Fiscal March

Secretary Mellon celebrated his 74th birthday last week by calling on his friend President Coolidge. Birthday festivities consisted of a handshake, laconic felicitations, a long conference on the tax-reduction situation. Leaving the White House, Secretary Mellon declined to divulge what he and the President had decided was to be the Treasury's specific recommendation to the Senate Finance Committee when the latter begins hearings on the House's tax bill next week. He said only that tax payments in the first quarter of 1928 seemed so far to justify the Treasury's original estimates of the surplus, and the tax cut it would make possible this year.

As nearly as the Treasury Department could tell last week, the month's tax collections would total some $515,000,000, or a little more than for the corresponding quarter last year. But the nature of these returns was such as to predict diminishing returns in the remaining quarters of the year. Individual incomes appeared to have risen in the past year, while corporation incomes dropped off. Corporations had evidently increased their dividends. Private individuals, attracted by high prices, had taken their securities out of deposit and sold them at larger profits. Thus, while the U. S. Treasury surplus of $252,000,000 estimated for fiscal 1929 (beginning July 1) would probably be realized, the 1930 surplus, upon which tax reduction also depends, was less predictable.

From the estimated $252,000,000 surplus Secretary Mellon last autumn subtracted a $25,000,000 reserve fund, and told Congress that a $225,000,000 tax cut would be safe if Congress would keep closely to the Treasury's budget figures. Up to last week Congress had already gone $25,000,000 beyond the budget figures, and still had to make a flood-control outlay of perhaps $40,000,000. From these facts Treasury experts predicted that a tax cut surely no greater than $225,000,000, perhaps of only $220,000,000, perhaps of no more than $180,000,000, and perhaps no tax cut at all, would be recommended instead of the $289,000,000 tax cut voted before Christmas by the House, and since delayed by the Senate.