Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-25
MELLON PREPARING
EDUCATION DRIVE
Laying Groundwork for
Change in Tax Policy When
Congress Is Ready to Act.
BY DAVID LAWRENCE,

Secretary Mellon is talking about re-
vision of the tax structure, not because
he expects Congress to do anything
about 1t right away, but because he
feels 1t is not too early to educate the
country on what he believes to be sound
fiscal policy.
Mr.. Mellon did not go into detail or
give any recommendations as to the
kind Of taxes he thinks should be i'm
posed, but 1t Is known he believes in
come taxes should be borne by every
body. even though the annual contri-
button Is small.
Less than per cent of the total pop
ulatton Of the United States pay taxes
to the Federal Government. Gradually
the exemptions have been applied so
more and more people do not have to
pay the tax, but the State governments
have gone ahead with their taxation
Just the same. and in general the net
tax burden has been increased.
What Mr.. Mellon Is advocating, how
ever. Is not alone a possible change in
the number who are exempt from Fed
eral taxation. but the Introduction of
general or indirect taxes He COM
mends the tobacco tax as a stable OPP
Grafton. There Is also the possibility
of taxes on bank checks as wen as taxes
on automobile sales.
Mr.. Mellon was very much opposed
to the removal Of the sales tax ON auto
mobiles. He predicted at the time that
Congress would regret the day when
it discarded this form of taxation.
Opposition Is Fereseen.
What the Secretary said In his Radio
Forum speech Saturday night will un-
doubtedly be opposed by those who feel
the Government should increase taxes
on those with high incomes. This Is
a favorite point Of attack. but Mr.. Mel
lon has the figures to prove the high
taxes have resulted In. less income from
the wealthy people than when the lower
taxes were in effect.
In other words, the moment the tax
rates on persons of. high income get
prohibitive they start investing their
money in tax-free bonds of States and
municipalities or else they fail to sell
properties or stocks to take a profit
when the norma! operations of business
would seem to be benefited by such
activity.
Indeed, there are many who argue
that the stock market collapse In 1929
never would have occurred II the normal
laws had been in operation and If the
holders of securities had not been IN
clined to keep those stocks to avoid
paying taxes on the large gains they
would nave made by the sale.
Low Taxes Aid Trade.
The Treasury always has argued that
with low tax business goes on ag-
gressively and the Treasury in the end
gets more money out of the sales and
exchanges that are made.
The Government faces a deficit OF
nearly a billion dollars and some in
crease in tax revenues is going to be
necessary. The burden of proof will be
on those who think all the Treasury
has to do is to increase the tax rates
in higher brackets and 1t will get the
necessary income. Actually, Treasury
officials, including Mr. Mellon, believe
the Government makes more money
when the process is reversed--that is.
when the tax burden Is spread more
evenly, so everybody pays something
either directly or indirectly for the sup
port of the Government
Copyright. 1917