Evening star., 1921-10-04
BOTH PARTIES FACE
AN INTERNAL CRISIS
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significance of Senator Smoots ad-
vocacy of sales tax at the very time
when the republican leadership of the
House is sticking to the older methods
Of taxation is just becoming clear.
Sales Tax Encouraged.
Senator Smoot is a stanch friend
Of Mr.. Harding. He Is not the kind
to throw monkey wrenches into the
machinery of republican progress. He
would not be campaigning a sales tax
If he did not have encouragement
from the White House. He has lined
up behind 1t also about twenty-one
republican senators, most of whom
are well known as members of the
inner circle of the administration.
Postmaster General Will Hayes in a
recent speech at Cleveland said kind
words for the sales tax, though he
doubted whether it could be applied
at once. Broadly speaking, there is
more sympathy for the Smoot pro-
gram than is admitted at the White
House.
One explanation for the reluctance
of Mr.. Harding to commit himself on
the subject is that from the first he
felt he ought to keep an open mind
and permit the situation to develop
without executive suggestion. The
sales tax has been variously pro-
nounced as politically dangerous and
economically unsound. The prejudice
on the latter ground is slowly being
overcome, but republican leaders in
the House still insist that no sales
tax can be devised which will not
pass the burden on to the ultimate
consumer, in which case the Ameri-
can people might show their resent
ment at the polls a year hence.
Demand Repeal of Frefxht Tax.
The affinity for sales tax among
administration republicans proceeds.
however, from another set of circum-
stances. The farmer-labor group is
determined to see that the taxes on
transportation, especially freights,
are repealed at once. That knocks
out about s131,000.O00. which will
have to be made up somewhere else.
Those who want to see the excess
profits taxes and the higher surtaxes
repealed are fearful lest the farmer
labor group insist that the deficit be
made up out of those two items.
The sudden turn to sales tax is
really based upon the theory that
if the farmer-labor group will agree
to it they can gracefully withdraw
their opposition to the repeal Of the
excess profits tax because the sales
tax idea is designed to- do away
with all sorts OF taxation and reduce
the whole formula to collections
from only four or ffve sources of
revenue.
But the agricultural and labor bloc
is not ready to agree. Republican
Leader Monde1l, who knows the SEN
timent of the House, Is urging that
the House bill be passed by the Sem
ate because he fears the House will
never approve a sales tax. The fight
may be settled in the Senate, but
there Is good chance that in the end
conference committee Of both
houses may have to write the tax bill.
Senator Smoot is making real
fight for the sales tax. He says the
House bill merely relieves the small
taxpayer whose income is $1,000 or
under and benefits the man with an
income above $65,000 year, and
places the real burden on that large
class of progressive business men
whose incomes are between 5000 and
SIS, 900 year, and on whom the coun-
try depends for the maintenance of
business conditions. the men whose
initiative has given employment to
an army of workers and who are
prevented today from expanding be-
cause of the excess profits and other
strangling taxes The agricultural
and labor republicans are arresting
the efforts of the conservative repub-
licans who believe the tax program
must be written from the viewpoint
of stimulating business as whole.
rather than by trying to satisfy
groups and classes.
Copyright, 1921