Evening star., 1934-05-20
BY OWEN L. SCOTT.

A most amazing, CepreSSlOn-lnSplr
tax now has been called to the atten-
ton of the world by Henry Wallace
The Secretary of Agriculture brought
up the subject in warning to other
nations that this tax might readily be
used by the United States to battle
for foreign wheat market. 1t already
is being used to help farmers in this
country withdraw gracefully from
those markets. Now, Mr. Wallace
warned. it may be called upon to help
these same farmers get back what
they gave up under the stress Of COM
petition.
This is a tax, designed by the real
brain trust" to give farmers some
thing that will be as effective in safe
guarding their interests as the tariff
on manufactured goods has proved to
be in protecting the interests of GER
tain industries. 1t is a tax equally
susceptible of use in cutting exports
as in increasing exports On the one
hand, the revenue it produces now Is
being widely applied to schemes for
reducing the size of the farm plant,
but 1t could Just as well be called into
play to increase the size Of that plant
if the occasion warranted. 1t Is tax
grumbled about by those it is supposed
to benefit and accepted pretty much
without protest by those who are eX-
pected to grumble.
X X
Such is the amazing processing tax
"a sales tax that isn't criticized as a
a sales tax-and a tax least under
stood and, thus far. least questioned
among all of the large revenue pro-
ducers. This tax plan has been ap-
piled on cotton since last August. 1t
will round out the fiscal year ending
June 80, with production record of
we'll over 100000. and the esti-
mate is that, next year. if not ex-
panded, the tax will bring in above
S400, ,000, 900.
Every housewife has come into con-
tact with it, whether she realizes this
fact or not. Her contribution is from
one-half to one cent loaf on bread,
a few cents on each cotton garment,
from two to five cents a pound on
pork products. In addition there soon
will be a half-cent tax on sugar, and
a tax is being studied for beef. One
had been projected on butter and on
milk. Tobacco carries tax, but that.
in most instances, is absorbed by the
manufacturers
Yet, touching this group Of house.
hold staples, the processing tax came
in for its first baptism Of political
fire in Pennsylvania, where it was at
g. oh DIV
the primary campaign which he won
last Tuesday. His attack was directed
less against the tax as levy on food
stuffs as it was against the tax as
an instrument that drained money
away from Pennsylvania to pay the
Western farmers.
The theory of the processing tax
simply is this: That back of the
depression lies a wide disparity be-
tween different groups of prices, max
ing il difficult. if not impossible, for
goods to move freely. One of the
principal disparities is between farm
prices and city prices. That is be-
cause city industries are organized and
often are working behind high tariff
walls. So, to remove that disparity
IN part, and to balance up the income
of the 30,000.0O0 people living on
farms. a tax can be levied on food
stuffs and other farm produced raw
materials, the proceeds Of which then
would go to the farmers as bounty.
In return for that bounty, farmers
can work reforms in their industry.
City people, although paying small
tax. will benefit by the heavier farm
buying and the increase in the flow
of goods.
Such is the idea of the tax. Under
1t wheat farmers were to get a bounty
Of % cents a bushel on part of their
crop in return for an agreement to
cut down by IS per cent the number
Of acres planted. Cotton farmers were
to get AZ cents a pound on part of
their cotton for agreeing to take 40
per cent Of their acres out of produc-
tion. Hog raisers got bounty Of $5
a head for cutting down their hog
crop Is per cent.
What the tax actually has done is
to give the city people q chance to
pay for the privilege of helping farm
ers balance up supply and demand
SO that food prices will be higher.
But, in return, they may benefit from
the improved buying power of the
rural population. They also are con-
tributing to the building of a system
that can be used by the United States
to fight any sort of a trade war
that the nations of the world may
start.
1t is in this field that Secretary
Wallace sees chance for the process
ing tax to come into broader use.
Instead Of applying its revenue solely
to the task Of lowering production Of
American farms to the demands Of
the home market, he sees the time
when this revenue may be needed to
go out and take markets away from