before
December.
BY MARK SULLIVAN.

Neither on the part OF the President
and Mr. Mellon. nor on the part OF the
Democratic leaders in Congress, Is there
any cryStaliZed program about Federal
taxes. Decision is not likely to be made
by either the administration or the
Democrats until close TO the meeting Of
Congress on December Z. The question
Is chiefly up to the administration. The
Democrats are not likely of their own
initiative to formulate a tax program
and try to force it through Congress
against the will of the Republicans.
Some individual Democrats think the
party should do this but hardly the
party as a whole. II, however, the ad-
minist-etion should conclude TO take
action about taxes, 1t Is likely the Demo-
Gratis would formulate some alternative
or varying program.
All the speculation is conhned y
the question Of time and has to DO with
the question of increasing the tax rale
At the coming session of Congress which
opens December and will end about
the following June. That there must
some time be a raising of tax rates and
a Lowing of new taxes on obJects not
now taxed is quite certain. II it Is not
done at the coming session, 1t is quite
certain to be done in the subsequent
session meeting in the latter part OF
1882. The better guess is that this 1882
session is the one in which the tax in
crease will be made. 1t Is still possible
the administration may conclude 10
have a tax revision in the coming De-
eember session. but more probable 1t Will
be deferred until December, 1882.
One reason for not increasing taxes
right now Is that no practicable increase
In rates could raise enough revenue TO
offset the deficit that is probably ahead
of lis next wear. Because the mass OF
our revenue comes from business prontS,
and because profits of all business are
very small it follows that the taxes
which will pc paid next year on this
years business will probably be con-
spicuously inadequate. What business
needs now is not present increase In
taxes, but a restoration OF its former
ability to pay taxes. This means in
creased earnings Increased earnings
would be not promoted but retarded by
an immediate increase in tax rates.
There is no imperative hurry about
Americas balancing its budget as there
Is in the case of Great Britain. Our
Treasury has accumulated, so to speak,
several years of fat on its bones upon
which it can borrow to meet the deficits
caused by depress' il. The national
debt. which after the war was. roughly,
$4,000. 100000, he been reduced to,
roughlv. between 10000, 100000 and
$1,000 900, 900. This reduction of ap-
proximately 100000 100000 has been
greater and faster than was contem-
plated. Congress in its postwar legis-
lation about the war debt provided that
it should be paid off at. roughly, an
average of about S30o,000,000 year.
Actually, Mr. Mellon took advantage of
the period of prosperity and paid the
debt at an average rate Of approximately
$500, 600, 900 year.
This, so to speak, advance payment
of some four billion dollars is what the
Treasury can now drawn upon to meet
the deficits of the present lean years.
Moreover, Mr., Mellon raid off q debt
that bore a relatively high rate of in
terest ranging about 4 per cent and is
now able to make new borrowings to
meet deficits at the very low rate OF
per cent. The Treasury, in short. is In
a quite comfortable condition to Dor
row to meet deficits for at least two
years and even more. 1t is fairly Ger
tain. however. that the borrowing will
not be kept up for more than two years.
Neither President Hoover nor Mr.. Mel
lon are men who would tolerate deficits
indefinitely, even under any circum-
stances
BY December. 1882. undoubtedly a
stiff effort will be made to get back to
a pay-as-you-go basis. That means,
PROBABLY. raising rates on incomes ana
profits to figures with which the public
was familiar some years ago. 1t means
also restoring some of the wartime
taxes, later repealed, on such objects
as automobiles, theater tickets and the
like. BY the time the next revision of
taxes is made, it is hoped, of course,
that increasing volume of the country's
business will help That expenses will
be at all times curtailed Sc far as Con-
sTess will allow goes without saying.
tCopyriEht, 1881