Evening star. [volume] (Washington, D.C.) 1854-1972, 1936-01-26
HOOS|ER TAX PLAN
DRAWS ATTENTION
Officials Of Other States
Seek Information as to
Procedure.

1NOlANAIOL1S, 4uQ., Jduud1y q
(NAN.A.).-Indiana has. been oper'
atinR since 1888 under a taxation plan
containing q number of unusual fea-
lures nov attracting attention outside
the State.
Taxation officials from other States
including California; have been here
seeking to find out how Indiana, under
the administration Of Gov. Paul Nc
Mutt, has been able to maintain its
schools, highways, and other instItu-
tons as well as ever, without resorting
to q consumers sales tax. while re-
ducing charges against real estate and
at the same time piling up tidy re-
serve in the treasury.
At least two manufacturing plants,
recently brought to Indiana from other
States, were attracted mainly by the
relative stability Of the tax situa-
ton.
At the end Of the fiscal year in the
middle of 1885, the State had collected
$65.555,716 (of which less than ST.
100000 came from the Federal Gov
ernment) and had spent only $780,.
743,283. Today the treasury reserve
is nearly 100000.
i Gross Tax Causes Talk.
OF the various kinds of taxes that
have contributed to this result, the
one that has caused the most talk is
known as the gross income tax, Sec
ond largest source of revenue to the
State-20.8 cents for every dollar col
lected. The unusual feature of this
tax is simply that people are assessed
according to gross income instead OF
on profits. If you are in business and
take in 100000 during the year, but
lose $4,000, you are taxed on the
100000 just the same. It doesn't
matter whether you lose or make &c.,
600: the tax has nothing to do with
profit or loss. If you find yourself in
a tight place and are obliged to sell
your house, you are taxed on what
ever you receive, even If you get less
than the house cost you.
The same is true if you have tc
sell bond or stocks. You pay Is
cents for every 500 received in any
wholesale transaction; and 81 of every
500 from retail sales or from any
other source. including salary. wages
or dividends. The first $1,000 is ex-
empt.
Now. at first this scheme sounds a
little crazy Why, you ask. should a
man Who is trying to keep men en-
ployed aud running his business al
a loss pay the same tax, or maybe
more, than another who is enjoying
big profits?
Officials Have Answers.
The tax boys over In the State
house have number of -to-mid.
ding answers to that question. even
though they are free to admit the
plan is not perfect and frequently
causes mequities or injustice.
First OF ali. they say that if taxes
were paid only by those who have
profits, il would be impossible to COL
lect enough and hence there's no USE
thinking about that. because it won't
work. Moreover. they say, many per-
sons or corporations who are losing
money, nevertheless, receive great bene.
fits and protection from State ex.
penditures and should contribute &C.
cording to volume OF business. Be.
sides, they add, if you didn't follow
this method. then you must increase
taxes on real estate. which also may
be showing no profit. Farmers, they
point out had for years been operat-
ing without profit, and it was not un-
common for a farmer to have to sell
q COW OF an acre of land to meet his
tax burden.
have been surprised at the num-
Der Of business men who think the
gross income tax IS all right. One
man, typical Of several, remarked:
1T have q small business on which
am able to make a little profit.
Across the street from me is another
fellow, in a similar line, who is losing
money. Now, while he's running at
q loss, nevertheless he does sell goods
that I might sell if he weren't there,
or il he weren't in business at all.
If he didn't pay taxes I would have
to pay more. We who are able to
make money would have to carry
those who. because Of careless man
agement, or for any reason, are not
showing profits. The total tax re-
quirements must somehow be met"
It should be added, however, that
small retailers, for the most part, do
not like the tax. In fact, there are