The Washington times., 1931-09-02
SALE TAX SEEN
. ASFRU|T Of
SLUMP
Revenue Lack Expected to
Force Drastic Step from
Which Republicans Shrink
By WILLIAM C. MURPHY, JR

By WILLIAM C. MURPHY, JR.
A fundamental revision of the
Federal taxation system-possibly
including some form of sales tax
is coming to be regarded as an
almost inevitable result Of the
present economic depression.
While an ingrained distaste for
tinkering with revenue laws on
the eve of a presidential election
may deter political leaders of
both parties from attempting
such a revision during the COM
ing session of Congress, there is
unmiStakable evidence that the
project is being given cOnsidera.
ton in high quarters.
Hints that a tax revision is
advisable have been dropped by
Secretary Mellon and Under-Sec.
retary Mills of the Treasury De.
partment and it is known that a
corps of experts have been at
work for several years trying to
devise the ideal tax system.
Conclusions Secret
What conclusions, if any, have
been reached by these experts is
still a carefully guarded secret
but it is known the consensus is
that the present system is en-
tirely too susceptible to fluctua
tionS,
BY far the greater portion OF
the Federal Governments income
at present is derived from income
and corporation taxes.
These are essentially taxes on
profits. Hence in periods of de,
preston, when profits shrink OF
vanish, the revenue derived from
this source suffers a correspond.
ing decrease. That is the reason
advanced for the present $1,000,.
100000 deficit.
This situation is regarded as
fundamentally undesirable be.
cause it is in just such periods
that the expenditures of the gov.
ernllent are likely to be stimu-
lated, as at present, through puo-
lie works projects and other
methods designed to relieve the
pressure Of unemployment.
Sales Tax AS Offset
Socalled unearned income,
which theoretically is taxed at
higher rate than earned income,
has largely escaped its share of
the burden through investments
in tax exempt securities.
Hence the problem is to find
some method Of taxation which
would be immune from the fluc.
tuatiOns of the present system.
Here is where the sales tax in
one form or another suggests
itself.
The stability of revenues de.
rived by many States through
sales taxes on gasoline, for ex
ample, has been cited as an illus.
tration of how this method is
unaffected by periods of depres.
sion or initiation.
Stamp taxes on documents of
everyday and essential use in the
normal transactions of business
have also been suggested.
Much Up To Clifford
1t is believed the Administration
would be extremely reluctant to
recommend tax increases during
the coming session, although the
possibility Of such action is not to
be entirely diSregarded.
Much depends upon the ability
of the Federal Government ia
handle its unemployment relief
burden through funds raised BY
private contributions as proposed
by Walter S. Clifford, President
HOOver's new relief chief.
Mr.. Hoover has made no secret
Of his opposition to Federal ap
preparations for direct relief. II
is assumed his attitude is un
changed.
However. recent declarations
from leading Republicans-in
Guiding the ultra-administration
iSt, Senator Reed Smoot ol
Utah-h.ave emphasized the ides
that a government cannot allow
it's citizens to starve. Whether
such straws indicate which way
the wind is blowing at the White
House is not likely to be revealed
until Congress meets.