The Waterbury Democrat., 1943-10-18


flghtin' 40s It has been brought for.
ward as one means Of helping Il
meet the costs Of the war on q pay.
as-we-go basis.
But however or for whatever
purpose the federal sales tax has
been proposed In the past, It has
always been turned down. Upper In
come groups are usually for It, lower
income groups are against IL, poll
ticians are afraid Of II. That Is why
1t was turned down In 1041 and
again In 1912.
The 1913 proposal is for q general
retail sales tax Of 10 per cent, yield
ing an estimated SO billion, which
is q model sum indeed, and little
enough as q contribution towards
meeting the high cost Of war.
HITS LOWER INCOMES
Principal argument against q fed
eral sales tax, coming from labor
and consumer, is that It puts an
unequal burden on the lower in
come groups. A family with an in
come Of $4,000 year spends It all
on the necessary expenditures Of
living and under q general sales
tax proposal would pay 10 per cent
Of the entire amount In sales taxes,
which would thus become an In
creased cost Of living. A family
with 5000 or $4,000 income,
however, might spend only 5000 or
$4,000 on retail purchases subject to
sales tax and would therefore be
taxed proportionately less.
Going back to the $4,000 income
family, II 10 per cent retail sales
tax means q 10 per cent increase In
the cost Of living and wages must
be increased accordingly, then It
can be argued that the sales tax iA
infiationary. And In times like these
infiationary taxes are considered
dangerous.
When you start granting exemp.
tions to meet these objections -
freeing certain items Of food and
clothing from sales taxes, you cut
down the effectiveness Of the tax
itself. Exempt foods and tie tax
Yield is cut third. Exempt food
and clothing and the yield Is cut In
half.
Treasury ohlcials don't like the
federal sales tax idea for O number
OF reasons. They say It would be
difacult to administer, require q
large personnel to collect and en-.
force, and would be an expensive
tax in proportion to the yield.
APPLICATION OF TAX
To prevent pyramiding Of the
sales tax, 1t is insisted that It be
applied only on sales to ultimate
consumers. That would exempt all
sales Of articles used in production
and distribution - that Is, broadly,
sales to business concerns whose
own products are ultimately sold OF
retail.
The more the exemptions. the
greater the difticulties Of handling,
obviously. But under the above set.
up there would be certain conflicts
between existing manufacturers ex.
else and luxury taxes. They could
be brought into conformity with
the sales tax, or sales taxes could
be levied in addition to the existing
excise taxes.
A further conflict arises in that
some 20 states now have sales taxes
OF their own, which in 1912 yielded
1925 million. Eight states formerly
had sales taxes, but allowed them
to expire or repealed them out.
right. The sales tax Is. however
second only to the gas tax as q rev.
enue producer and 1t is contended
that the sales tax should be re-
served to the states.
These, in brief, are the principal
points against the sales tax as a
federal revenue producer. But there
are new and potent arguments in
its favor, which will be dealt with
in this space in the next issue.