The Republican journal. [volume] (Belfast, Me.) 1829-current, 1921-06-02
The Proposed Sales Tax
BY II. H. Windsor, in the June Popular
Mechanics Magazine.

! The Financial World" says: sit is not
overtaxation that is burdening the world
and stopping its rehabilitation as much as
it is burdensome, unwise and inequitable
taxation" If business is to recover, it is
absolutely necessary to repeal the present
absurd, exasperating, unjust, and expen-
sive system without delay. A member of
the Finance Committee of the House said
to me: '1n my judgment the present sys.
tenn adds fully 20 per cent to the selling
cost of merchandise, taken as a whole "
| At present it costs the Government mil
lions a year to collect the tax-and it does
/ not get near all of it at that. 1t costs the
taxpayers many more millions for time,
attorneys, and experts to make out the
annual reports. Even then, no one knows
for several years whether the report is
right-from the revenue departments
point of view.
1t is needless to 60 into details of the
exasperations of the present system:
Every taxpayer, large and small alike, is
agreed as to this. The question then re-
solves into, "What is better method2"
Several bills have already been intro
duced in the present Congress to substi-
tute "sales tax" This has aroused the
most vitriolic and frantic objection on
the part of a few congressman. They
! have not, so far, offered sound reasons
for their disapproval, although supported
in their attitude by some college profess
sors, and to some extent by the Secretary
of the Treasury. Perhaps the best ex-
PLANTATION of sales tax is that written
by an eminent financier, Jules S, Bache,
who suggests the following general plan:
A tax of per cent to be paid monthly
on the actual receipts of all engaged in
business, with an exemption of all small
businesses collecting $4,000, or less, per
year. Any grammar school boy can make
up the monthly report for the largest
concern; he takes the total amount col
lected and if it exceeds $500 he points off
two figures. On monthly collection of
$4,000, this would be 500. If some
months exceed $500 and others fall be-
low, refund is made at the end of the
year if the total II months reports do
not exceed $4,000 The monthly payment
would prevent the heavy quarterly Dor
rowing at banks, now necessary to many,
and the government, by reason of this
steady, regular flow of money, need not
issue the short time Certificates" as at
present, on which interest has to be paid.
The 1 per cent is estimated by careful
/ financiers to produce between So, $780, 000,-
900 and $1,000, O000 900, probably about
5,000 600, 600; this. with the tobacco tax
of $500, 900, 900 and the equal amount now
collected from personal incomes, should
produce the enormous revenue of Sc, 000,-
900, 900 annually. With any sort of econo-
my this would be more than required in
peace times,
The average increase in the selling cost
of merchandise does not figure over ia
per cent, from the raw material to con-
sumner, against the 20 per cent being add
ed at present to anticipate the excess
income tax in force. On $50 article,
such as a suit of clothes, the sales tax
would be so cents. Distributed between
wool grower, mill, wholesaler, and retail
er. the suit could still sell for $50. On
the multitude of small purchases of one
dollar or less, the / per cent is so small,
it could not increase the retail price, yet
would not be burden on the seller, who
would gladly absorb it, as his yearly tax
would be less than at present The Hill
noiS Credit Association voted against
sales tax, on the ground that many DEAL
ers were now selling at less than cost the
goods bought by them at war prices. But
should a postwar condition, which is
unlikely to occur again for years, we
hope never, stand in the way of a lasting
improvement? And anyway the sales
tax could not go into operation this year,
and readjustments should be pretty well
accomplished within II months. Admit
teddy, a sales tax would not be welcome
to a business being run at a loss, which
now pays no taxes On the other hand,
the business of the country is run at
profit, and a losing business cannot last
very long in any event. The payment of
$40, 900 on annual receipts Of $1,000, 900
/,
if that million receipts showed loss. No
tax system can ever be devised which
does not hit here and there. The present
one seems to hit everywhere and is full
of injustice and inequalities, for which
there has been and is no relief whatever
The best test of anything is the verdict
of those who have used it. A sales tax
of / per cent has been in force in the
Philippine Islands for the past Is years.
For the first few months it was unpopu-
lar, but ever since it has met with uRl-
versal approval. Any tax system which
is allowed to continue for Is years IN
country where the taxpayers have any
voice in the matter, must be pretty good.
The Fllpinos even have under consldera-
ton at the present time an increase IN
the rate to 2 per cent, In substitution Tor
all other taxes of every kind. 1t may
dent our pride as tlnanciers to borrow
tax system from our distant dependents,
who, in years past, have had more pub
lcity as head hunters than economists,
but isIit reasonable to suppose they enjoy
taxpaying any more than we, and there
is the record of Is consecutive years as
evidence. Whatever our views, we can't
I"get away from those Is years of SATISFIED
taxpaying. ,
Of course it cannot be denied that skill
ed accountants are hardly necessary to
check off the two points, nor that an
audit of firms books could ordinarily
be made in as many hours as it now re-
quires days. The department is steadily
falling behind (the reports for 1913 have
Just been reached, and this means still
further increase in help. With the sales
tax. the greater part of this work wouid
vanish, and most of what remains can De
performed by much less experienced and
less expensive clerks Some would SUN
try to evade their tax, but it would pe
incomparably easier to detect them' ana
after all not so many of US are unpatrlotic
or trying to flimflam our Uncle Samuel.
Remember the Is years.