Evening star., 1932-05-03

cause the corporations pay tax on this
income before it is distributed in divi-
dends. The House, however, has voted
to tax these dividends.
The taxes levied by the Federal Gov
eminent on gifts (many Of them made
to escape inheritance tADes). and upon
estates passing by inheritance, have
been sharply increased. They are the
largest ever imposed. The question OF
the rates to be levied on inheritances
is complicated by the fact that SO
many of the States have their own in
heritance laws and derive varying but
substantial revenues from that source.
That there is an increasing sentiment
that the unequal distribution of wealth
can be in part relieved by heavy taxes
on large inheritances is becoming gen.
orally recognized and accepted There
Is another defense to these big taxes
on inheritance, namely. the necessities
from which the Government cannot
escape.
Despite the sharp increases in in
dividual income tax rates, especially on
the large incomes, and despite the in
creases in the tax on corporate profits
and upon estates and inheritances, it
has been perfectly obvious and
universally conceded that the maxi
mum which these taxes will yield will
still fall far short of providing for the
revenue needs of the Government.
That is because incomes large and
small have so shrunk. and corporate
profits so declined that the revenue
yield even at the high rates, is cor
respondingly reduced. In the days of
the wartime, high income and profits
taxes, profits we're huge and incomes
swollen. and the revenue yield cor
respondingly large 1t is very differ
ent situation today.
Sales Tax Explained.
1t was to meet this gap in the rev.
enues of the Government, which the
income and profits taxes could not be
made to fill, that brought the proposal
of a manufacturers excise tax, popu-
larly and inaccurately labeled the sales
tax
A real sales tax is tax levied on the
retail price paid by the purchaser. in
addition to the regular purchase price
of the article. The manufacturers ex-
else tax is a tax percentage of the
value) levied on the producer against
the wholesale value Of the product. 1t
is proposed by all who advocate the
tax to exempt food and clothing from
the manufacturers excise tax, but to
levy it universally against all other
goods at low rate, between and 2
per cent.
1t admittedly would have yielded
large revenues. 1t would have avoided
the imposition of the luxury and nui-
sance taxes on a few industries, at
relatively high rates, which seemed to
be the only alternative to raise the
revenue. 1t would have rested lightly
and equitably upon all manufacturers
in all lines alike.
In the present emergency, and faced
with the stern necessity of finding rev.
enues, it has seemed to me that the
manufacturers excise tax was the lesser
of the evils. and was greatly preferable
to the special nuisance taxes to which
we are now obliged to resort because of
the House rejection of the manu-
facturerS' sales tax.
The inequalities that luxury and nui-
sance taxes provoke lead me to prefer
a small manufacturers sales tax, which
is spread over a large field. The candy
industry claims that pastry and cake
manufacturers sell large quantities OF
goods which compete with candy, and
go untaxed though candy Is taxed
The gum manufacturers say that they
compete with candy and that If candy
goes untaxed. gum should be untaxed.
These contentious. which have more or
less merit, arise whenever attempts are
made to pick out certain industries for
so-called luxury tax and omit other
industries.
Proposes other Taxes.
Furthermore, if foot ball and base
ball and other athletic goods are to
be taxed as a luxury tax, why not tax
expensive office furniture, tables and
chairs made of expensive woods, used
in the homes of the well-to-do? Why
not tax rugs, carpets, expensive wood
paneling, hardwood floors, statuary,
paintings, if we are to tax the scent
candy bar; the 10-cent jewelry pin, and
admission to theaters? Yet, none Of
these luxuries Is taxed in the pend
ing tax bill.
You will doubtless recall that the