Better and Better

With the approach of the end of the fiscal year, the Treasury, on its New Year's Eve, had cause for rejoicing. It was apparent that the final casting up of accounts would show a surplus of about $400,000,000 or perhaps something better. The 25% reduction in income taxes, which is divided 50-50 between the collections of the last half of the fiscal year of 1923-4 and the collections of the first half of the fiscal year 1924-5, had reduced income tax receipts only about $100, 000,000, which was more than made up by extra collections on other taxes, payments on the foreign debt, disposal of railroad notes and increased tolls of the Panama Canal.

As a result of the surplus during the year, besides the reserve for debt retirement, the public debt will be reduced over $1,000,000,000. This reduction will save the Government more than $40,000,000 annually in interest charges alone.

To add to these savings the June 15 offering of Treasury certificates was disposed of--in fact, oversubscribed more than three times--although the interest offered was reduced from over 4% to 2 3/4%. This reduction in interest on the $200,000,000 of certificates sold will make another small annual saving of some $3,000,000. The Controller General, Mr. McCarl, consented to the refunding of 25% of the tax to those who paid in full on March IS. The Treasury, therefore, will not be prevented from making these refunds immediately out of general appropriations for tax refunds. Thus another of the possible consequences of the failure of Congress to pass the final Deficiency Bill was averted. Refunds of about $16,000,000--most of it in small amounts --will be made.

The only income tax payer in the U. S. who did not benefit by the 25% reduction in taxes is Calvin Coolidge. According to Constitutional provision the President's salary may not be increased or decreased while in office. The courts have ruled that a change in the tax rates is in effect a change in the amount of compensation which an officeholder receives. On account of this ruling, President Wilson while in office paid no income tax, since there were no income taxes when he took office. Similarly Calvin Coolidge must continue to pay the same income tax rate that was in effect when he entered office in August, 1923--until he leaves office.