, 1923-10-23
The Consumer and the Tax

-. ujdesnread misconception concerning
the identity of taxpayers Ii illustrates ny ~
cent remark by the Charlotte, NORTH OaroH rna
Observer. The Observer says that "Nortn Oai,
oIina pays one-third of all the tobacco taxes OF
the union,s Probably the editor did not really
mean what he said, but II his statement was ms
tended to be taken literally, ne was cerlaLny
far from the facts. His remark Is unimportanI
IN itself but as an indication of erroneous IDEAS
of the distribution of the burden OF taxation IL
is highly significant
1t has been frequently stated that the great
burden of the income tax, for example, rails
mon New York and Chicago. 1t is true, quite
probably, that one-third Of the tobacco tax Is
collected by the government in the state Oh
North Carolina. 1t is also true that a very large
0roportion of the income tax is collected py the
government from residents of New York and
Chicago. It does not follow, however, that North
Carolina ultimately pays the tobacco tax or tnat
New York and Chicago ultimately pay the great
bulk of the income tax.
Everyone knows that the tax on tobacco is,
and in the nature of things must be, added to
the price of the commodity when sold TO the
consumer and the consumer In reality pays the
tax. That is true under any sort OF excise law
In the old days, when We had the licensed sa'
loon. it was not the saloonkeeper who paid the
license fee TO the local government or the Unit
ed States revenue tax, but the consumer OF the
liquor. In Just exactly the same way income
taxes are figured as one of the costs of doing
business. They are included in the IN OF
costs Just as fuel and lighting and rent are in
Guided. They are clements of fixing the price at
which commodities shall be sold or services
rendered and the consumer of commodities or
the buyer of services pays the tax along with
his bill.
It is possible for people to avoid paying n to-
bacco tax by refusing to use tobacco. 1t was pos
sible for people TO avooid paying the liquor tax
by refusing to consume liquor. 1t is not possible
for the people in general to avoid the indirect
payment of the income tax or an excess profits
tax for the reason that this is added to the price
of such n large variety of commodities and in
such an indirect and unknown way that the peo-
pie in general can not avoid paying, some time
or other, their due share of the tax.
There is only ono practical way in which tax.
payers may be certain Of escaping the burden of
the income tax and that is to have the tax re-
pealed. So long as it is imposed, even though an
effort is made to impose it in such a discrim-
mating way as to make it bear upon some peo-
pie more than others, ultimately there will be
nm adjustment so that each and all of us will be
called upon to pay our due proportion.
1t is understood that Secretary Mellon will
recommend a reduction of income taxes ON both
large and small taxpayers. There is opposition
TO this and in some circles it is proposed that
instead of repeating some of the taxes or reduc
ing them, new excess profits taxes shall be i'm
posed. This proposal is based upon tho belief
that thereby "A few people will lie singled out ms
PAYERS OF the tax. Such n theory is manifestly
unsound. In the first year after such a tax is
imposed IL may accomplish its purpose. Soon
however, prices will be adjusted so that the tax
will be added to the price and the consumer
will pay. Secretary Mellon has the only sure
scheme for the lifting of the burden of taxation
the reduction of tax rates.