The New York herald., 1921-07-30
What a Spending Tax Might Do.

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The following letter on taxes in
general. the proposed spending tax
In particular, merits comment:
Relative to the spending TAX pro-
posed by Representative MILLS and
to your interesting editorial thereon,
may express the hope that tho
writer Of the editorial will give the
public his Views Of the limit Of ex-
emptions and the rate OF a spend
ing tax which might be expected to
produce the necessary tax ana per-
NIT the repeal Of taxes which are
generally agreed to be oppressive and
dangerous?
Assuming a national income Of
forty-hve billion dollars, of which
one-half was spent, It would appear
that. aside from the normal income
tax and certain other revenues of the
Government. the spending tax rates
would have to be rather high. But
It seems. on the other hand, to be
quite probable that It would be in
the long run much more economical
TO pay directly a considerable tax
than for the private citizen to pay a
small tax direct. while his other spend
ings included concealed in them excess
profit taxes. with an additional bonus
to various individuals who not only
passed the tax along but added to It
profit to themselves.
After all, It is the whole people
who are concerned in paying tho
taxes and no legerdsmain can pluck
them out of thin air without depict
ing the private pocketbook.
CHARLES e. MANrExRr..
Unless It were exorbitant in the
higher grades undoubtedly a spend
ing tax, to produce any considerable
revenue. would need to take In ali
spendings. The exemptions would
have to be sharply limited. The grad
uated increases would have to begir
far down.
OF the abnormal national income
of forty-five billions of dollars, the
and nine-tenths public's
share may be estimated at forty bill
ions. Perhaps thirty billions of 1,
might be classed as going into or
dinary spendings. Obviously so small
a tax as per cent. on thirty bill
ions of dollars Of spendings would
produce 100000, ,00o--if It could b,
collected.
That per cent. tax apparently
would mean no more than three
quarters Of 1 per cent. out Of the
average income Of more than 80 pei
cent. Of the population. That is Il
say, out Of the average income ol
$4,000 there would be tax due, or
spendings Of perhaps $1,000, SIS
one dollar and quarter a month
Every family now pays more thar
that several times over in multiplied
and concealed exactions smugglec
into prices under the pretence OF GOV
ering taxes but much of IL not 20
ing, as a matter of fact, into the ma
tional treasury at all.
Beginning a graduated increase oi
the spending tax not later than at tho
probable $500 OF ordinary spendings
out of the $4,000 Of income thert
might be gathered a large amount or
the way up to $4,000 incomes and
$4,000 spendings without anybody be
ing hurt. An additional tax Of
say, per cent. on the spendings OF
persons with such incomes would be
likely to represent average incomes
In that whole class OF $3,500 and av
erage spendings of $4,000. BY tho
1919 Government income tax figures
there were indicated approximately
100000 returns in that class. This
superimposed tax averaging per
cent. on the spendines of 1000, ,00C
persons averaging $4,000 and totalline