Henderson daily dispatch. (Henderson, N.C.) 1914-1995, 1940-05-27

mental expenditures continue al or
near their present Level. taxes must
sooner or later be much higher than
they are now: and the longer the
balance is deferred, the greater the
burden will eventually be.
Significant Tax Ratios.
THE absolute magnitude of the tax
payments by business enterprises,
while impressive, conveys little
meaning when considered alone. The
real significance of the tax burden
lies in It's relations to other factors
in business operations. In an effort
to throw some light on these rela-
tons, d study has been made by the
Guaranty Trust Company Of the 1889
| income statements of large and re-
preventative group Of industrial and
public utility corporations, not in
Guiding railroads. The primary pur-
pose of the investigation was to de-
termine, first, the ratio of direct
taxes paid by corporations to report
cd net income before tax deductions;
second. the ratio Of taxes to payrolls:
third, the average amount Of tax pay
mcnts per employee.
The inquiry reveals, first, that the
ratios Of total direct taxes to total
net income before taxes for the
groups Of corporations last year were
us follows:
l22 industrialS ......... 38 percent
q utilities .......... SO percent
l49 companies .......... 43 percent
THE 20 industrials and II utilities
that reported taxes equal to so per
cent. or more of net income before
taxes are thus seen to have paid out
more to tax collectors than they had
left for distribution to stockholders
and reinvestment in the business.
Taxes For Employee.
Even more surprising, perhaps,
are the facts disclosed as to the re-
iation between taxes and number of
employees. Direct taxes per employee
We're Us follows:
10 industrials E. .S315
10 utilities ..''''. .'........... Iol
SO companies i24
THE representative character of
the foregoing figures is borne out by
reports from other sources. The
American Iron and Steel Institute re-
ports that taxes paid by the steel in
duStry last year absorbed more than
one-half of the net profits remain
ing after all other expenses Of opera
ton had been met. They were equi-
valent to more than 1892 per wage
Garner employed during the year, and
if they had been paid out in wages
they would have increased the total
payrolls for the year by % per cent
Expressed in another way, the tax
payments represented years pay
for $4,000 workers.
Comparisons between taxes on the
one hand and employment and pay
rolls on the other must be inter-
preted with care. They do not imply
that the tax burden is directly shift
ed to employees or that amounts
saved through tax reduction would
be automatically added to payrolls.
The main purpose of the comparisons
is to show the relative magnitude of
the tax payments as an element Of
cost. 4 very significant relation does
exist, however, between taxes and
wage payment, DIS will be indicated
presently.
The oil industry, besides paying
direct taxes such as are levied on
business concerns in general, bears a
special burden in the form of heavy
excise and sales taxes on its pro-
ducts. Taxes levied on the industry
and its products last year, as one
company points out in its annual re-
port totaled more than one and one
third billion dollars. This is about a
hundred million dollars in excess Of
the total value Of all the crude oil
produced in the United States dur
ing the year and is equal to more
than 10 per cent. of all taxes COL
lected during the same period by the
Federal, State and local governments
Gasoline taxes alone amounted to
more than a billion dollars and were
equalivent to a sales tax of Al per
cent.
Depressing Effects of Taxes.
Taxes on petroleum products, like
sales and excise taxes on numerous
other commodities, are ordinarily
passed on to the consumer and do
not represent burden on the indus
Try in the same sense as direct taxes
on corporations. But taxes that raise
the cost of goods to the consumer
necessarily reduce demand and dim
iniSh the volume Of business, and this
affects the industry and its employees
as we'll as its customers.
conversely, direct taxes on cor
porationS tend to affect not only the
companies themselves but consum-
ers and employees as well. When the
taxes are light and the companies
find it impossible or inadvisable to
pass them on to others, they may be
absorbed without appreciate harm.
But heavy taxes are vital factor
in the cost of doing business and in
many cases represent the difference
between profitable and improbable
operation. Consequently, they have
,rofoIuo1 affects on bllSineSS DO1icjeS