The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1921-07-11
WORKING OF A SALES TAX.

When the wholesale merchants in
Canada recently expressed objections
to certain changes in the administra-
ton of the sales tax, chiefly on the
ground that in the keen competition
for business that is likely to result
there would be a strong tendency. es-
pecially on the part of new firms, to
absorb the tax instead of passing 1T
on directly to the consumer" side
in this controversy beneficial to the
consumer was revealed. says the
Christian Science Monitor. The atti-
tude Of the Canadian wholesalers
shows one of the collateral possibili-
ties of the tax now being considered
in the United States. Since the most
interesting phase of the question is
the actual result for the consumer in
terms of total price, including the tax,
this angle is of the utmost importance
in determining the intrinsic merit of
the sales tax. In a further discussion
of the sales tax the Monitor says:
The consumer is more particularly
concerned with the actual price of an
article than with the ways and means
of apportioning the tax. 1t is neces-
saRy to remember that the sales tax,
as proposed in the United States by
Senator Smoot, is in lieu of the excess
profits tax. In either case the con-
sumner pays the tax, SO there is no
weight to the argument that this pro-
posed exchange would transfer the tax
from the rich to tho poor. The prob
lem is to work out a tax plan SO that
each individual shall bear the pro-
portional share of governmental ex-
nonGpl that hn la hast alba fn 0as -y-Hr
Therefore, when a sales tax is pro-
posed in place of an excess profits tax.
as in the United States, or substituted
for a business profits tax, as in Can
ada, the consideration must be kept
directly to that angle of the whole
! problem, and not be permitted to be
camouflaged with irrelevant talk
about the sales tax replacing all other
taxes.
In Canada the income tax remains
| a remunerative source of revenue, as
| it undoubtedly VIII in the United
States, where there is talk of modify
ing the higher surtaxes. These, how
ever, are entirely apart from the spe-
cific substitution of the sales tax for
the excess profits tax, which the pub
lie now pays, but which the govern
ment does not always collect because
it is too easily concealed in some 9TH
er guise. By the sales tax plan it is
! conceded to be easier, theoretically at
least, to collect on the definite amount
Of sales, and 100 per cent collection
is a highly desirable achievement.
Since the consumer must pay any,
way, his interest is to make the levy.
including the cost of articles, as low
as possible. The statement of the
wholesalers is a convincing indication
of the possibility of competition help
forcing the sellers to absorb the ia :
instead of passing it directly on to the
consumer. The consumer naturally
prefers to pay 81 for given article
that the dealer finds he can sell for
that price after absorbing the tax
himself, perhaps because he is freed
from the previous excess profits tax.
The automatic graduation of the
sales tax is q feature strongly advo-
Gated by some proponents of the plan,
Instead of transferring the burden
from the wealthy to the poor, it Is
pointed out that the family spending
$1,000 a year pays on that amount,
while the family that spends at the
rate OF 100000 a year is required to
pay one hundred times as much, with
little opportunity Of evasion. Thus at
least two important practices, thrift
and competition, might be encouraged
by the sales tax plan.
4