The Washington herald., 1921-01-27
Fortune leaves always some door open to
;ome at a remedy.-Cirvantes
The Gross Turnover Tax.

~
~ form that have been put forward, the gross
turnover or sales tax has aroused more con-
troversy than the othsss. This may be accounted
ior by the tact that this plan suggests more radi-
cal departure from the present methods than any
other and because its supporters more aggres-
sive in their advocacy.
Jules S. Bache, OF the foremost advocates
OF the gross sales tax believes that the result to
the civilized world OF the general adoption of this
system would be as important in its ultimate effect
on business and social life as the abolition of slavery
was sixty years ago
On the other hand, its opponents maintain that
the proposed tax would yield sufficient revenue
to permit the repeal OF present excess profits and
high surtaXes that it IS grossly inequitable that it
IS economically unsound and socially unjust and
that 1t will tend to encourage undesirable changes
in business practices.
1t is generally admitted that any plan for tax
revision must be based these three things Cd
its power to produce revenue 2) its equity; Cd its
simplicity of interpretation and admnistra-
ton Added to these is the political consideration
which will be by means negligible factor in de-
termining the plan which is finally adopted
1t is these fundamentals however that the
opinion OF the experts is widely divergent or abso-
lutey antithetical
For example, the revenue from a tax OF per
cent gross sales is estimated anywhere from ST.
100000 10 $6,72oooo,ooo. If this tax is to be
relied upon to furnish three-ourhs OF the required
S4,oOoooo,ooo it would appear necessary to know
more definitely whether I per cent tax would fall
short of requirement by $I5oo,oooo coo or exceed
them by a similar amount
1t is asserted by some that due to pyramidng
the tax would be heavily cumulative resulting in
heavy burden on the consumer and would be unfair
to small, sIngle-process manufacturers or unnte-
grated industries in which there are many turnovers
The advocates OF this tax. however, declare
that the maximum burden to the consumer would
not exceed per cent. II unintegrated plants have
been able to compete successfully with the in
tegraed, it is held that they will not be overbur-
dened by tax small that proposed.
There seems to be general agreement that if the
gross sales tax substituted for excess profits
tax its administration would be comparatively sim
pie, especially in comparison with the present
system.
From the political point OF view it is sure to be
urged against this that it favors large corporate
combinations, that it ignores ability to pay which is
measured largely by net income, that it is tax on
needs and not production or income and that it
is tax against the living wage.
An attempt to tax farmers, newspapers and
magazines on advertising receipts insurance COM
psnics, bankers, landlords, etc, it is held would
involve difficult legislative problems 1t is gcncr-
ally recognized, however, while the present tax
theoretically is not open to these objections, in
actual practice it has been found that many OF
the evils it designed to avoid have appeared
in exaggerated form.
There are certain features OF the sales tax how
ever, which strongly recommend it Were it adopt
ed in a modified form along lines suggested by Mr.
Kahn rather than in toto a panacea for all our
tax ills, it would be removed from the realm Of
theoretical discussion and its virtues or defects
would be proven.
4 tax OF onc-third or onc-fourth of per
cent on gross turnover as suggested by Mr.. Kahn
would provide a fair test and at the same time Sc
cure revenue which would permit the abolition
or revision of certain present obnoxious taxes As
has been pointed out by MI. Kahn if this test on
small scale proves that tax of this kind does
not work out satisfactorily, it will not be very
costly to the taxpayers.