Alexandria gazette. [volume] (Alexandria, D.C.) 1834-1974, 1921-11-23
American Valuation Plan is
EXPLAINED for the Perplexed

American VGluuteoh ' "
Erplained for the Perplexeo
Racause of numerous inquiries
that have come to The Cnronicie
.nncerninp the American Valuation
man proposed in the tariff act no"
pandino. the following explanation IS
prosented. If we have included eH,
plantations of elemental facts anu
arithmetic with which, as we are wen
sware. our readers are Thoroughly
familiar, it has been out OF excess ,:,
Of caution, so that no poinC coui''
possibly remain in doubt
What is meant by the American
valuation scheme proposed as OASIS
for calculating ad valorem duties Oh
imported goods?
An ad yalorem duty is customs
charge fixed at certain percentage
of the value of the article, For eH-
amps. an American importer brings
in French automobile valued at
81 600. The tariff act now IN force
imposes an import duty OF 40 per
cent. ad valorem on such AUTONOMOUS,
Therefore, the importer pays Cnc ae
Sam as per cent. Of $1,000. or '9oo
in duties.
! In fixing ad valorem duties, ques;,,
ton arises before law makers. Shail
the duty be a percentage oil the Vaiue
of the article in the country from
which it comes, on Shall it be per
centage of the value of the article III
the United States? ~
It is clear that this makes an
ference. For if an automobile cost
mr. $4,000 in France can protitaoly
be imported into this country 1T must
be worth here at least $4,000 Plus
the freight and plus the tariff. 1t
must also be worth here as mucn
more as the cost Of building such a
machine in France is less than 1t IS
in the United States.
] Let us say that this car, which
cost So 900 in France, cannot be built
ard sold wholesale in the United
States for less than $4,000. linen
it's value here is $4,000.
Under the present tariff act ad
valorem duties are calculated on tne
cost of the article in the country
from which it came. Hence, on this
French automobile the importer pays
! 45 per cent. of $4,000, or 5000.
The American valuation plan
adopts the other method. 1t makes
the cost of the article in the United
States the basis on which to calcu-
late the duty.
But it is not quite so simple as
this sounds. There. is a complica-
ton. The duty on our automobile
would not be As per cent. OF S5,0O0,
even assuming that as per cent. Will
remain the figure in the new act.
Perhaps we can best get at the
matter by quoting the old and new
acts. The act now in force reads:
The duty shall be assessed upon
the actual market value OF wholesale
price thereof at the time of exporta-
tion to the United States, in the prin-
cipal markets of the country whence
exported.
The proposed amended act reads:
The duty shalt be assessed upon
the actual market value or whole
sale price thereof at the time Of eX-
portation in the principal markets
of the United States, deductlrg there
from United States import duties.
The puzzle picture is in this last
clause, "deducting therefrom United
States import duties"
Taking our automobile again, and
assuming that the ad valorem rate
/ on such automobiles will remain at 40
per cent, we shall have to plunge
into mathematics.
First we observe that though 49,
600 is the figure we must take as
the cost of the car in the United
States, it is not the figure on which
We reckon the 45 per cent. duty.
Before we can apply our as per cent.
VIC must subtract from $4,000 the
amount Of the duty.
| Sounds like curious proceeding,
doesn't it-subtracting the amount of
our duty before we know what it
is? But it can be done.
When we have subtracted the
amount OF the duty from $4,000 we
will have the amount on which the
duty is calculated. Therefore; 3d.
600 must be the amount of the duty
plus the sum on which the duty is
figured.
This sum is 100 per cent. OF itself.
The duty is As per cent. of il.
Therefore, $4,000 must be 145 per
cent. of the sum we are looking for.
One per cent. of that unknown sum
must be the 145th part of $4,000, or
S20.6S and fraction. One hundred
per cent. must be 100 times s20.6S,
or S2,06S.96.
This is the sum we had to find
The duty will be As per cent. of
s2,O6S.96, or S931e3. Any one who
proves this in the usual way will
only need to bear in mind that small
fractions have been omitted.
! This, then, is the way in which the
American valuation plan will work,