The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-07-12
SHOULD THE GOVERNMENT IMPOSE A
TAX ON GROSS SALES?
Impos This Kind Strongly Advocated the Of
Largo Business.

consumption, and Furthermore tina,
tax on the same article would 10
pyramlded through various channels
such as a tax by the manufacturer n
tax by the jobber and a tax by thu
retailer on a single item. which woula
inevitably be passed on to the con.
sumer. In this it seems to me we are
dealing with the problem OF human
nature No matter what the tax may
be called. and no matter how IT NAV
be based, 1t will be passed on If com.
petition. the nature OF the business or
the scrupies OF the parties affected
will permit. But this applies couallv
to any other kind of tax, with the nd.
vantage to the sales tax that being
definite and fully understood the
amount added to the sales price 4,
apt TO be a good deal less than IL lef,
to the imagination OF those affected
by II. Our company buys direct from
manufacturers as n rule, and the ad.
vance in price to us on merchandise
in the past year would average nearer
90 per cent. than 1 per cent. on tho
sales price Of such manufacturers In
part. at least, these advances have
been due to doubt on the part Of tho
manufacturers as to what their taxes
would be, and the human nature tenn.
tation to play safe.
The argument might be advanced
that n tax on sales would work an In
Justice to some lines OF business which
do not have the opportunity for turn.
over gross profit and net profit that
other businesses might have. II has
been my observation, however. that
these things all adjust themselves 10
the kind of business involved Some
companies require a larger invest
ment and a slower turnover, but in
turn larger gross profit is derived
and a corresponding net profit Other
businesses make very small gross
but expenses Of operation are light
and turnover rapid, and men are
tempted to engage in one or another
Of the different kinds OF business he.
cause Of these elements.
But II the business is properly man
| aged and conducted with intelligence
the net profit on any business will bear
n corresponding relation to investmen,
and sales.
This Is another reason why any tax
having even an indirect relation 10
profits of previous years is unfair,
| for very often businesses change
management because they are not
successful. and a totally different
| showing Is made. l know OF several
businesses which were making very
little money, or losing money. during
the few years prior to the war. which
are to-day making substantial returns
to their stockholders. entirely because
the management has been changed
and the business is being properly con
Quoted and not at all because the hus9-
ness was of such nature that it Ia,
increased as a result Of the war ~
the reverse argument some businesses
are making less money than they
made prior to the war because ~
stagnating management and organiza.
ton. and therefore a tax having in
contemplation comparative profits Is
apt to penalize and punish successful
management and to put premium
and reward on incident apathetIc and
unintelligent management
l believe a canvass of this subject
among representative business men
whether of corporations. partnerships
or individuals. would reveal the de-
cidcd opinion that such tax wouH
he the fairest, and I might say the
only fair method Of taxing business IN
the very serious and heavy way which
we all know 20 be necessary.
No one to-day disputes the noces-
sity for big business taxes, and there
fore evasion will only come when tho
operation of the tax is surround by
confusion and the opportunity roT
misconstruction, and the smaller Tie
size OF the business the more lkon-
hood OF confusion. because, as stated,
small businesses do not keep accurate
and illuminating records
G. NJ CALLS
President Louis X. Liggett Company
New YORK. July 10.