Evening star., 1932-04-06
MILLS OPENS FIGHT
FOR TAX CHANGES
Objects to High Corporation,
Stock and Estate LevieS
in House Bill.


Continued From First Page.)
tax as a foundation for the Nations
revenue structure.
What 1 wish to bring home to you
very definitely is ttat if we turn to the
income tax as a means of furnishing
in large measure the additional rev.
enue required. we cannot think of the
problem in terms of simply raising the
rates on those who already pay income
taxes" he said. To raise greatly in
creased revenue through income taxa
ton we must be prepared to lower the
exemptions to as low a point probably
as England does, and to impose sub
stantial normal tax on all taxpayers,
even in the lower brackets.
While recommending some broaden
ing of the base, the Treasury Depart
ment has not advocated such a
course. In spite of its theoretical ad-
vantages, there are very cogent argu-
mentS against it,
For a long period of years we have
relied on a limited rather than a
general, income tax We have become
accustomed TO high exemptions and
very low rates on the smaller taxable
incomes That is our fixed conception
of an income tax, and it is very difficult,
as a practical matter. to change fixed
conceptions of this character. More
over, it must not be forgotten that the
real burden of taxation in this country
is due for the most part to local and
State taxes, and they are borne. gen.
orally speaking, by people of small and
moderate means.
Can't Reach Lower Bracket.
There is very real justification,
therefore, for hesitation when it comes
to the adoption of Federal income
tax which would really reach the lower
incomes. But, having reached that
conclusion, the next conclusion becomes
inevitable, and that is that we must
look to other forms of taxation in order
to fill the greater portion Of the gap
in our revenues.
ITO impose the full weight Of the
additional taxes on the present income
taxpaying class would make their bur-
den almost unbearable and would so
penalize the capital actually employed
in business asEto seriously affect the
general economs of the Nation"
In seeking a substitute, the Treasury
chief said his department had can
vassed the entire field of taxation.
We. recommended, to be sure, a
broadening of the income tax base by
a reduction of the exemptions and an
increase in the surtaX rates to the
level of the 1924 act. which meant a
doubling of the rates in the upper
brackets, as a means not only of OBJ
tanning such revenue as these measures
would yield, moderate though the
t1n gll1 han 4I-t,
we recognized that if ever there was a
time when the doctrine of ability to
pay should apply, it is now
Objects to Sales Tax.
Mills said the Treasury had rejected
a general sales or turnover tax because
of administrative difficulties and be-
cause it was considered unsound In
principle.
He called the manufacturers sales
tax one which presented administrative
difficulties that might be hard to over
come in this country.
Turning then to his objections to the
bill. he discussed at length the pro-
posals for taxing industry and its earn
ingS.
with the heavy taxes proposed on
future possible railroad earnings and on
railroad dividends" Mills said, coupled
with the inhibition on carrying over
losses from one year to another, the
restoration of equity values essential to
the restoration of the high standing of
the underlying securities and of the
ability of the railroads to obtain neces-
sary capital, becomes more difficult.
Mills said his criticism was not di-
rected at the bill as whole, but he
| hoped the committee would eliminate
or modify the features to which the
| Treasury objected He analyzed each
| of the sections of the House bill which
| did not meet with the Treasury's pro-
| posals, and set forth his reason for OBJ
| jecting to them.
Would Sacrifice Assets.
Discussing the high estate tax in the
House bill, he said it was obvious that
| in many cases executors or administra.
| tors would find great difficulty in max
ing payment because they would no
| have sufficient assets which could bt
readily turned into cash.
| The necessity of paying such hlgf
! taxes, he continued, would in many IN
| stances operate so as to bring about tht
sacrifice of capital values ana the ols
ruption of business.
|
| effect upon business recovery through
the imposition of drastic estate ta'
rates" the Secretary said.
| "Unquestionably there will be stront
| pressure on constructive business mel
whose activities normally result in thu
upbuilding of new or enlarged business
| enterprises to refrain from employing
| their sapital in such enterprises ant
( to put it instead in forms IN which l
can be readily liquidated.
when account is taken OF this etfec
it is not clear that the imposition o.
very high estate tax rates will not tent
to increase the revenue from various
sources and to check business develop
ments which might help in the flelC
of employment and in other ways.
From a broad economic standpoin
I think you should consider the danger
of impairing the working capital OF tht
| Nation by this form Of capital lev!
imposed at very high rates"
Doubts Wisdom of Tax.
In discussing the provisions of tai
/ transfers of stocks and bonds, th'
Secretary said the Treasury had nj
information on which to base. an opin
ion whether they would interfere witt