The daily morning oasis. [volume] (Nogales, Ariz.) 1917-1920, 1920-05-04
EXCESS PROFITS TAX PYRAMIDS COST

Under the above caption one Of the literary
bureaus which floods the newspaper offices Of the
country with canned editorials and exaggerated news
items their propaganda always camoufalged by
great deal that is really true and useful has put out
the following:
'There seems to be an almost universal demand
in the interest of industry that the so-caed excess
profit tax be removed. This tax simply pyramids
the cost of living the manufacturer must make pro-
fit and sufficient in addition to the tax goods
are then sold to wholesaler and he makes his pro-
fit on the gross price which he pays which includes
the tax; the retailer buys from the wholesaler and
another profit is made on the goods, including pro-
fit on the tax. And so it goes. Abolition of ex-
profit tax would encourage industry and ncreas
ed production and tend to reduce the cost of living
GA purchase tax instead Of the excess profit tax
would collect only tax from the ultimate con-
and would not necessiatte pyramiding profit on
tax charge as at present. Industry must make
profit to operate and maintain payrolls. Hence,
a tax which is the least complicated and the least
burdensome to industry falls the lightest on the I'LL
innate consumer as all taxes charged against indus
try must be passed on to the consumer.
Hence, the necessity for some form of taxation
similar to the tobacco tax which add nothing to the
cost of manufacturing but through the stamp on the
goods which the consumer buys, the necessary re-
venue"
The very first sentence in the quotation is miss
representations There is no such universal demand
for repeal of the excess profits tax.
There is reason in the world why the excess
profits tax should pyramid cost if those who gather
in the excess profits will be guided by the spirit Of
the law. AS imposed the excess profit tax does not
begin to run until the profiteer has succeeded in Sc
curing fair margin of profit. He pays excess pro-
fit upon his net business He is permitted to dedlict
all kinds of expenditures such as rent wages advnr
Using, salaries etc. Where he the building in
which he conducts the business charges rent against
himself, and it is legal deduction. He may pay
himself an enormous sary for management and that
is legal deduction. All taxes paid of whatever ma
ture except the excess profits tax, are legal de-
duction. Then after he has shown all those things,
what is left is profit.
Now then, after showing that the excess pro-
fit do not begin to be imposed until it exceeds
twelve per cent upon the investment. That twelve
per cent may be deducted before profits begin
to Above twelve per cent to forty per cent the
profiteer pays twenty per cent Above forty per
cent he pays still larger proportions, and the tax
raises the excess profits raise. No business
need carry his profits up to point where he has to
pay the excess profits tax He need not add the tax
to the cost of the goods he pays forty per cent
excess profits he is selling goods commodities for
more than he should sell them. By reducing the
prices he can reduce his taxes That is all there is
to that But he wi / not do that because he wants
the other sixty cent that he retains Now he has
found that people will stand for the high prices he
exacts, and he wants excess profits removed so he
may get the other forty per cent he pays. Should
the excess profits tax be repealed the producer of
commodities will not reduce prices No indeed.
So all the talk abount the pyramiding costs is
camoufladge
In fact in asking repeal of excess profits tax the
proponents suggest bit of pyramding. The gov
eminent is to recoup the lost excess profits tax by
taxes on sales one of the most odious of all forms of
taxation. They cite the stamp tax tobacco. That
goes simply because it is levied upon luxury that
no one need use. If man uses tobacco he pays the