Askov American. [volume] (Askov, Pine County, Minn.) 1914-current, 1935-03-07
TAX RELIEF

confronting the country today is that
of tax relief There are probably few
who will question the necessity for
removing some of the burden from
real estate, especially in view of the
fact that the depression has greatly
reduced the income power of real
property. And it is widely conceded
that taxes should be imposed accord
ing to the ability to pay.
But the unf rtunate circumstance
in connection with the effort to re-
form the tax system so as to make it
more equitable is that it has given
rise to number of tax schemes
which are of doubtful utility. and
some of which might even make the
burden of taxation harder to bear in
stead of easier. Tax reform organi-
each offering a plan purpOrting to
be cure for our tax ills.
The task of reaching a real solution
OF the problem is made more difficult
by the confusion thus created by the
various schools of thought. There is
reduction is popular one. Thus
anyone who comes forward with a
promise to bring about such a reduc-
tion gets a sympathetic reception, no
matter how unavoidable his plan may
prove to be when it is placed under
the magnifying glass of competent
analysis. Anyone who attempts to
1rtf inio nj nd nnl nc
defects is in danger of being attacked
on the charge that he is Obstructing
tax reform.
Several proposals having as their
announced purpose the easing of the
tax burden on real estate are now
before the Minnesota Legislature.
Outstanding among these Is the bill
for the so-called gross receipts tax
on business turnover.
Proponents of this bill contend that
it would raise between $50,000,O0O and
$6O,0O0,OO0 a year in revenue as 4
replacement for real estate taxes. If
this could he proved, there might be
considerable reason for entertaining
the idea of such a tax. However,
there is much cause to doubt these
estimates. The Minnesota Institute
OF Governmental Research, a fact
finding body. estimates that the gross
receipts tax of one-half of one per
cent, as proposed, would yield only
about $12,0OO,0OO year. 1t is hardly
believable that this organization,
which made a comprehensive survey
before announcing its conclusions,
can be in error to the extent of S40,-
100000 or more.
But there is another and perhaps
more serious objection to this tax pro-
posal. The gross receipts tax Is es-
Sentially a sales tax. 1t will be borne
by the ultimate consumer. Inasmuch
as 60 per cent of the buying in this
accommodates and serviCes-
groups it follows that this tax would
bear most heavily on persons of small
means. as all sales taxes do. The
mere camouflage in the name-"gross
receipts taX''-cannot remove the OBJ
jectionable features inherent in a
sales tax.
Still another fault of the gross re-
ceiptS tax is that it is pyramided.
AS provided in the bill now pending
it would be levied on the producer OF
raw materials. the manufacturer. the
wholesaler. the retailer and so forth.
Thus. instead of being tax of one
half of l per cent by the time it is
paid by the ultimate consumer. it
would be . or 21l2 per cent at least.
In the end such tax might prove
harmful to many small business men
as we'll as consumers. For people
with only small incomes to spend.
upon whom such business men must
rely mainly for their trade. might be
forced to reduce their purchases by
the amount of the tax. 1t has been
the cry Of many Of the present advo-
Gates of tax reform that heavy tax
burdens are reducing purchasing
power and retarding business recov-
cry. The gross receipts, or sales tax
might increase this tendency rather
than decrease it.