Other Plans

In the tax discussion, the chief events of the week were the presentation by the Democrats and by the insurgent group in the House of other plans as substitutes for the Mellon plan. The substitute plans have in common lower normal taxes than the Mellon plan but higher surtaxes.

There follows a comparison of the chief features, three plans for tax reduction with the present income taxes.

Normal Taxes. Present law: 4% up to $4,000; 8% on larger incomes. Mellon plan: 3% up to $4,000; 6% on larger incomes. Democratic plan: 2% up to $5,000; 4% from $5,000 to $10,000; 8% on larger incomes. Insurgent Plan: 2% up to $4,000; 4% on larger incomes.

Personal exemptions. Present law: $1,000 for single persons; $2,500 for married persons or heads of families with incomes not exceeding $5,000; $2,000 for such persons with larger incomes. Mellon Plan: the same. Insurgent Plan: the same. Democratic Plan; $2,000 for single persons; $3,000 for married persons or heads of families.

Earned Income. Present law: no reduction in tax. Mellon Plan: 25% reduction. Democratic Plan: 33 1/3% reduction. Insurgent Plan: 25% reduction.

Surtaxes. Present law: beginning at $6,000 and graded up to 50% at $100,000 and more. Mellon Plan: beginning at $10,000, and graded up to 25% at $100,000 and more. Democratic Plan: beginning at $12,000 and graded up to 44% at $100,000 and more. Insurgent Plan: same as present law.

Soldier Bonus. Mellon Plan: none. Democratic Plan: not mentioned. Insurgent Plan: a bonus to be paid for at the rate of $200,000,000 a year.

The Insurgent tax reductions are apparently about as great as those proposed by Secretary Mellon and in addition call for a bonus, and therefore call for additional taxes. The additional taxes suggested by the insurgents include:

An excess profits tax of 10% on excess profits not greater than 20% of the invested capital; of 75% on excess profits greater than 20% of the invested capital.

Increased inheritance taxes, beginning at 2% on inheritances in excess of $50,000 and grading up to 50% on inheritances greater than $20,000,000 (state inheritance taxes to be deducted against the Federal tax.)

Gift taxes on money or property beginning with 1% on gifts not greater than $3,000 and running up to 25% on gifts of more than $10,000,000.

Taxes on undistributed profits: 5% on amounts not exceeding $20,000, grading up to 20% on amounts exceeding $200,000.