The Waterbury Democrat., 1936-01-06
Tax Is Conpounded


 What is the purchasing power of the people? Last year 1t was e4o,- GOO. .OOO, 900. Out of that sum was taken in taxes eo.600, ,000, 900 by ell taxing units. Add to that another 9l0OOO, ,OO0,OO and you will subtract from the purchasing power of the people S2e, 800, ,OOO, 900. Those who re- ceive the taxes will spend them. Those who pay the taxes will have that much less to spend. These high taxes will take more than half of the nations money income-S20,- 500 OOO0, GOO out of e40, 900 ,OO0,0 900 = leaving only 2O,5O0, 900 900 for those who produce the wealth.
 The tax, as already explained, will be Q transactions tax, not Q retail sales tax. The difference is enormous. I buy Q suit for $30 and pay e tax of per cent. sell 1t to you for $40 and you pay per cent. The retail price of the suit is $40. But the two transactions total $T0. Of course I pass the per cent pay on to you. You pay that plus the ? per cent you pay when you buy the suit. You really pay more than 3 per cent. It is of course far worse than that. Because the tax es start with the wool on the sheep. The shipper buys from the farmer and pays 2 per cent. The yarn maker buys from the shipper. The fabric maker buys from the yarn maker. The suit manufacturer buys from the cloth maker and 50 on. Anw there is c 2 per cent tax on each transaction. The total of the transactions on Q $40 suit may be 4260. All these taxes are paid by the final customer to the retailer. The buyer of Q $40 suit might well pay 2 per cent on $40.
 Most of the taxes in the end would be paid by customers ct rec tail. And this means the great bulk would be paid by the wage earners of the nation. You could not pile 19,000, ,000,000 onto the price of goods without impoverishing the workers of the nation. Of course, the pensioners would have the money to spend which had been taken from the workers. But 1t must be clear that the workers the producers must the money before 1t can be taken from the pen- sioners. And if you impoverisE them the whole economic system will collapse-the pensions scheme along with 1t.
 HOarding ls Feared
 pr. Townsend's plan includes two essential clements. One is that the aged get $200 Q month each. The other IS that they spend 1t within the month. If they take $i,600,- 100000 Q month from those who earn and pay the taxes and fail to spend 1t all, effective purchasing power will be reduced to the extent that they hoard the money.
 pr. Townsend recognizes this. He therefore is trying to work out Q plan to compel the pensioners acc tually to spend their money. The pensioner will not be given cash. Instead, an account will be opened for him in . local bank selected by the government. The check vii be sent to the bank and an account opened for him for $200. This he can get only by making checks in payment of his purchases. The bank will not credit him with his next months check unless the $200 of the preceding month Is all drawn against.
 However, if the old gentleman wants to save, what will prevent him from making . check to his grocer for 3iO to cover Q @ purchase and getting the change in cash? As 6 matter of fact you have to recognize his need for cash. He can't give checks for street car fare, movie seats, Q cigar, . cup of coffee in Q restaurant, etc. He must have some cash. And you cannot check up on his purchases to see if he collahor- ated with his dealer to get some cash on Q check. It would take an army of snoopers and sleuths ten times as big as the prohibition army.
 There can be little doubt that the plan would not aid the economic society. That being 50 it would not help the aged, for since the money must come out of the producing ele- ment of society, and since the pro- ducing element cannot pay 1t out of its present s,sssrchasing power and since the plan will not increase purchasing power, 1t would break down altogether. The aged as well as the youngsters would all be vic- tims of scheme, conceived in good faith, by well meaning people, but people who do not know how this