Evening star., 1937-06-25
The Chain Store Tao.

Ahe cnaln store tax added by the
House As an amendment to the business
privilege gross receipts (or sales) tax IL
merely one prics-raising feature of
prlce-raising tax. But 1t differs funda-
mentally in purpose from the gross re-
ceipts tax OF which 1t is \ part. The
gross receipts tax is 4 crudely drawn
form OF sales tax which In application
would be highly damaging to some forms
OF business and which In general would
raise prices OF such necessities of life as
food and clothing. But the tax was
proposed In good faith-if bad judgment
AS 4 revenue raiser, and If properly
amended could be brought into line with
the same tax in some OF the States.
But the chain store tax was not pro-
posed primarily to raise revenue, but to
punish the chain stores. AS drawn, the
bill would affect not only the proprietary
chains, under one ownership, but ap-
parently the voluntary" chains-of which
there are seven in Washington-where
stores have combined for cooperative
purchasing while operating under their
own management and ownership. It
would apparently affect not merely the
food chains, but other forms Of chains,
such as gasoline stations
The chain store tax reflects 4 political
theory for which the customer will pay
and the results OF the tax would be
economically bad. It was adopted hur-
riedly by the House. without due con-
sideration, and needless to say 1t will
be fought bitterly before the Senate
committee next week.
What do the people of the States think
OF this tax? Some form Of chain store
tax is in force In twenty-five States. Dur
ing the current years sessions OF the
State Legislatures the tax was proposed
in one form or another in l20 bills. But
to date only three States-Pennsylvania
Georgia and South Dakota-have adopt
ed the tax; the Louisiana plan Is pend
ing in Minnesota and Wisconsin; six
States-Illinois Arkansas, Utah, Okla
homa, Massachusetts, and Connecticut
defeated the proposal and three States
Florida, Colorado and Iova-voted
down proposed increases in existing rates
California defeated the tax in \ State
wide referendum in 1896 and Maine re-
pealed It's chain store tax previously i'm
posed. Louisiana, by the way. is the only
State which has adopted the tax proposed
for the District Of Columbia, by which the
stores are taxed on the basis OF numbers
in the chain outside the State In those
States which are experimenting with the
tax, extensive litigation has followed, all
of which has not been halted by the
Supreme Courts decision upholding VA
lidity Of the Louisiana tax.
1t Is diflicult to obtain data on the
effect OF the tax in the States which
have adopted 1t. In Pennsylvania, where
the new law became effective within the
past few weeks. however. 800 stores, most
of them in Philadelphia, are reported to
have closed and further Withdrawals from
business are said to be in prospect. The
adverse effect on real estate OF course,
is obvious. 1t has been authoritatively
stated here, on behalf Of the food chains,
that enactment Of the bill proposed for
the District-more harsh than the Penn
sylvania law-would result in higher
prices or forcing some stores out Of busi-
ness or both.
Before any such tax is imposed in the
District, the people Of the District would
like to know something Of its alleged
benefits. They are the ones who must
pay the bill.