Evening star., 1934-01-28
Income and Sales Taxes.

Income and Sales Taxes.
The Governments main reliance for
revenue has been on the income tax
payers outside its miscellaneous collec-
tions. But this year. for the first time,
q large portion of Government revenue
IS coming from the sales tax-wfich Is
a proper, if unused. name for the new
processing taxes on agricultural COM
modties. The yields from these two
sources of revenue-the income tax and
the processing tax-make possible an
important comparison.
The new tax bill reported by the
House Ways and Means Committee Is
expected to produce about 100000, 900
increase in income tax receipts. Whether
1t will be successful in producing that
Increase depends primarily, Of course,
Upon the business upturn. Increased
rates of taxation yield increased taxes,
but only when there are the incomes to
tax. A great increase in business
activity would doubtless send receipts
from income taxation above the esti-
mated total yield for 1885 of $685.
100000
But while the Government is collect
ing this S1,265, 100000 from a small
percentage-less than two per cent-of
the population. it Is at the same time
expecting to collect about $548, 900 900,
or almost half as much, from the pro-
cessing taxes assessed on the basic
agricultural commodities Of cotton. TO-
bacco. wheat, pork and corn. That
latter tax. in theory at least, is paid
by all the people of the United States.
That the effect Of the processing tax
or sales tax-has not been hard to bear,
and has not resulted in anything like
extortionate price increases to the con-
sumers, has been one of the boasts of
Its sponsors.
The processing tax now amounts to
b direct levy on the consumers Of es-
sentials of life to raise the money to
feward producers of these essentials.
It Is a tax on one element of the popu-
1ation for the direct benefit of an
other element of the population. The
fact that the tax has been levied, and
as the income tax, pretty thoroughly
disposes of the traditional objections
to the sales tax. If the question of
justice enters into the matter at all,
there Is more justice in the theory
OF sales tax. levied for the benefit of
all, than in the theory Of a sales tax,
under another name, levied in the in
terests of a special group-no matter
what may be the particular needs of
that particular group. or how these
needs may affect the condition of all.
The income tax is considered an ap-
propriate and proper source of revenue.
But If there Is any general reform in
the principle of taxation, experience
during this depression lends weight to
the conlmon-sense theory that In times
OF business recessions more dependence
should be placed on sales taxes and
less on income taxes; that when busi-
ness generally is gaining, the chief
dependence on these sources of revenues
might be reversed.
For despite the popular idea of soak
Ing the rich, the Government In search
Of revenue must face realities, and one
OF these is the effect of business recess
sions on tha number of the soakable
and taxable rich.
The largest percentage increase of
taxation in the new tax bill falls on
the incomes between fifteen and twenty
thousand dollars. The Bureau of In
ternal Revenues statistics of income
for 1882 preliminary show that the
largest percentage of income taxes are
collected on the group of incomes be-
tween ten and twenty-five thousand
dollars. In 1882 this group comprised
2o4 per cent of the total number of
Income tax payers-some 77,000 indi-
viduals. At the height of the boom
l929-the same group comprised 271,-
900 individuals. Their net income in
1882 amounted to $1,127,225,987. In
1929 the same net income amounted
to s4o25, ,233,375. 1t may be proper to
squeeze lemon dry. but the essential
requisite is the lemon.
There were only 1854, ,969 income
tax payers in 1s32-out of population
Of about 125, 100000. OF these. the in
comes Of five thousand dollars or lass
represented 635s per cent Of the totSi
But the fve-thousand-dollar or less
incomes were taxed only $42000,000
or 1919 per cent of the total collec-
Nons-while the remaining thirty-six
per cent of incomes were taxed $780,
744,617. That shows where the money
comes from. But while there were
100000 incomes of more than five
thousand dollars in 1929. the number
had dwindled to 339,4O7 in 1882.
New deal expenditures, of course, are
made In dollars that must some day,
some how, be collected In taxes. The
ninety-eight per cent Of the population
paying no income taxes may be called
on for their contribution. As the pro-
eessing tax collection demonstrates. the
manufacturers sales tax will be found
the least burdensome.