How to Reduce

The way to reduce is to reduce. Every member of Congress wants tax reduction, but everyone wants the credit for tax reduction. There lies the key to the present situation.

The Democrats do not feel that they can allow the Republicans to pass the Mellon bill and get credit at the next election for both proposing and carrying out "the great desire of the people."

The President intimated, as he had done before, that he will veto a tax reduction bill that would not comply in all its larger features with the Mellon proposal. This is implied to mean a veto for any surtax greater than 25%. It is doubtful, however, whether Mr. Coolidge can afford politically to prevent tax reduction altogether because Congress insists on higher surtaxes.

The Republican leaders in the House offered the Democrats in so many words to draw a joint bill in the Ways and Means Committee as a compromise. The Democrats declined, or rather, evaded the compromise offer.

It was suggested that the Democrats might try to pass their own measure (with maximum surtax of 44%) with the aid of Republican insurgents and then dare the President to veto it.

The Committee at work on the bill did not reach the dire question of surtaxes, but both parties agreed on a $103,254,488 cut in "nuisance and luxury taxes." The admissions tax was wiped out on tickets up to 50-c-. The telegraph and telephone and candy taxes were wiped out. The jewelry tax was cut in half. These reductions accounted for about $84,000,000 of the total cut so far agreed on.

Mr. Mellon published a letter from Daniel Guggenheim, telling how high surtaxes had prevented his firm (Guggenheim Brothers) from expanding. His company had invested $6,000,000 in Mexico, $22,000,000 in Alaska, $100,000,000 in Chile, $10,000,000 in Bolivia, to develop copper and tin mines--all of these investments being made in speculative development--i.e., before any dividends were paid. With the present high surtaxes taking over 50% of the profits, the risk involved is too great to enable them to continue such investments.

The letter concluded: "In so far as this situation relates merely to the affairs of Guggenheim Brothers, it may be of little consequence. But in so far as our experience reflects the experience of others similarly situated, I venture to believe that our experience points to this conclusion: The present law presents a definite obstacle to the expansion of American business. . . ."

[Note: Daniel Guggenheim is a grandson of Simon Guggenheim, a Swiss immigrant, and son of Meyer Guggenheim. He is the second of seven brothers: Isaac, Daniel, Murry, Solomon, Simon, Benjamin, William. Many years ago their father called them together, told them the parable of seven sticks which separately could be broken, but together were unbreakable. He started them in the mining business with a smelter in Colorado. They prospered, engaged the best brains in the mining business, now control the three largest copper mining properties in the world--Chile Copper, Utah Copper, Kennecott Copper--producing two-fifths of the world's copper supply. [CLOSE_P] [OPEN_P]Daniel is known as the leading spirit of the group. During the War he took the lead in seeing that the Government was supplied with copper at half the prevailing market price. Before he was 40 he had crossed the Atlantic 70 times. He is a patron of Art, Music, Literature, horse breeding, horticulture, an excellent geographer and anthropologist, a noted philanthropist. [CLOSE_P] [OPEN_P]In industry he has stood for high wages, profit sharing with employees (in this he was a leader long before it received general publicity) and high standards of living. He believes in and set an example of hard work. He also believes in vacations, saying that a man who works twelve months does only eight months' work. As for getting ahead in the world, his maxim is: "Roasted pigeons don't fly into a man's mouth."]