Evening star., 1933-01-15
LevieS on Commodities and
Services Are Not New
in Fiscal Policy.
FEDERAL WAR MEASURE
PASSED 70 YEARS AGO
History Of Legislation, With Prin.
cipal Arguments for and
Against It, Is Recalled.
BY DIR. MAX WINKLER.
Special Dispatch to The Star.


NEW YORK, January IA gen.
eral sales or turnover tax (that is, a
levy on the sale, exchange or transfer
OF commodities, property or services)
was proposed in Congress 70 years ago
to raise revenues with which to carry
on Civil War between the States,
Although business was almost univer-
sally in favor Of the measure, both
houses rejected it. When the legislators
reanzed that no other source of reve-
nue. could be developed, they consented
IN tne same year to the enactment of
a sales tax covering all manufactured
articles, as well as selected commod-
ties, including leaf tobacco, raw cot
ton, coal and liquor.
Eight years later, in 1870 all Fed
eral sales taxes were repealed. except
those on liquor and tobacco.
Proposal Revived In 1918.
For nearly half a century, nothing
more was heard either for or against
a sales tax. In 1918, the question arose
again, and conversation regarding the
advisability of introducing it went on
Ior three years. The general proposal
was 10 d1Splace the excess profits tax,
Wnlch had become irksome to business,
Dy a sales tax. OF course, advocates of
the tax were aware that levy on sales
might prove even more irksome to the
general public than the profits tax to
business. The effects of a sales levy. it
was held, might be felt especially bv
the poorer classes and single process
enterprises. which would be at a dis
advantage competing with multi process
or self-contained concerns.
Early last year, former Secretary of
the Treasury Mellon adduced the fol-
lowing reason for rejecting q general
sales tax, in favor of levies on selected
commodities and services
We laid aside all thought Of q gem
eral sales or turnover tax, not only be-
cause, generally speaking, 1t bears no
relation to ability to pay and Is regres.
sive In character, but because of the
great administrative dificulties in.
volved and the almost Inevitable pyra-
miding OF the tax in the course of sue.
ceSsive sales. The objections to a gens
eral sales tax are not In this respect
applicable to tax on selective articles
OF the character heretofore EMPLOYED
IN this country and now recommended
we concluded that our immediate
needs could best be met by utilizing O
known general plan with such changes
as might be appropriate In the light Of
altered conditions rather than EMBARK
ing on new and untried ventures in tax
alton"
The amount which general sales tax
would yield has been variously estimate
ed at from $500,000, 900 to $1,000, ,000,-
600, depending upon the percentage at
which such tax would be raised. A
year ago, the House Ways and Means
(tNvln VYafttan rH1onoI fHn
from a 21a per cent general manufac-
turers' sales tax, exempting agricultural
products, fertilizer, seeds and essential
articles of food, at close to $500, ,00O, 900.
Regardless of whether or not these esti-
mates are accurate, economists and stu
dents Of finance almost uniformly admit
that general sales tax is capable Of
producing substantial income.
21 States Use Tax.
According to survey by the National
Industrial Conference Board 81 States
have already introduced levies on the
sales of commodities and services. The
most comprehensive form has been in
force in the State of West Virginia for
the last 10 years. 1t produces on the
average about 20 per cent of the tax
collection for State purposes, with a
cost of collecting varying from about
3.9 per cent in 1922 to IL per cent
in 1927.
The tax on extractive industries
ranges from slightly less than y of l
per cent on coal mining. to 17s per
cent on natural gas production. The
levy on ore output is fixed at / per
cent, and that on timber and lime
stone sand at 0.45 per cent each. There
are also levieS on manufacturing sales,
to OBJ per cent; on retail
aggregating 0.20 per
cent; wholesale merchandising, 0.5 per
cent; banks, 0.30 per cent; railroads, /
per cent; street railways, 0.40 per cent;
pipe lines, l per cent telegraph and
telephone, express, light and power, 0.60
per cent; other financial and public
utility enterprises, 0.40 per cent: con-
tractors, 0.30 per cent; amuSements, /
per cent, and levy of 0.30 per cent on
all other concerns doing a business in
excess of $4,000 annually.
Connecticut imposes a levy on the
gross sales CT all unincorporated manu-
factlrers and merchants, ranging from
IS cents for each 81 900 gross income
for wholesale merchandising, to 81 for
retail merchandising and manufact-
urers.
Delaware enjoys the advantage of a
tax on gross sales of certain occupa-
tons and businesses.
In Georgia, levy is imposed on gross
ales exceeding $4,000, the rate varying
from O.5 per cent to 03 per cent Of
gross receipts.
Kentucky taxes all gross retail sales.
In Mississippi there Is a tax on the
volume of business exceeding $1,000 a
year, the rate ranging from z of ! per
'ent to 212 per cent.
Other State Levies.
In Missouri, the cities of st. Louis
and Kansas City levy a tax on gross
tales of manufacturers and merchants.
North Carolina collects a tax on all
5ross sales of wholesale and retail ner-
chants.
Pennsylvania taxes all gross sales, the
ate amounting to u of / per cent plus
Y for retail merchants, and to 1-20 of
per cent plus So for wholesalers.
Other States which impose levies on
he sales Of selected commodities and
ervices include Alabama, Arkansas,
owa, Kansas, Michigan, North Dakota,
south Dakota, South Carolina, Tennes-
zee, Texas and Utah.
Whether it viii be possible to over
ome the principal objection to a gen.
raj sales tax-I1anely, that it weighs
more heavily on the masses than on
'ig business-is difficult to state at this
ime -...-,.
Copyright. 1898. by North American News
paper Alliance, Inc)