Evening star. [volume] (Washington, D.C.) 1854-1972, 1936-08-27
Direct VS.. Indirect Taxes.

DlTcCI vs. luuITCCL dACSs
In his discussion of "the financial
problems of our Government" Governor
Landon devoted considerable portion
of his address, delivered last night
at Buffalo, to hidden taxes" In
1892, he said, the Government derived
fifty-nine cents out of every dollar from
direct taxes-that is to say, taxes levied
directly on the incomes of individuals
and corporations. The balance of forty
one cents came from indirect taxes,
among them the so-called nuisance"
taxes, which are passed on to the con-
sumner, and hidden" to the extent that
some of them are paid without the payer
knowing it. But in 1886 the Government
received forty-nine cents of its tax dol
lar receipts from direct taxes, the bal
ance of f1fty-one cents coming from
indirect taxes, thus showing the trend
which the President deplored when he
proposed his share the wealth tax
alton in 1895.
In other words, said the Governor,
"the share of the cost of Government
falling mainly on those with incomes of
twenty-five dollars week or less has in
creased twenty-five per cent during the
three years of this administration. They
are paying far more than their rightful
share of the cost of government"
What has happened in the interval
between 1882 and 1896 is that, despite
the increased rates at which direct taxes
are levied the yield from such taxa
ton has fallen. There are not as many
or as high taxable incomes as there
were. This decline in the direct tax
yield has increased the proportion of the
indirect tax yield.
How does Governor Landon intend to
correct what he conceives as this unjust
or illogical state of affairs? He does not
say. What he does say is that he has
always believed the Government should
raise "the major portion of its revenue
from direct taxes levied on the net in
comes of individuals and corporations"
II Governor Landon should be elected
and should seek to make that principle
effective in new legislation, how would he
60 about 1t? The experience of the
Roosevelt administration in squeezing
additional dollars from individual income
taxes and corporation taxes-including
the bill enacted in the last session and
dubbed by Gov. Landon as 1.-The most
cock-eyed piece of legislation ever i'm
posed in a modern country"-has DEM
onstrated how bare is the cupboard Of
income and corporation taxation. Gov
Landon himself points out that If we
confscated every income in excess of
5000 ut would not be enough to pay
for the cost of our Federal Government"
Then how does he intend to increase the
proportion of Government income from
direct taxes while diminishing the yield
from indirect taxes?
Returning business would, Of course,
help him. But the only other method,
outside of raising surtaxes that already
reach seventy-five per cent, would be to
"broaden the base" of income taxation
by reducing exemptions and going down
into the low incomes, which now pay no
direct taxation at all. That was what SEN
ator La Toilette proposed to do, and 1t
would accomplish the desirable effect of
raising revenue as well as bringing home
the cost Of government directly to more
than the two or three per cent of the pop
ulation which now pays income taxes
This administration has not dared do it.
Will Gov. Landor do itp Judging from
the tenor Of his remarks, he would favor
such step. But, campaigning against
President who has just announced that
no new taxes are necessary, he can hardly
be blamed for not saying so.
Governor Landon chose to simplify his
criticism of the Administrations fiscal
policies by talking In terms that the
average wage-earner readily understands
and arguing that the cardinal principles
OF ordinary thrift and common sense in
the individuals effort to live within his
income apply with equal force to Gov
eminent finance. There are complicated
differences. But Governor Landon at
tacks the administration in one of its
weakest spots in raising the question how
q government, any more than an indi-
vidual, can hope to continue the danger
GUS practice Of living on borrowed
money "The present administration"
he said, lis paying half of its bills
with borrowed money. The truth is, we
are living in FOOLS paradise-far beyond
our income"