Indiana daily times. [volume] (Indianapolis [Ind.]) 1914-1922, 1920-01-03
TAX
ON ALL SALES
Speaker Sees Greater Fairness
in Substitute for Excess
Profits Plan.

ST. LOUIS, Jan. 1.--Speaking before
the meeting of the American Association
for the Advancement OF Science. Morris
4. Frey, assistant treasurer of the Guar
anty Trust Company Of New York, indi-
Gated the possibilities of a federal tax
on gross sales as substitute for the
present excess profits tax, which, he said,
threatened the industries Of the country
with 1rreparable injury.
Undoubtedly" said Mr.. Frey, zone of
the strongest arguments in favor of a
sales tax lies in the desire and need of
relieving the country of one of the most
unjust, unsound and dangerous taxes
which has ever been imposed upon eur
industries, namely, the excess profits tax
The excess profits tax, though probably
Justifiahle as means of raising revenue
for the prosecution of the war, is both
unscienti1c in principle and economically
unSound. Although this tax is in the
form of direct tax on profits, It is, in
effect, a most unsatisfactory commodity
tax. A manufacturer, merchant, or other
business concern sub1ecE to the tax, in
most instances, estimates in advance, the
amount which he is compelled to add to
the selling price of the commodity in
order to pass the same on to the vi
mate consumer, so as to protect himself
against the heavy imp0sition0. Because
of the uncertainty of the determination
Of the tax owing to the intricacies and
Germ is apt to oYerestimate, rather than
underestimate, its liability.
PROPER SOURCES
OF FEDERAL REVENUE.
"From the foregoing it would seem
that, as a matter Of principle, cOnsump-
tion taxes are recognized as proper
sources of federal revenue and existing
taxes must be superseded by an equally
productive system which does not so
seriously threaten the prosperity, and
even the existence of our industries In
other words, what is needed most at the
present time is u tax law which may
be productive enough to raise large
amount Of revenue and elastic enough 70
meet changing conditions, and at the
same time, not an impedinent to In
creased production, and simple and eco
uomicaI in administration. Summing up
the possibilities of the gross sales tax,
Mr.. Frey said that it had the following
advantages:
81 Either L cumulative tax or tax
limited TO retail sales will be productive
and flexible and probably offers the only
available substitute for the excess profits
tax.
"2 The tax would be equitably dis
trihuted over a large mass of people
and would be so light that it would not
impose an undue burden
50. As a substitute for the excess
PROFITS tax, II would impose definite,
certain, consumption tax, easily ascer-
tainable, in place of an indefinite, unde-
terminable tax which is now passed on
to the consumer on a good deal higher.
basis than the actual imposition.
AZ The tax is so low that in prac-
tice any attempt to abuse or defraud
the consumer should be taken care of
by competition.
MARKED ADVANTAGE
IN SALES TAX.
"a consumption tax of this character
will reach the great mass of farmers and
wage earners into whose hands the
greater portion of the natural income
Ing fully in whatever prosperity the war
has brought, but can not be reached eff
fectively through income taxes. Thus, q
large number Of people will cOntribute
to the expense Of the government 4 large
peudinR unOn the amount of their eX-