The Washington herald., 1921-04-11
SALES TAXBILL
OF | PER CENT
IS DUE TODAY
Text of Smoot Measure
Announced; $4,000 Ex-
emption Provided.
3 ALTERNATIVES
TO BE CONSIDERED
Senator Admits Consum-
er Pays Cost, But Says
Burden Is Lightened.

Text of the sales tax bill to be
introduced by Senator Smoot, of
Utah. in the Senate today was made
public last night.
The bill imposes a tax of l per
cent on all turnovers with an an
nual exemption of $1,000, the effect
of this being to exempt smaller
farmers and tradesmen. 1t has been
estimated that the 1 per cent would
yield more than $4,000, 100000 an
nually.
In a statement in behalf of the
general sales tax plan Senator
Smoot declares that its advantages
are extreme simplicity of assess
ment and collection, a low tax rate
applying uniformly on all COM
modities. and absence of compli-
Gated features which makes IL diff
cult for the taxpayer to know at
any time what his tax liaoIIlties
are.
While the bill as 1t will be in
troduced provides for a tax of
per cent Senator Smoot indicates
that the rate might be limited to
one-half of 1. per cent or other al
ternatives might be adopted.
Three Alternative Plans
In his statement he proposes
follows:
l. A rate of one-half of l per cent,
but not to exceed l per cent. on all
sales without distinction Of inte-
grated or unintegrated concerns.
.. A rate of three-fourths of
per cent. but not to exceed l L.
per cent. with a credit for taxes
previously paid on goods bought
for resale.
;. A rate of per cent but not to
exceed pes cent without distinc-
tion of integrated or unintegrated
concerns. but exempting each dealer
on the FIRST s5o.0eo OF annual sales.
For simplicity of administrations
and collection of the tax 1 have
concluded to support the first
named plan. and for the purpose of
this bill have specified a rate sof
1 per cent" said Senator Smoot.
If at any time the amount to be
raised from such a tax is to be re-
duced or increased. the only amend
ment required to the law would be
to change the rate of tax.
The bill follows closely the pro-
visions of the Philippines sales tax,
which today is the most satisfac-
tory tax to all classes and the most
productive that is imposed in the
islands, 80.
Provides Quarterly Payments.
Merchants and others maxi
sales subject to the tax would nna4e
quarterly payments to the govern
ment under the terms Of the bhl.
The bill exempts sales and leases
made bv the United States govern
,nert. states and municipalities, for
Ign governments. mutual ditch or
IRRIGATION companies and hospitals
ana other corporations organized
and operated exclusively for re-
lirious, charitable, scientific or ed
ucstional purposes, and also goods
sold or leased for export.
The sales tax does not apply to
beverages, cigars and tobacco on
which taxes already are imposed by
TITLES VI and VII of the present
reyenue act. 1t also does not apply
TO a few commodities on which
there is now an excise tax snd-which
Is not repealed by the bill, such as
automobiles. automobile trucks and
wagons. motorcycles and tires, parts
and accessories, yachts and motor
boats
UItinaste Consumer Pays.
Senator Smoot says that the turn
over tax will be shifted to the ulti-
mate consumer but he contends that
the final increased price Of a commod-
ity which has passed through half
a dosen hands will not be more than
81 per cent. He refers to a Depart
ment OF Justice investigation in
connection with the Lever food con-
trol act in which the assertion was
made that the excess profits tax was
responsible for an increase Of % per
cent in prices.
Normally the entire taxes paid on
each turnover are shifted and rest
finally on the ultimate consumer
said Senator Smoot at can be
demonstrated with mathematical ac-
curacy that even with half dozen
turnovers, and Che corresponding
per cent taxes, the price Of commod
tiles to the ultimate consumer y
very rarely increased. over az ger
cent