The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-10-26

| q q
Ut is with the second of these two
Il divisions that we must most i'm
mediately deal. For regulation is
bound to be a subject of continual
experiment by the states, and it is
one of the advantages of repeal that
it gives freedom to experiment. But
| taxation is in part a national ques-
ton; it is urgent, and the difference
between a good and bad system of
taxation will affect not only the
government revenues, but may de-
termine how successfully the coun-
try can eXterminate organized boot
Logging.
Messrs. Fosdick and Scott have,
it seems to me, been especially
clear headed in their discussion Of
federal taxation.
Their essential argument may be
restated about as follows: In levy
ing taxes on liquor we should like
to do three things-to obtain as
much money as possible for the gov
ment, to drive the bootlegger out
of business and to discourage the
consumption of hard liquor. If we
did not have the bootlegging in
dustry, very high taxes would pro-
| duce much revenue and would also
discourage consumption. But the
bootlegger complexities the matter.
If taxes are too high, he will con-
inue in business.
Therefore, we have to make up
our minds what it is that we wish
most to do. Messrs. Fosdick and
Scott think the elimination of the
bootlegger ought to be the first OBJ
jective, and most persons will agree
with them. But then it becomes
absolutely essential that the price of
legal liquor should be low enough
to make it Improbable for the
bootlegger to compete. Messrs Eos
dick and Scott think that to achieve
this end the price of beer ought to
be reduced slightly; that ordinary
wine should sell at retail for from
$3.50 to $3.50 a gallon; that whisky,
gin and other spirits should sell at
$3.50 and up per quart.
With prices at this level they think
that organized bootlegging would
diSintegrate. In choosing such rela-
lively low prices, they frankly &C
! cept the conclusion that until boot
Logging is eliminated, it is impossible
to discourage consumption by high
taxes and high prices.
q
THEY have estimated that even
Il at these low prices well-de-
viSed scheme of taxation should be
able to derive $7OO,000,00O a year
from liquor, over and above the nor
NAL taxes that liquor manufacturers
and dealers would. as business men,
have to pay. It is not quite clear to
me how they have arrived at this
estimate, but what is clear to me is
that they have discovered a prin-
Cipal of taxation that will yield the
greatest possible revenue and yet
keep retail prices down. This dis
covery is well worth examining
The usual way of taxing liquor is
to charge the manufacturer a small,
flat license fee-for beer it now is
81 ,000-and then put an excise tax
for beer it is SIS a barrel-on the
quantity he produces. MessrS. Eos
dick and Scott point out that the
excise tax is sales tax which is
passed on to the consumer.
The higher you make it the higher
will be the price to the consumer.
They argue, therefore, that if we
wish low prices to break up bootleg
ging, we must not lay high excise
taxes. They would, therefore, re-
duce the excise tax on beer from
S. to So; they would put the tax on
wine at 40 cents a gallon and on
spirits at 8 proof gallon.
The principle seems to me unmis-
takably sound. 1t provides the best
means of combining low retail
prices with as much revenue as the
business will stand BY keeping
prices low the government will be
doing its best to return the liquor
business to the legalized manufac-
turers; by taxing their profits it
will be taking its share of the pro-
ceeds. The proposal is not ony in
geniouSly adapted to the problem of
the bootlegger, but is thoroughly
consistent with the philosophy of
the administration.
The proposal made by Messrs.
FoSdick and Scott seems to me to
meet one Of the real issues squarely.
If there is an important error in it
some one ought to point it out as
soon as possible.
Copyright. 1881