Evening star., 1939-09-27
Gross Income Tax
Hailed by Leaders
Of Indiana
Is Nearest Approach to
Townsend Plan Levy
Than Any Other
BY the Associated Press.

BY the Associated Press.
INDIANAPOLIS, Ind, Sept. 81
Tax officials in Indiana say their
gross income tax Is the second best
revenue producer in the State and
Is taking more money into the farm
ing counties of the State than 1t Is
bringing out Of them.
Back in July, however, one Of the
Indiana State tax officials went
before the Townsend National Con-
vention at Indianapolis and told
the pension planners the transac-
tions tax they envisaged would be
q vast disappointment from the
standpoint of the amount of reve-
nue. they hoped to get from it. He
was booded vigorously.
Indiana's gross income tax Is the
nearest approach to the Townsend
plans transactions tax of any levy
In the Nation. The difference be-
tween the two is one of detail rather
than of principle. They would op-
crate in the same general fashion.
But, where the gross income tax
operates on fairly low rate to
supplement the revenue cleaned by
Indiana from other sources, the
Townsendites would make their
transactions tax a 2 per cent levy
designed to produce the money from
which to pay pensions to all persons
over 60. They hope the tax would
raise enough to pay 5000 month,
under compulsion of spending the
full amount, to some 1900, 900 per-
sons.
Fight on Ex-Backers.
The vote of 3O2 to 81 by which
the House battered down the Town.
send plan last June did not sig
Nifty the end of the movement. AL
ready efforts are being made to
recruit the votes in which to drive
out of Office those who accepted
Townsendite support in the last
congressional campaign only to vote
against their bill when 1t finally
reached the House floor.
Estimates of the number Of Town.
sendites in Indiana alone range up
ward from 10000. Many say they
were a potent factor in the last
elections which gave the Republicans
several House seats from Indiana.
Along the highways in Indiana,
Michigan and Ohio stand signs
which proclaim the Townsend plan
as an economic cure-all for the
Nations woes. Plans already have
been worked out by the Townsend
organization for beginning a cam
paign in Ohio this fall which will
gradually be expanded eastward into
PENNSYLVANIA. 1t is a part OF a
general Middle Western movement.
Senator Downey of California will
be one of the mainsprings In the
movement.
Indiana uses the funds 1t gets
from the gross income tax for a
number of purposes. 1t goes into
the general revenue fund whence
a large share of 1t Is drawn later
to pay teachers salaries.
Drop Of $4,000, 900.
Collections from the tax fell of
about 100000 last year from the
year before, the fall attributed
chiefly by officials to the business
slump. Nevertheless, they garnered
almost $4,000, 900 from it last year
an amount which put 1t second only
to the 4-cent-a-gallon gasoline tax
as a revenue producer.
The gross income tax Is a levy
ranging from one-quarter OF l per
cent to l per cent on the gross
receipts of individuals, corporations
and all other legal entities. Whole
salers pay one-quarter OF l per cent
Retailers and all others pay l per
cent. The chief exemptions are
$4,000 annually for retailers and
$1,000 annually for the others.
In operation every individual
corporation or member of partner
ship reports to the State how much
money he has received during the
wear from all sources. Save for the
81 900 and $4,000 there are no ex-
emptions of any consequence to
complicate the report. Even if the
receipts may have been eaten up
by business losses, the tax Is paid
nevertheless, on the total receipts.
State tax officials argue that 1t is
the most equitable tax yet devised
They say there is no reason why
the good businessman who man.
ages to make a profit should be
penalized for it by paying a tax
while the man who operates beside
him cuts prices and resorts to other
practices which cause him to lose
money, escapes such tax.
Opposition Seen Whiting.
Over the State many businessmen
shake their heads when the gross
income tax Is mentioned. Some
small merchants are bitter in op-
position to 1t. There have been at
tempts to organize tax strikes. But
those who know Indiana well say
the original opposition to the tax Is
whiting. The most frequent reply to
questions about the tax Is:
"It raises the money"
Paul v. McNutt put the tax into
operation back in 1888 when he was
Governor. The Legislature was
faced with an emergency. 1t is de-
barred by the constitution from is
sui bonds and running into debt
Property taxes had been cut during
the depth of the depression, endan-
gering the normal functions of the
State government, and particularly
the schools. The gross income tax
was one of the three levies worked
out to make up the money needed.
When enacted, the legislators esti-
mated 1t would produce about $12,-
10000 a year. Since 1895, however
1t has brought in from $4,000, ,00(
to $23, 900, 900 a year. State tax OH.
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