The Republican journal., 1921-06-02
THE SALES TAX

The bill to provide for Sales Tax was
introduced several weeks ago by Senator
Smoot of Utah. This matter is of great
Importance and, although public senti-
ment seems to be favorable to the enact
ment of this bill, few people have any
definite knowledge concerning its pro-
visions and requirements. They have
become thoroughly disguised with the
tax on ice cream, soft drinks, passenger
tickets and other petty taxes. They
know that the income tax and the excess
of vast amounts of capital from business
and it's retirement into government Sc
curities. They favor the sales tax be-
ieving it can be no worse and Eoping it
may be better.
The Sales Tax is not entirely an eX-
pertinent. 1t has been in operation in the
Philippines for sixteen years. The testi-
rnony of the Philippine Government and
of prominent merchants having offices in
Manila and New York is, in substance,
that the Sales Tax is equitable, produce
tive, simple and economical in admins
Eraton and collection. This cannot be
truthfully said of our income tax nor the
excess profits tax.
Under Title IL, Section POI of Senator
sSmoot's bill it is provided that "there
shall be levied, assessed, collected and
paid upon all goods, Ewares or merchan-
disc sold or leased On or after July 1,
1921, a tax equivalent to / per cent of
the price for which SO sold or leased; such
tax to be paid by the vendor OF lessor"
In computing the tax due under this title
every tax payer shall be entitled to an
annual exemption of Sc, 900. Few of our
farmers will have to pay tax on their
sales under this law. On every thing
they buy for themselves, their families
or for use on the farm, as ultimate pur-
chasers, they will have to pay sales tax
on every turn over from the raw material
to the finished product. To illustrate
Suppose a man buys a suit of all wool
clothes and pays 500 for it. Beginning
with the raw wool, which sold to the
wool dealer would cost him about Sc so;
sales tax would be .O65 cents. The wool
dealer scours the wool and sells it to the
spinner for 50; tax .08 cents. The spin
ner converts it into yarn and sells it to
the manufacturer for $40; tax 10 cents.
The manufacturer weaves it into cloth
and sells IL yards at 81 a yard to the
tailor for $14; tax IA cents. Tailor buys
Innings, trimmings, ETC., for So; sales tax
and turn over tax on these, is cents.
Then he makes suit and sells it to retailer
for $45; tax As cents Suit sold to GUS
Goner for 500; sales tax 90 cents Total
of sales taxes Sl615.
The Sales Tax will be computed and
paid quarterly by each seller who will
keep a daily sales account on blanks fur
nish ed by the Revenue d partment. The
&otals for the quarter, less exemption,
will show how much tax he has to pay
The extreme simplicity of assessment
and collection OF this tax will vastly les
sen the expense of employing costly exc
perts and auditors. 1t will of course take
a great deal of money from the pockets
of the people and will be burdensome and
to some extent unsatisfactory. On the
other hand, if it is enacted, we shall be
well rid of the petty, irritating an dis
crimi mating tax, which now amount to
several hundred million dollars every
wear. We shall see the last of the excess
profits tax which gives an official, per-
rnissive wink to the profiteers. We hope
that it will produce sufficient revenue to
warrant Congress in putting decent and
income tax law in place
of the present ill-advised, enigmatical
and expensive monstIosity.