Taxation

At the first Cabinet meeting following President Harding's return from Florida, Secretary Mellon renewed his suggestion that surtaxes and incomes be scaled down from a maximum of 50% to a maximum of 25%. His argument was that the previous reduction of maximum surtaxes from 65% to 50% had resulted in an increase of $70,000,000 in income tax returns for the first three months of 1923. He also presented statistics that of the total income tax revenue only about 6% is derived from surtaxes above 25%.

Mr. Harding felt, however, that it is too early to judge the effects of the present tax law. In any case he would favor a reduction in the general income tax rather than in the surtax so as to relieve the small tax payer in preference to the very wealthy.

All prospects of tax reductions are remote. The day following the Cabinet meeting Senators Watson and Smoot, heir-presumptive to the chairmanship of the Finance Committee, called at the White House. They oppose any attempt to alter the present tax law at the next session of Congress. Senator Smoot expressed his sympathy with the President's suggestion, but regarded it as " premature." The anxiety of the two Senators is obviously due to the political unwisdom of such a move. If any tax measure is brought up in Congress, it would fall among "radicals," as pointed out in TIME last week, with the result that the President would be faced with an entire and undesired revision of the Administration's tax program.