Evening star., 1932-05-27
SALES TAX SEEN
AS INEVITABLE
Believed Only Solution to
Balance Budget in Pres
ent TangIe.
BY MARK SULLIVAN.

The stage into which the tax bill has
now gotten points toward sales tax,
supplementary to the other taxes now
being enacted. If adopted it would be
in substitution for the commodity taxes
already in the bill. This course seems
the almost inevitable outcome of events
in the Senate from day to day. 1t is
also forced by conditions in the broad
est sense.
When the Senate reduced the rate
on automobiles from per cent to 3,
that action cut Sl4,000,O00 from the
expected tax receipts. At once the
Finance Committee was obliged to meet
and get that S14,C00,0OO by a new tax,
which they put upon jewelry and some
commodities. This process is likely to
continue. The result is a constantly
increasing number of separate COM
moditieS upon which a tax is laid. In
time the number of these commodities
is likely to become in effect general
sales tax. 1t Is also clear that every
time rev commodity is subjected to
tax the persons interested in that COM
modify become willing to Rave sales
tax spread over substantially all COM
moditieS. The victims of taxes on in
dividual commodities will soon become
a union wanting a general sales tax.
Other Indications.
There is an even more fundamental
condition pointing toward the sales tax.
The objective of the whole program is
to get enough revenue to meet the Gov
ernment's expenditures and thereby
balance the budget. This objective is
sincerely held by majority of both
the Democrats and Republicans in the
Senate. Balancing the budget involves
making an estimate of the amount of
revenue that will be yielded by a given
tax. This in turn neceSsitates making
an estimate Of the volume of business
in the country. In these estimates, it
was assumed, for example, that per
cent tax on automobiles will yield $685.
100000 This means it was assumed
that ST, 400, 100000 worth of automobiles
will be sold during the year These es-
Inmates of volume of business were made
early in the year. If the tax bill had
been passed at the time planned, some
weeks ago, the estimates would probably
have turned out correct. What has
happened, however, is that the passage
of the tax bill will be postponed until
probably close to July l, with only half
the calendar year left.
Because of the delay in passing the
tax bill and because of the unfor-
tunate effect on the country of the COL
lapse of the first tax bill in the House
and for other reasons it is now ap-
parent the resumption of business ac-
lively will be delayed. 1t is now
probably impossible for resumption of
business to reach sufficient momentum
within the remainder of the year to
yield as much revenue from commod-
tiles or from incomes as was at first
anticipated. In short, the returns from
the tax bill now being written can
hardly be as great as was hoped when
the tax bill was first planned. This
means that new taxes must be laid, ad-
ditional to the ones in the present bill
The only additional taxes practicable
to impose will be more taxes on the
sales of commodities. The aggregate
Of these will be so large that Congress
will realize it might as we'll lay a
general sales tax and be done with it.
Additional Expense.
The necessity and probability of 4
sales tax arise from yet another cause
1t is evident Congress is going to do
something for relief of unemployment,
presumably in the form of loans.
through the Reconstruction Finance
enterprises. Whatever is done for relief
employment means expense. That ex-
pense will be an addition to the expense
side of the budget Even if there is a
bond issue. the yearly interest must
be added to the expense side of the
budget. The only way to Offset this
Is more taxes on the receipts side of
the budget. 1t would seem that the
only practicable new tax must take the
form OF the sales tax in one degree of
completeness or another.
1t is true that when the sales tax
was first proposed the House rejected
1t Overwhelmingly and almost savagely.
Since that unhappy episode, however,
the House has learned much. 1t has
learned, among other things, that its
own action postponed business recov-
cry. The House is now in a different
mood. 1t is certain that many who
voted against the sales tax would now
support it. The number of willing con-
verts increases daily.
The net of the fundamental situation
Is that the leaders of both parties in
Congress subscribe to the principle Of
a balanced budget. Such leaders out
side Congress as eX-Gov Smith and
Owen D. Young subscribe to it. A ma
jority of members of both parties in
both houses of Congress subscribe to
it. Since their support of the principle
of balanced budget is sincere, those
who hold it will be forced to realize
ultimately that the only practicable way
to balance the budget will be- on the
one hand. effecting economies and, on
the other. laying taxes on so many
commodities as to constitute in effect
a sales tax.