Evening star., 1928-03-23
AUTO TAX BATTLE
OPENS IN SENATE
Repeal of Sales Levy Sought
Despite MELONS Desire to
Retain Principle.
BY DAVID LAWRENCE.

The battle for the repeal of the tax
on automobile sales has opened in the
Senate. President Coolidge and Secre-
tary Mellon are against repeal. but on
the other side are the automobile COM
panies and organizations of automobile
and truck owners. The total influence
of the latter was sufficient to cause
I'll House to eliminate the auto tax
from the revenue BILL and there are in
dications that the Senate may do like
wise.
The item involves a reduction in taxes
of about $68,000,000, but curiously
enough the amount is not the chief
subject at issue on either side of the
controversy. The Treasury is inSistent
that taxing sales of automobiles Is a
form OF taxation that should not be
abolished and that the principle of a
sales tax should he retained in Ameri-
cas- taxation system. 1t Is contended
by Secretary Mellon, for instance, that
II 1t ever should be necessary to meet
possible deficit by increasing taxes,
the very first thought that would enter
the congressional mind would be to in
crease the corporation tax, and that this
would affect the automobile companies
Tar more than tax spread out so eX-
tensively on automobile sales.
Easy in Emergency.
In line with this idea Is the actual
experience of the Treasury with Con-
greSs in the last two years. when the
corporation tax was increased over the
protest Of business generally. And now
the corporations. while having no diff
Guilty in getting the corporation tax
back to where it was before, neverthe-
less, know that this form of taxation is
one that can be put back in an emer-
gency much easier than any other.
The Treasury argues that an automo-
bile. tax is relatively easy to bear; that
1t represents small outlay compared to
the total outlay for new car and that
1t is not paid by the manufacturer, but
by the consumer. On the other hand,
the automobile companies have felt
that certain stimulus toward buying
machines would come If the total cost
to the consumer were reduced by the
amount of the tax. While there might
be a tendency to agree with the Treas
ury on the abstract theory of taxa
ton. the practical aspect of an auto
mobile world engaged in the most seri-
Gus era of competition it has ever
faced--a competition involving the alb
sorption of used cars to make way for
new cars--is at the moment the gov
erning FACTOR.
Cite LUXURY Tax Repeats.
In opposition to the idea of the Treas
ury too, that the auto tax is lux
ury" levy, the automobile companies in
sist that the removal of the tax on
candy. jewelry and motion pictures es-
tablishes precedent.
The administration will make real
effort in the Senate TO block the repeal
OF tn tax on the ground that the as
sessment is not felt by the public gen.
orally and is method of taxation that
should be retained. It Is known. how
ever, that the automobile owners aSSo-
Citations and various other bodies are So
we'll organized in congressional districts
that the pressure on the House was
such that an overwhelming vote was
cast in favor of repeal The Senate is
being canvassed at present in much the
same way. and the prospect is that If
any tax bill is passed II will carry re-
peal of the auto tax, effective imme-
diately on the signing Of the new reve-
nue. law.
tCopyrght. 1a2sl