The New York herald. [volume] (New York, N.Y.) 1920-1924, 1921-09-01
Senator S.noot's Tax Plan.


measurably better in its economics
than the revenue bill passed by the
House is the substitute tax pro-
gramme outlined at Washington on
/ Tuesday by Senator SMooT, and which
he will shortly put before the SEN
ate Finance Committee. In charac-
teristic fashion the Senator from
I Utah grasps the revenue situation
as one big concrete problem to be
solved by an equally substantial and
coherent revenue plan.
He proposes six methods of raising
\ revenue. All the present tax legis-
lation would be repealed. IN its place
would be substituted 8 per cent.
sales tax on manufactured products
20 be levied only on original sales
by manufacturers; an individual in
come tax. with 32 per cent. as
\ maximum, yielding about sS30,0o0,-
| 600; straight 10 per cent. tax on
net profits of corporations, yielding
about s445, 1000, ZOO; tobacco taxes and
estate taxes unchanged, yielding to-
| gether about S405, 100000. The yield
from the manufacturers sales tax,
estimated at S1,20O,oo0,o00 would
bring the total revenue from ali these
sources up to S2,Ss0.0o0, 000 From
] import duties Senator SMooT ex-
poets the Government to receive not
more than s400,00o,0o0. From other
sources an additional S615, 900 is
anticipated, bringing total revenue
for the year up to $685., 200, 900.
This, with postal receipts, Senator
SMooT estimates, will cover all ex-
penditures, including some still to be
authorized, and leave possibly $780,
100000 as q surplus.
The plan is simplicity itself. The
transportation tax, the excess profits
tax and the supertax on incomes,
and the nuisance taxes on soda foun-
tain drinks, &C., are discarded. The
repeal of the excess profits tax and
the supertax on incomes is retroac-
tive to the first of this year. the sales
tax taking their places.
The yield of the House bill is
estimated at s3,347, 100000, but this
is contingent on receipts from the
present income and excess profits
schedules, which cannot be accurately
gnuged. The House bill repeats
higher schedules of the income tax
and the excess profits taxes next year
without providing substitute. Thus
the business world would face the
uncertainty of another and probably
more sweeping revision Of the Fed
eral tax laws in 1922, for 1t is prac-
tically certain that with all the ex-
emptions provided In the House bill
new sources Of revenue would have
| to be found.
| Senator SMooT is and has been
positive In his opinion that the adop-
ton of the sales tax in one form or
another would have to come. In this
THE NEW York HERALD completely
agrees with him. Only a few days
ago the report on internal revenue
receipts revealed a decline for the
| fiscal year 1921 OF sS12, 100000 from
the figure for the previous fiscal year
and an increase from 55 cents to SIS
cents in the cost of collecting each
| 500 in taxes and other revenues.
The inference is plain enough.
| There has been no reduction In tax
percentages, but the main sources
OF revenue, the income and profits
taxes, have diminished. 1t required
| just as large staff to make the
smaller collections, so the cost Of
administration in proportion to re.
ceipts was enormously higher.
Senator SMooT's plan provides In
the sales tax a stable source OF reve-
nue. with minimum fluctuations
under all degrees of business pros
perity or depression. The manufac-
turers sales tax can be checked up
by simply referring to their sales. The
large staff now required to investi-
gate returns to the Treasury could
be we'll nigh wiped out.
Furthermore. IL the Smoot plan is
adopted, there will be no need for
sweeping tax revision next year.
With minor alterations az needed
from time to time the plan would
serve for several years TO provide
necessary revenue for the Govern
ment with q minimum of disturbance
to the nations industries.
THE NEW York HERALD warmly
compliments Senator SmooT on the
clarity, the simplicity and the practi
cality OF this plan for raising reve-
nue.. 1t is wise: 1t comes from a
craftsmanship of a high order.
Faulty Insulation.