Evening star., 1933-01-22

are levied on one set OF persons IN the
expectation and intent that they will
be passed on to others by the process
Of shifting. The income tax lends
rate increases as the amount assessed
becomes greater
As to its incidence the income tax
tends to remain where 1t is levied,
especially in the case Of personal in
comes. About the only way person
may attempt to shift his personal in
come tax Is by obtaining an increase
in salary. There may be efforts to
SHIFT taxes on corporation and business
incomes through an advance in prices
or to employees in lowered wages. It
may be impossible to do this by either
Of these methods and as rule a
income is not readily shifted
the taxing power is justified to accom-
plish redistribution of wealth have
favored imposition of the highest pos
sible rates on the larger incomes.
The income tax has been boon to
the various groups which have sought
an expansion Of governmental activ-
tiles along lines not originally centem-
plated. The ease with which large
amounts of revenue could be obtained
through this tax in times of pros
perity has been regarded as a major
factor in keeping Government expend-
itures at high level in the years
since the war
Held Regressive in Effect.
The objection to the greater use Of
taxes on the production or conSump-
ton Of commodities has been that they
are regressive in effect. which means
that they bear more heavily on those
with small incomes than on those with
large incomes. Commodity prices are
not adjusted in accordance with the
purchasers ability to pay. The poor
not only spend larger part of their
income than the rich, but a larger part
of their expenditure is for commodities.
Further, it is likely that the larger pro-
portion of their commodity expense Is
for articles generally taxed
Organized labor and the farm organi-
zations oppose general sales tax
They have not objected to such
special excise taxes as are levied upon
commodities which are regarded some
what as luXuries. The Executive
Council Of the American Federation of
Labor in a report to its recent annual
convention declared that the sales tax
represents IAN attempt to transfer the
burden of taxation from wealth and
from those who are able to bear it to
the masses Of the people and to those
who are least able to bear the burden
of taxation" 1t was added that the
sales tax Is. a movement to soak the
poor"
Those who object to a manufac-
turers' sales tax such as was defeated
in the House last year and has been
recommended this Winter by President
Hoover and Secretary Mills assume
that it would be passed on to con-
sumers This is not necessarily true
The only way in which the tax can be
shifted Is by an advance In price of
the commodity. One method is to in
voice the tax separately through to
the consumer. Another is to shift 1t
by silent inclusion in the retail price.
Some May Absorb Levy.
The ease with which the shifting
can be accomplished depends upon the
demand for the commodity and the
In many lines the dealers prefer to
absorb the tax rather than to inter-
fere with established prices. This Is
apt to be the case with respect to
articles sold for a small price such as in
10-cent stores In times of depression
as at present, when the price tendency
Is downward even to point below the
cost of production, it is exceedingly
difficult to shift the tax. The manu-
facturers or dealers are forced to
absorb it.
II a manufacturers sales tax should
be adopted in the near future its burden
upon consumers might be considerably
less than if normal income tax rates
were increased. As business improved
and prices advanced sales tax would
be reflected to a greater extent in the
cost Of living.
The possibility Of the pyramiding of
a tax while a commodity is being passed
through various hands on the way to
the consumer has been one of the chief
objections to a general sales tax. The
plan approved by the House Ways and
Means Committee last year, which was
patterned after the Canadian system,
seeks to prevent pyramiding by a
licensing system under which no tax
is applied when a commodity is passed
from one licensed manufacturer to
another, the tax applying only once,
when it is sold by licensee to one
who is not licensed.
One objection to the adoption Of a
sales tax is that if once made q part
OF the revenue system it probably could
not be dislodged and in times of pros
perity might help to encourage ex-
cessive expenditures, just as has the
income tax.
Yield Put at $355,o00, 900.
Those who believe it to be desirable
or necessary to adopt manufacturers
sales tax, which, according to present
Treasury estimates, would yield at the
IN per cent rate about 1855 ,000, 900
annually, and which under last years
estimates was supposed to yield nearly
$500, ,000, 900 annually, contend that it
should not be judged by itself, but as
part Of complete revenue system.
It Is regarded as proper that the
burden Of taxation should be spread
over as large a part of the population
as possible. Every one should con-
tribute to the support of the Govern
ment according to this theory. Other
taxes, including income taxes and gen.
eral property taxes in the States and
local subdivisions, affect principally
those who own property or who have
large incomes. Moreover, incomes and
inheritances are subject to progressive
| rates. The regressive effects Of sales
taxes are considered less Objectionable
as part Of diversified tax system. To
the extent to which they are shifted
to consumers they reach portion OF
the population which might be exempt
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