The Washington herald., 1921-04-14
Means Shown to Gain
Revenues Cited in Hard
Message.
SAYS RICH DODGE
PURPOSE OF LAW
Little Fellow to Suffer If
Nations Output Is
Not Assessed.
By MARK SULLIVAN.


Intention on the part Of Republican
leaders in the House and Senate
bears out the two definite recon-
mendations that President Harding
made on the subject of taxation.
One of these references was spe-
cine. 1t said: We are committed
20 the repeal of the excess profits
tax" The other was less definite,
but no well-informed hearer mis-
understood it. Harding called for
-the revision or repeal of those
taxes which have become unproduc-
tive and are so artificial and bur
densome as to defeat thek own pur-
pose"
Big Incomes Eyade Tax.
By these words, everybody un-
derstood Harding meant that the
income and surtaxes on very large
incomes are turning out to defeat
their own purpose, and should
therefore, be repealed. This inten-
tion is unanimous among all the
leaders who will be responsible for
the new tax program.
The point at which the Repuo-
ucan leaders draw the line between
large incomes and smaller ones is
$50, 900 a year. On the so-called in
comes Of $4,000 a year or less, the
Sncome and surtaxes run from,
roughly, 40 per cent at $4,000 a
year down to per cent on $1,000
a year. On the big incomes from
$50, eco a year upward, the income
and surtaxes are, roughly, from 40
TO 70 per cent. 1t is on these big
incomes that IL is proposed to make
fbe reductions. so that the highest
rate paid by anybody will be 40
per cent
The purpose of the reduction on
these incomes Is not to make things
eaxser for the rich. It is because
the rich have found II profitable to
put their fortunes wholly or largely
into Liberty bonds or into State and
municipal bonds, which are exempt
from taxation. That is what Hard
ing meant by saying these higher
txxes are so artificial and burden
some as TO defeat their own pur-
spose-"
Tax Source Holds Interest.
Now, L. these larger income taxes
and the excess profits taxes are to
be repealed-and the expectation in
Washington Is universal that they
will be-the next question is: Where
shall we get the taxes that former
ly we have been getting from these
sources?
To this question two answers are
proposed. One Is that the rate of
taxation on small incomes shall be
increased. This suggestion will
strike the army of small income
taxpayers as startling; but the fact
is II is seriously discussed as the
alternative in case the sale tax
should fail.
The other answer is the new form
of taxation called the sales tax or
the turnover tax. This tax, in its
simplest form-in the form in
which, Senator Smoot, of-utah, in
troduced it-provides for a flat tax
of 1 per cent on all goods, wares
or merchandise sold" Even in the
simple form to which Senator Smoot
has tried to reduce the idea, there
are several exceptions or exemp-
tions- One is that a merchant or
other person whose total gross
sales are under 5000 a year should
be exempt. This would leave most
farmers free of the tax. Another
exemption Is that goods sold for
export should not be taxed.
Cossress' Attitude In Doubt.
How this new proposal will fare
tn Congress cannot be foretold. SEN
ator Smoot is the chief advocate of
1t, and IL Is no secret that even
some Of his associates on the FIJI
nance Committee do not share his
conviction. The reasons animating
those doubters has little to do with
the merits of the tax, or with its
practical effectiveness. The hesita-
tion is based on doubts whether it
can be put through Congress, and
fears lest II should turn out to be so
unpopular as to hurt the Republican
party.
Undoubtedly. among the rank and
file of Congress, and especially of
the Lower House, there will be much
opposition. This opposition Is sup
posed to reflect the prejudices of that
figure. potent in all political con-
siderations, who is called "the little
fellow. But the fact Is, the great
majority Of the little fellows" are
already paying very considerable in
come taxes now. The only possible
hope of any relief for these small
income tax payers lies in the pas
sage of the sales tax. In fact, IT
may readily happen that If the sales
tax Is not adopted. the small income
taxpayer will see his rates raised in
stead Of lowered.
Tax Bogy Revived.
Many radicals oppose the sales
tax because II violates one of their
most ancient contentions-thatt there
should be no taxation on fundamen-
tails of food. clothes or shelter"
II the Republican party has the
courage that their immense major
ity ought to give them. they will
face boldly this ancient plea against
taxes on consumption. Inevitably
taxes must fall either on consump-
tion or on nonconsumption. There
Is no escape from that. In the pres
ent state of the world il is pre-.
:. eisely consumption that ought to be
taxed. and nonconsumption that
should be rewarded by exemption
efrom excessive taxation. Noncon-
sumption is merely another word
lsr savings.