Evening star., 1932-01-13

Continued From First Page)
receipts and expenditures of the Gov
ernment should be brought into bal
ance for the next fiscal year beginning
with the coming July, so as to put an
end at that time to any further in
creases In the public debt" Mellon
told the committee as he read from q
prepared statement. This Is essential
not merely for maintaining unimpaired
the credit of the Government, but also
for reinvigorating the entire credit
structure of the country.
THE greater part Of the present
fiscal year has already elapsed and it Is
impossible to avoid large deficit for
this year. To cover, for the balance
of this fiscal year, all expenditures al
ready authorized and appropriated for
as we'll as those called for by the ad-
ministration's special emergency relief
program, will probably require increase
in the public debt by $500, 100000 less
any amounts to be derived in the cur
rent year through additional taxa
Stresses Retrenchment.
II cannot overemphasize the i'm
portance Of retrenchment. Without real
economy there can be no balanced
budget. We are fully justified in calling
on the people to make further sacrifice
in order to supply their Government
with adequate revenue, but we are only
justified in making this call If at the
same time we eliminate every unneces-
sary expenditure and see to it that just
as enforced rigid economy prevails in
every home in the land, so must 1t be
observed In every operation of the
Federal Government"
After discussion of the increase in
expenditures in this and the last fiscal
years due to veterans activities, en-
ergency construction, and the postal
deficit, and the decline in revenue from
taxation. Mellon said:
The truth of the matter is that our
revenue system rests on a comparatively
narrow base and that our tax receipts
are susceptible to the widest variations
in accordance with variations in busi-
ness conditions. This is particularly
true of current individual income tax
collections, the instability of which is
further accentuated by the wide varia-
tionS in gains and losses derived from
t41C od4C VI oO-Cdl4cu CdplLdl dSSGGS.
Mellon reviewed the decline in big in
comes during the past two years, and
turned to a defense of his plan to bring
in 100000 additional taxpayers by
lowering the income tax exemptions.
1T Is sometimes suggested that our
additional revenue requirements can
be covered for the most part by in
creaSing the income tax rates applicable
to the larger incomes" the Secretary
continued. THE justification for such
proposal is that in periods of emer-
gency the doctrine of ability to pay
should be pushed to the limit.
Would Boost Surtaxes.
Leaving aside the economic uues-
tiorS involved in drying up, even tenn
porarily, those liquid resources which
should be available for restoring the
working capital of industry and COM
merce and reinforcing our credit ma
chinery, study of the figures leads
to the conclusions that the necessary
revenue cannot be derived from this
source"
An increase by 100 per cent in sur
taxes on the big incomes would net
only s200,000,0 900 Mellon said, although
he recommended a. 40 per cent surtax
on incomes in excess to 100000 and 81
per cent between 100000 and 5000, 900,
as compared to the present maximum
of 20 per cent on incomes in excess of
100000
Many not now taxed are very def
nitely in a position to make some con-
tribution to the support Of Govern
ment," Mellon continued They should
be asked to do So taking into consider
alton ability to pay. This basic con-
cept underlies the entire program which
the Treasury Department is submitting
for your consideration. 1t must form
a part of any program, for without it
a solution is impossible, and it is justi-
fled not only by necessity, but by equity
and sound public policy
II realize, of course, that arguments
can be advanced against every increase
in rate or additional tax proposed This
is true of all measures looking to an in
crease in the public revenue. But I
trust that on this occasion the attitude
of taxpayers will be different from that
which. knowing human nature, we
would expect under normal circum-
stances"
AS the proceedings got under way
Mellon took his place In front OF the
large desk behind which the committee
men sat, and started to read his pre-
pared statement. But he changed his
mind and requested permission for
Undersecretary Mills to do the reading.
1t required 40 minutes.
Crisp Opens Inquiry.
Representative Crisp of Georgia,
ranking Democrat on the committee, |
opened the examination by asking Mills
what specific increases the Treasury
in the postal rates.
The Undersecretary suggested that
the committee call Postmaster General
Brown to explain how the revenues
could be increased to meet the prospec-
tive $3.50 100000 deficit in that depart |
ment
During the past "a months, Mills said, |
the public debt has been increased by |
s4, 100 100000, and added:
THE Treasury considers 1t essential
to bring this borrowing process to a
halt by June 30. We must do this by
attacking Government expenditures as
well as by increasing taxes"
He said Congress must exercise self |
restraint in adopting new projects and
must scrutinize every appropriation"
Asked by Crisp whether the admin /
istration's proposed stamp tax on bank |
checks and drafts would not increase |
boarding Mills said it probably would |
have some effect but this would not be
great.
No Money in Gift Tax.
Asked why the Treasury did not pro-
pose gift tax, Mills said I'VE won't |
get any real money from it,"
He said he did not consider it q
legitimate method of taxation, and that |