The New York herald., 1920-12-07


WASHINGTON, Dec. 6.-The proposal
to substitute some sort of a gross sales
tax for the existing excess profits tax
in the Governments programme for
tax revision will undoubtedly result in
expressions of wide difference of opin-
ion among experts on the subject when
hearings begin before the House and
Senate committees.
Despite the admitted necessity and
desirability of drastic revision OF the
taxation, the great variance with
which this proposal is regarded is cal
culated by many to retard rather than
expedite tax reform even should it be
attempted during the short session Of
the Congress.
Many members of the Ways and
Means Committee of the House and
certain members of the Finance Com
mittee of the Senate, including Sena-
tor Watson of Indiana, the acting
chairman, and Senator Smoot Of Utah,
have announced themselves in favor
of sales tax. The big argument for
such tax is it's revenue producing
! potentiality. which is admitted. al
| though dependable statistics regarding
/ the various forms of applying such u
tax are pure estimates and differ
widely. on the other hand. many per-
/ sons who at first were inclined to the
| principle of the sales tax have, upon
closer study of the subject reached the
1 conclusion that, under present condi-
tions, its application would be mad
visable. Their alternative would be a
substantial increase in the tax on GER
tain specified commodities like ciga-
rettes, perfumes. cosmetics. photo
graphic supplies, musical instruments,
jewelry. thermos bottles and the like.
Three Plans Suggested.
The discussion now going on regard
ing the feasibility of a general sales
tax closely parallels that which followed
the close of the civil war. At that time
similar proposals found widespread
favor but were abandoned after the
United States Revenue Commission had
made a careful study Of the subject and
Its report was submitted by the Secre-
tary of the Treasury to Congress on
January 30. 1866.
Favorable reports Of the operation of
such a tax in France and Canada, and,
in modified degree In the Philippines,
are offset by the fact that the British
and Italian governments, after careful
consideration. reached the conclusion
that such method of taxation is a last
resort measure. Consequently. its OPP
ponents urge. the principle should not
: be applied In the United States.
The several proposals for a general
sales tax fall into three groups:
IA tax on every sale or turnover not
only of commodities but also OF
personal services, realty, capital assets
rent and interest.
"a tax on every sale or turnover OF
goods wares and merchandise only.
"A tax on all final sales OF goods.
wares and merchandise for con-
sumption or use.
The first two proposals are In reality
much alike and differ principally In the
scope OF their application. For this rea-
son the objections to the first apply also
to the second.
The advocates 'of the turnover tax
claim that Il will In nearly every In
stance be shifted. That is. that It will
be passed along and eventually be borne
by the ultimate consumer. But the op-
ponents of the tax on turnover princi-
pie see incalculable opportunities for
loading and pyramiding with the result
that the burden would become n tax
against the living wage. subject to no
exemption as recognized In the income
tax. and to be borne by those least able
TO pay
Arguments for sales Tax.
! In other words. they disagree with
/ Tho nrononents of the turnover tax