Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-20
UNIT TAX DECISION
HITS CHAIN OWNERS
Defense Suggested Volume
of Business as Better
Basis for Revenue.
BY JOHN r. SINCLAIR.


NEW YORK, May 20 (N.AN.A).-
Chain store owners and operators were
left dazed by the decision of the United
States Supreme Court Monday that a
unit basis of taxation, based on the
number OF stores, Is legal. The case
in question was an action between La
fayette Jackson, owner OF 225 grocery
stores In Indiana, and the Legislature
of that State over the license tax.
The Indiana law requires SO license
fee for one store, and $40 for every adj
ditional store up to 10. From IL to 20
stores, the fee Is $40 per store. while
over that total 1t is $25 for each store.
The tax derived in this way has been fur
nishing the State with almost 100000
for its public school funds.
The case was fought on the issue OF
discrimination. The largest department
store in Indianapolis, which does more
business than Jackson in his 225 stores,
pays only the SO tax fee. The plaintiffs
counsel pointed out that more just re-
suit would De achieved If the State based
its license fee on volume OF business.
This point was also made in the opinion
filed by the dissenting minority Of the
justices.
IF unit taxation of this kind is per-
mitted," said one of the largest chain
store owners, where will it end? It is
not the modest Indiana fee itself which
we are opposed to, but the principle in
Volved. OF course, this tax will apply to
gas stations. tire shops, drug stores, cigar
even hot dog stands!
Meanwhile the big one-store fellows In
the cities get of with a SO fee
There has been much discussion of
late concerning faulty distribution of
goods profits and production Under
the astute direction of Carleton H.
Palmer, president of E. r. Squibb a.
Sons, that company has worked out a
plan to overcome the evil.
It Is called the Squibb plan and is
regularly incorporated as a separate in
stitudon. This organization holds all
the assets OF the company in the way
OF common stock, sales revenue and
dividends. Preferred shares are divided
between the company and the retail
druggists. After deducting the usual
items OF expense, the profits are split
between the participating retail drug
gists and the company on a $3.50 basis.
share for share, in addition to 8 per
cent dividends.
This plan really boils down to
profit sharing scheme. Under 1t the
Squibb Co. Is assured Of the active
marketing support OF the druggists and
Is able 70 arrange its production pro-
gram and financial operations scien-
tidcally.
At the outset, Mr.. Palmer had to I'M
dertake sort OF stumping campaign to
sell the idea to the druggists. All the
large cities were covered. At first, there
was much opposition, but Mr.. Palmer
got the idea across.
The New York clearing house has
again cut the interest rate on demand
and time deposits. This action was ex-
pected soon after the reduction in bill
rates by the Federal Reserve but the
Clearing House Committee refused to
act at that time. Meanwhile. rates on
the money market automatically re-
duced themselves in adjustment with
lower rates on bankers bills.
When the Federal Reserve slashed
the reoiscount rate to III per cent, It
was interpreted by many as an attempt
TO force the hands of the Clearing
House Committee, which held of until
the beginning Of this week
The new rate Of interest to be paid
by clearing banks will be one-hAlf OF
per cent on all demand deposits except
mutual savings deposits, and / per cent
on all time deposits. These rates be-
came effective yesterday, and are the
lowest rates established since the clear
ing house entered the scene in 1918. It
Is expected that the Committee on For
eign Deposits will take similar action
within few days.
Virgil Jordan of Business Week wasn't
much impressed with the business lead
ership shown at the United States
Chamber Of Commerce Atlantic City
meeting two weeks ago.
He particularly objected to the re-
marks Of Prof. Wesley Mitchell of Co.
lunbia University. author Of Business
Cycles" who said that there is prob
ably no such thing as sterilization and
that 1t wouldn't be desirable, anyway.
"All that Prof. Mitchell could suggest"
said Mr.. Jordan. was that we ought
first to commence to get ready to begin
to prepare to study the problem Of APP
the task of analysing more
the possibilities of UNDER
taking to examine the question, etc"
Which Is Mr.. Jordan'S idea of how
some experts expect to solve depres-
sions.
Ten years ago no one believed that
Soviet Russia would be occupying the
spotlight of world economic drama, yet
that Is what she did this week on the
same day in both Geneva and london.
At Geneva her delegate. M9z1m Lit
brusque and frank, presented
proposal for an economic nom
aggression act between nations, without
any of the usual bolshevik verbal fire.
works. The plan, which Is clear, con-
else and direct, would provide, accord
ing to Litvinoff, basis on which both
the capitalist and Communist systems
could conduct their rivalry in a peace
full manner.
So different In tone and approach was
this proposal from the former fiery So
Wet denunciations and demands that 1t
was almost automatically referred to
committee for serious consideration,
along with other resolutions, despite its
really far-reachirIg character. II a pol
Icy Of live and let live can be worked
out by all nations it will be real boon
10 mankind.
At London, on the other hand, the
Soviet delegates monopolized the stage
with somewhat different performance
They assumed a 'take-it-or- leave-it"
attitude on their world wheat control
opinion. Their proposal was that either
they must get credits to compensate for
reduced wheat exports or they will go
on increasing shipments abroad.
The success of the wheat conference
Just now seems dubious.
Copyright, 1881, by the North American
Newspaper Alltance)