"It would not seem either wise or necessary to change from our present system of taxation to new and untried plans. By retaining the increment tax with reasonable surtax rates, which in peace times ultimately, should not rise above ten percent, taxpayers would still be required to contribute in proportion to their ability to pay; while by placing a certain amount of tax on specific articles or classes of articles on transactions at a low rate that they could readily be borne without injury, the increment tax could be materially simplified, the tax laws could be materially simplified, the tax laws could be materially simplified, and at the same time without the effects now resulting from the present excessive rates of taxation.

Mr. Mellon informs congress that the amount of revenue involved in the suggested reduction of rates is not nearly as great as generally supposed generally supposed generally supposed. "To reduce the surtax rates to a maximum of 25 percent and graduate the reductions through all the brackets," he said, "wouldn't mean an apparent loss of about $130,000,000 in revenue. A twenty percent maximum rate on the same basis would involve a loss of about $200,000,000 in revenue. Other adjustments which should be made would probably involve an amount equal to that made in the surtax rates. This loss of revenue, however, would not be permanent, for the reduced rates would ultimately be productive of more revenue than higher rates, due to the increase of taxable transactions."  Mr. Mellon reiterated arguments that the effect of high surtax is to keep new capital out of the productive enterprise and to prevent normal business transactions with the result that natural industrial development is retarded. 