The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-11-02
STATE SHARED
FEDERAL SALES
LEVY WEIGHED
Plan Considered in Effort
to Eliminate Present
Overlapping.
BY RICHARD l.. GRIDLEY
United Press staff Correspondent

w AoHlN1 lON, NOV. LAX eX-
perts are studying a state-shared
Federal sales tax in their effort to
eliminate overlapping and conflict
ig taxes imposed by Federal, state
and local authorities.
TWenty-four states now impose
sales taxes on most retail sales at
rates ranging from Il to 3 per cent
| In many cases these are on top of
| the present Federal excise tax on a
NUMBER of important manufactured
articles.
Several hundred millions of dol
lars annually is estimated to be the
present yield to states from sales
/ taxes, lille the Federal govern
ment receives more than $4,000 900
annually from it's manufacturers
excise tax, which is considered a
form of limited Federal sales tax.
Burden on Public
The principal objection to the
sales tax in any form is that it
places heavier burden on that
part of the public least able to af-
ford taxes. This objection is partly
offset by the fact that it makes the
public more tax conscious" because
it is constantly reminded of the
cost Of government.
The problem of whether the Fed
eral government on the states
should collect the sale tax, however,
is far more complicated. A Federal
take at a uniform rate with re-
bates to the states woulr eliminate
state tax competition, but would
raise the question of the diStribu-
ton of the proceeds just as it would
in the case of proposed Federal COL
lection of state income taxes.
Another argument against collec-
ton of sales taxes by the Federal
government is the belief that state
tax collectors are more efficient in
reaching the small follow"
But independent state sales taxes
have raised many difficulties. In
neighboring states having different
sales tax rates, merchants long the
boundaries have been forced to alb
! sorb the retail sales tax to bring
down their prices in line with those
in the lower rate or no ate adioin-
ing state. Mail oruer houses, on
the other hand, have ben able to
avoid state sales taxes in dealing
with out-of state purchasers.
Commission Gives View
The Interstate Commission on
Conflicting Taxation has this to say
with respect to the sales taaX ques-
ton:
Judged by anticipated economic
effects and incidence, the manufac-
turers' sales tax and state retail sales
taxes appear equally undesirable.
The manufacturers sales tax has the
disadvantage of being imposed at
the time of the first sale. and, to
the extent that and taax is shifted,
it becomes an element in the price
of the commodity upon which sue
ceeding price margins are computed.
Hence, it would be more likely to
raise the price to the consumer by
an amount in excess Of the tax. The
adoption of this tax would extend
the application of regressive levy
to the states which do not have sales
taos. A uniform Federal measure
of this type would be especially hard
to defeat or eliminate, because it
would command the support of OPP
ponents of high income taxes and
would dull the opposition of local
retailers and others who fight sales
taxes for competitives reasons.
The manufacturers sales tax
would eliminate tax avoidance
through uneconomical interstate
trade now practiced len sales tax
states"