Evening star., 1921-10-09
PROPOSED SALES TAX
HAS GROWN IN FAVOR
Under Senator Smoot's Plan, Manufac-
turers and Producers Will Bear Burden,
Products Worth $4,000 Being Exemp pit.


$62. .50O.0 100000. This census covered
ISL classifcatiops of manufactured
goods. Not all this production would
be taxable under the Smoot plan. In
the first place, there is the exemption
Of $4,000 a year for each producer
and manufacturer. Then there Is the
exemption of goods produced for .ex-
port to foreign countries. Under the
Constitution. it is not possible to levy
tax on. them. it is held. Tobacco.
liquor, the products of public utili-
ties companies, gas, electric light,
power, etc, do not come under this
tax. nor do the newspapers. But it is
estimated that approximately $40,-
oo0,0oo,0O0 worth OF. products in this
country would be taxable.
No Tax on Service.
1t may be mentioned here that serv-
ices rendered-such as transportation
are not covered by this proposed
tax. A distinction is made between
service" and Consumption and use"
Newspapers. for instance, are held to
render "service"-the service of pre-
senting to the public news matter and
advertisements, and therefore would
not pay the tax. But the tax would
be paid upon the news print paper sold
to the newspapers. upon the ink and
other materials used in producing a
newspaper.
In estimating the revenue to be de-
rived from the proposed tax, the farm
products as such have practically
been eliminated. because of the $4,000
exemption allowed each producer,
and because many Of these farm
products are raw materials and are
consumption.
The imposition Of the tax upon
imported goods is to prevent any ad-
vantage to the foreign producers and
manufacturers which they might de-
rive from the levy of such a tax on
American producers and manufactur-
ers if they themselves were exempt
from the tax when their goods come
into competition with the home prod
uct. On the other hand, American
goods going into competition with
foreign goods abroad will not be sub
Ject to the tax, and therefore will be
able to compete without that han
dicap.
The sales tax, as now proposed by
Senator Smoot. is simpler than the
sales tax in Canada, and also more
simple than the tax imposed in the
Philippine Islands. which has proved
markedly successful. 1t is the. be-
lief Of Senator Smoot and other sup
porters that, even If the plan be de-
feated now, it will eventually be
adopted by Congress because Of it's
simplicity and it's fairness. 90
Paid Only Once By Consumer.
The tax will be passed along to the
consumer. Every tax is. But the
advantage of this is that it can be
passed along only once, since it is
levied only on the last sale to the
merchant who is to put it out for
consumption. While critics of the
plan have declared that it will be
difficult to collect such a tax, it's sup
porters point out that the Treasury
Department already has had expert
ence in handling the taxes upon vari-
out manufacturers under the present
law, and is well equipped to deal with
the matter. Moreover, they claim that
it will be possible to collect this tax
with far less federal agents than are
now employed in handling all the So
called nuisance taxes.
Under the plan all manufacturers
will be taxed. instead Of those now
singled out by law. While the miller
will have to pay the tax on flour.
bread should not increase in price.
for the excess profits tax now levied
on the miller and the baker will be
eliminated and the excess profits
taxes have been passed along to the
consumer in magnif1ed form.
Senator Smoot has been deluged
with letters and kilograms from all
parts of the country, from individuals
and from corporations. expressing ap-
proval of the manufacturers and pro-
ducers' tax as now drafted. The
business world. on the whole, appears
to have approved of the proposed
system, and the general public, SO
far as it has been educated in regard
to the real meaning of the proposed
change in the tax system, apparently
has approved. too.