The Glasgow courier. [volume] (Glasgow, Mont.) 1913-current, 1921-05-20
The Proposed Sales Tax
By H. H. WINDSOR, in the June Popular
~ Mechanics Magazine

The Financial World" says: at i
not overtaxation that is burdening tn
world and stepping its rehabilitation
as much as it is burdensome, unwis
and inequitable taxation" If bushes
is to recover, it is absolutely neces
sary to repeal the present absurd, ex
a%sperating, unjust and expensive sys
tenn without delay. A member Of tn
Finance Committee of the House SAT-
to me: ain my judgment the presen
system adds fully 20 per cent to tn
selling cost of merchandise, taken al
a whole" At present it costs thu
Government millions a year to collec
the tax-and it does not get near al
of it at that. 1t costs the taxpayers
many more millions for time, attor
e and experts to make out the an
nual reports. Even then, no n knows
for several years whether or no the
report is ~right-from the revenue de.
partment's point of view.
1t is needless to go into details OF
the e~xasperations of the present sys-
tenn: Every taxpayer, large and small
alike, is agreed as to this. The ques-
ton then resolves itself into, "What
is a better method?"
several DlllS lave diIcduy UccH II
troduced in the present Congress to
substitute a "saies tax" This has
aroused the most vitriolic and frantic
objection on the part of a few con-
gressmen. They have not, so far, Of
fered sound reasons for their dis
approval, although supported in their
attitude by some college professors,
and to some extent by the Secretary
of the Treasury. Perhaps the best
explanation of a sales tax is that writ
ten by an eminent financier, Jules S.
Bache, who suggests the following
general plan:
A tax of 1 per cent to be paid
monthly on the actual receipts Of all
engaged in business, with an exemp-
ton of all small businesses collecting
$4,000, or less, per year. Any gram
mar-school boy can make up the
monthly report for the largest con-
Germ, he takes the total amount col
lected and if it exceeds $500 he points
off two figures. On a monthly col
lection Of $4,000, this would be 500.
If some months exceed $500 and others
fall below, a refund is made at the
end of the year if the total IL months
reports do not exceed $4,000. The
monthly payment would prevent the
heavy quarterly borrowing at banks,
now necessary to many, and the gov
eminent, 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 l percent is estimated by
careful financiers to produce between
SO, 500, 900 900 and $1,000, 900 900,
probably about $4,000, 900 900; this,
with the tobacco tax of $500 900 900
and the equal amount now collected
from personal incomes, should pro-
duce the enormous revenue of $6,OOO,-
O00, 900 annually. With any sort of
economy this would be more than re-
quired in peace times.
The average increase in the selling
cost of merchandise does not figure
ove 3A per cent, from raw material
to consumer, against the 20 per cent
being added at present to anticipate
the exceSs-income tax in force. On a
$50 article, such as a suit of clothes,
the sales tax would be so cents. Dis
tributed between wool grower, mill,
wholesaler, and retailer, the suit could
still sell for $50. On the multitude
of small purchases of one dollar or
less, the 1 per cent is so small, it
could not increase the retail price,
yet would not be a burden on the sell
er, who would gladly absorb it, as his
yearly tax would be less than at pres
ent. The Illinois credit association
voted against a sales tax, on the
ground that many dealers 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 last
ing improvement? And anyway, the
sales tax could not go into operation
this year, and readjustments should
be pretty we'll accomplished within IL
months. Admittedly, a sales tax would
not be welcome to a business run at
a loss, which now pays no taxes. On
the other hand, the business of the
country is run at a profit, and a los
ing business cannot last very long in
any event. The payment of $4,000
on annual receipts of 81 700, 900 would
make very little difference, ever if
that million receipts showed a loss.
No tax system can ever be devised
which does not hit here and there. The
present one seems to hit everywhere
and is so full of injustice and Unequal
tiles, 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 l per cent has been in
force in the Philippine Islands for the
past Is years. For the first few
months it was unpopular, but ever
since it has met with universal APP
prevail. Any tax system which is al
lowed to continue for Is years in Il
country where the taxpayers have any
voice in the matter, must be pretty
good. The Filipinos V have under
consideration at the present time an
increase in the rate to 2 per cent, in
substitution for all other taxes of
every kind. 1t may dent our pride
as financiers to borrow a tax system
from our distant dependents, who, in
years past, have had more publicity
as head hunters than economists, but
is it 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 get away from those
Is years of satisfied taXpaying.
Of course it cannot be denied that
skilled accountants are hardly neces-
sary to check off the two points, nor
that an audit of a firms books could
ordinarily be made in as many hours
as it now requires days. The depart
ment is steadily falling behind (the