Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-12-04
PLAN DIRECT SALES
TAX AS SUBSTITUTE
FOR PROFITS LEVY
Enactment of Legislation to
Solve Present MuddIe
Expected by June 80.
THREE PER CENT FINAL
ASSESSMENT PROPOSED
Copley Explains Suggestion
Would Save Consumer Costs
"Pyramided' by Others.
ny WILL p. KENNEDY.

"Pyramided" by Others.
BY WILL p. KENNEDY.
Repeal of the excess profits tax by
June so, or before, with the substitu-
ton OF 3 per cent final sales tax.
and Joint sessions of the House ways
ana means committee and the Senate
nnance committee to expedite a soIu.
ton of the tax problem are being
seriously considered by those in Con-
gress directly charged with the dntv
OF framing the revenue producing leg
islation.
ihe theory is the consumer must ma "
the tax in the end; that bv the indi-
rect method of assessing it the tax
is pyramided before it reaches tho
consumer in the fnal-sale price tho
cost OF living is piled I'D. the neon1a
are overburdened. and the govern.
nent does not get the benefit. Bv hav-
ing the courage to levy a final salas
TAX where the consumer knows bs
pays only one tax. and to whom he
pays IL so that he can lay the blame
olrectiy Tor any overcharge, it is esti.
II mated that the public can be saved
ioqr-nItns OF what it has been nav
ing. and the government get inst =.
much revenue
ing entire proposition is explained
Dv representative Ira c. Coplev of
1iinoIs, a business man and financier
anu VINO IS one of the leaders on the
ways and means committee in work
ny .:I on the tax problem. Representa-
i've Copiey has been devoting most Of
ms time for the last four years ia
Tying 10 hnd the best solution OF
now TO raise enough to keen the gov
Srhmeht going properly with the least
burden on the people
Had Because Retroactive
am absolutely convinced tba, the
excess profits tax will be removed ha.
Iore or after June 80. more likeIv he.
Tore. The reason is this: l do nor he
1ieFe that any one ever wants to GO
PACK ana pass retroactive law. The
~ eoAnplnAtion OF the two principles in
.he revenue law-the excess profits
TAX ana the retroactive features-are,
more than anything else. resnousihIs
fer the High cost Ofliving.
Every Tax that can he .sia.s ,,tSsed
on 10 come one else. iseT Z ESntinns
tnat hnman nature. The excess
pronts tar Is passed on All com modi-
ties IN general use go through three
70 dozen processes before they reach
the hnal consumer. When the last
man who had q hand in ii places an
excess profits tax il is frequently
pyramided to tremendous proportions.
The retroactive feature was not
only an inducement, but it practically
demonstrated the necessity for every
man looking out for himself. because
he didn't know what was going TO
happen. For instance, the excess
profits tax law Of 1917 didn't become
q law until October 3 of that year, but
it was made retroactive to January l
OF that year. A great many busi ess
men, in fact a large majority, had
provided for expenditure or perma-
nent investment of those profits. Con.
sequently. following the figures of
the bureau Of labor, we see very
great jump in the cost of articles
about the time that gill was intro
duced carrying retroactive features.
The business men had spent the
money and had to provide by in
creased profits to pay the tax the fol-
lowing twelve months.
1913 Law More Severe.
Again, the excess profits tax of
lsIs' Wnlch was very much more Sc
we're, did not become q law until Feb
ruary 23. 1919, but was made retro
active fourteen months back. Instead
OF prices declining as they ought to
have done after the armistice was
signed they enormously increased. be-
cause this tax was made retroactive,
q large increase over the tax under
which business had been operating.
and, again, men had spent large
share OF their money. The tax had 10
be paid in 1919. with increased prices
the only way to get the money.
Not only that. but they didn't
know when another retroactive tax
was coming, and so the business man
grabbed all he could get"
Representative Copley explains that
"any general tax on business is sure
to be passed on to the consumer M
matter in what form it may be levied.
and, consequently, the best tax is the
simplest tax. FOR instance. if it is
necessary to put on CONSUMPTION
tax, it ought not to be total turn.
over tax, but a final sales tax ON re.
tail merchandise. Then no one indus.
try doing any part of the work on
that commodity can lay the excess
cost to the other fellow, because the
consumer is going to pay but one tax.
and knows exactly how much il is.
This is even very much better than
a production tax, or a tax at any
stage of production, because again the
consumer, who must pay the tax. can
place the exact TcSpoHSiDlilty for auy
overcharge, either on the article it.
self, or in the tax.
Pay Tax Just Same.
ut is very much question in NV
mind" said Representative Copley.
whether or not the people of the
country have sufficient courage to
face this problem and meet it by paw
ing a tax which they know about
cheerfully. They may prefer an indi-
rect tax If the do, they pay the tag
Just the same, and. not knowing lust
how much they pay. are likely to pay
great deal more for the article
than they are paying taxes on. There-
fore, the cost often is more and the
Representative Copley points out
''by the excess profits tax law the
government received only about one
fourth of the revenue on excess prof.
its that it ought to have received,
for the reason that the great de-
partment stores and the mail-order
houses. prior to the excess profits tax
law, practically fixed all prices, and
could handle commodities very much
cheaper per unit. In order to make
q profit that would sufficiently cover
the bad years and the good onee 1t
would be necessary for all Of the
large mercantile establishments to
make more than II per cent in good
years. The $4,000 exemption to all
business means nothing to them. The
small dealers had an opportunity eth
er to put their large competitors out
Of business or to run their prices
on up without being compelled to
pay a proportionate tax because the
5000 per, per year es ,sn exemption ss was % more
and the new tag allowed for liberal
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