Evening star., 1932-05-31

SENATOk DA\
has been perfectly obvious that this
source alone could not be relied upon
to supply the full measure of our re-
quirementS.
1T is apparent that under present
conditions individual net incomes have
undergone a tremendous shrinkage. 1t
Is immaterial how high the tax Is on
profits If there are no profits to tax.
The extent to which profits have
vanished is graphically revealed bv re-
| cent figures covering the combined eX-
perience Of 387 of the great corpora
| tions of this country during the first
three months OF the present year. Cor
| porate profits In 1881 were none too
good We had a depression then. but
for the first quarter Of 1882 the net
profits as shown by this cross section
of the business of the country were
1913 per cent less than the 1881 record,
and in the case of SO railroads the
combined deficit for the first quarter
of that year was more than $4,000, 900.
New Tax Sources Necessary.
I'm the light of such figures, the
fallacy of contending that We can
balance the budget by increasing the
taxes on incomes and gross profits Is
clearly exposed. Congress, not from
choice but from necessity, has had to
turn to new sources of taxation. We
are turning to excise taxes to be i'm
posed upon goods or upon services be-
cause it Is the only remaining avenue
of taxation open to the Federal Gov
ernment Here again, as In the case
with income taxes and with corporation
taxes, our aim should be to impose
excise taxes, often called sales taxes,
in accordance with capacity to pay,
and to distribute them as equitably as
possible with the least oppressive
burden upon business or the individual.
The bill which passed the House
and the bill in the form now before
the Senate does not in my Judgment
a vast number Of special excise taxes.
It selects certain industries and certain
products to bear this new tax burden.
It imposes different rates on different
articles and different industries, with
out consistency or any reasonable
theory other than a guess at what the
traffic will bear. 1t Is proposed to tax
automobiles at one rate, automobNe
tires at another rate. 1t is proposed to
put tax on candy and chewing gum
and a variable tax on soft drinks. 1t
Is proposed to put one tax on furs, an
other on jewelry. on sporting goods. ON
toilet goods, and so on.
Cites Inequities
"An illustration Of the ineQuities,
and indeed the abSurditieS, In which we
find ourselves in the imposing Of these
special excise taxes Is furnished by the
| proposed tax of 4 cents gallon on
lubrlcating oils. Lubricating oils are
used extensively in industry and in
motor vehicles. The price Of the oils
| ranges from cents a gallon to 81
a gallon, but the tax is to be cents
! a gallon regardless Of price, which
means that we are proposing to put
| the equivalent of so per cent tax
| on the oil in industry and 4 per cent
| tax on oil used in motor vehicles. Such
special excise taxes are utterly inde-
| fensible, except upon the theory that
we must have the revenue at any cost.
; They work the most manifest discrimi-
| nations. They disrupt business and
industry, and they raise unfair COM
petitive barriers.
The alternative for these so-called
| selective excise taxes-selected, I may
| say, at random-is a general excise tax
| which shall be levied upon all indus
| tries alike at low, uniform rate. This,
ferred to as the manufacturers excise
] tax. 1t is, indeed, one kind Of sales
| tax, and so indeed. all the excise taxes
| tn the bill are sales taxes Of a sort.
But in fairness it should be said that
| q general turnover tax is an entirely
different proposal from the emergency
manufacturers excise tax which is now
before Congress and which is embodied
| in the amendment which I have offered
| to the Senate bill.
Pyramided Tax.
"A general turnover sales tax, as its
very name implies. is q tax imposed
| every time an article IS sold, and many
articles are sold over and over again
before finally reaching the consumer,
with the result that under a general
sales tax the consumer pays not one
but three or five or dozen taxes. The
tax Is pyramided. No one, so far as
know, has proposed to Congress a turn
| over sales tax Of this character. Per-
| sonally I am unalterably opposed to
any such proposal. A manufacturers
excise tax, on the other hand, Is to levy
the tax once upon the article in its fin
ished state, but on its wholesale selling
price, not on the retail price.
The objection most often raised
against tax of this character is that
it Is a tax upon the consumer, and to
the extent that the tax upon the manu-
facturer becomes one element, although
a very small element, in the total cost
Of his product, it Is true that in many
cases this tax will fall upon the con-
sumer. though, in my own judgment, a
manufacturers tax at as low a rate as
we have proposed, namely, / q per cent,
| will be absorbed by the manufacturer
in many more cases than the oppo-
nents of the tax are ready to admit.
Necessaries Exempted.
But in order that there may be no
departure from the principle of levying
a tax on the basis of capacity to pay,
and in order that it may not be said
that we are levying a tax upon the
necessities of life and laying new bur-
dens on those least able to bear them,
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