PROFITEERS ESCAPE UNDER SALES TAX

...2nd that a sales tax is unjust to the people...

...If the tax could not be shifted in some cases it would threaten the life of that particular business or in the words of Seligman a well known international tax expert "A sales tax on the sales of capital would ruin New York City as a financial center of the country...

...also reducing the surtax on personal incomes and will substitute a consumption tax on everything we eat, drink and wear to make up the revenue deficit caused thereby...

...If the farmers back home and the railroad men and miners and merchanies of all kinds, if clerks and clergymen alike all of whom will pay a sales tax will reflect they will not forget that Congressmen are their agents as well as agents' of the bankers and brokers and the only way that Congress can know the sentiment of the country is through the same means of propaganda now pursued by turnover sales tax advocates...

...While tax experts assert the excess profits tax is right in principle it is not always easy to ascertain invested capital, takes a good share of the excess profits out of the business and backed by a powerful propaganda it is slated for repeal...

...Would Protect Profits WHAT is true of the farmer is equally true of the miner, the black smith, the bricklayer, the clerk, the woman and child dependent upon their own labor...

...Cotton goods, woolen, leather, steel and finished articles generally have many turnovers, all of which would be taxed by this plan for illustration: Cotton, 1st tax raw cotton to gin, 2nd tax gin to spinner, 3rd tax, spinner to merceriser, 4th tax, merceriser to dyer, 5th tax, dyer to weaver, 6th tax, weaver to finisher, 7th tax, finisher cloth to wholesaler, 8th tax, wholesaler to retailer...

...if all these improbable fantastic things had been whispered during the war, any one proposing that plan or that purpose would have been hauled before a lunacy commission in order to determine his sanity...

...Some governmental authorities declare that if the one billion dollars revenue from excess profits and reduced surtax is not paid that the government through economy and reduced expenditures can make ends meet from other existing revenue sources and also make substantial payments on the floating debt...

...According to repeated press announcements, a member of the Senate Finance Committee and a member of the Ways and Means Committee of the House, two of the most influential men in Congress, will each offer bills at the coming extra session repealing the excess profits tax on corporations...

...Business must live...

...They predict in favor of a turn over sales tax that with a one per cent tax on everything we eat, drink and wear collected in every turnover it will raise between $1,000,000,000 and $5,000,00 providing all taxes are collected...

...Julius Semon Bache, banker and broker representing a score of large business interests...

...The National Industrial Conference Board is composed of 25 affiliated industrial organizations representing cotton, woolen, metal, boot and shoe, pig iron, copper and other industries with a total capital reaching into billions of dollars and employing many hundreds of thousands of men...

...When informed that our luxury sales tax here is largely avoided they answer, that will not occur with a sales tax and while asserting they have passed all taxes on to the ultimate consumer they indignantly protest against the excess profits and income tax because it taxes and burdens the rich...

...The government would only receive 9% tax on nine turnovers, if it was ever paid to the government in fact, but the profits on every turnover would abnormally swell the price of everything, judging from past experience...

...Congressman James A. Frear of Wisconsin answered this question in a speech delivered in the House on January 31...

...The Payne—Aldrich tariff bill that carried to defeat a great party would have its raval in a consumption turn over sales tax that has for its flag a skull and cross bones and a stand and deliver demand for every man, woman and child in the country — in order that corporation excess profits shall have no limit — in order that war profiteers protected from indemnities by our armies abroad and good people back home, may now say to these returned vet-erans and to their parents who gave until it hurt, in the words of a New York banker and broker "If anyone don't want to pay the tax he should merely refrain from consuming...

...The stakes are $800,-000,000 now paid from corporation excess profits that would then be shifted to the backs of 1OO,000,000 people, who must consume in order to live...

...Many other plans of taxation are proposed but these offered by the Government Treasury would more than meet any deficit because, an increase in tariff rates proposed this session will add $300,000,000 more or almost double the amount now received from customs...

...Rothschild, Goldsmith, Leo Hahn, representing a National retailers organization all want a sales tax and so do many other interests, to whom the shift in tax incomes present and future profits without taxation will be of great personal moment...

...if it had been then proposed that the army of profiteers during war and peace were thereafter to retain their gains whether honest or illgotten without paying any corporation tax or other contribution toward their support of a government which had made their profits possible...

...It is pressed by great New York financiers like Otto Kahn, of Kuhn, Loeb & Co...

...The political liability is obvious but what do those who have their profits gained from the war care which party is in power so long as they chew the persimmons...

...Reason For Sales Tax THE reasoning of these sales tax experts who are now seeking to educate Congress and the public regarding the beauties of their system and nec for its enactment in order to revive business, is about as follows: "The government has permitted us to make enormous unheard of profits, but the government has wrongfully taken away part of those profits after allowing us an exemption of only $3,000 and only 8% on investment...

...We demand that you transfer the excess profits tax and other objectionable taxes reaching a billion dollars annually over to the backs of men, women and children who are least able to pay or if not again we threaten to invest our gains in tax exempt sect ities and let business go hang...

...The section men and engineer under this plan will pay the same as the $50,000 salaried railroad president and the iron moulder will pay the same as J. P. Morgan for what he eats, drinks and wears...

...Frear on the subject — Editor's note...

...Thereby the government destroys initiative and any further investment because we ask to make profits without limit...

...Expenses of government for 1921 fiscal year will fall far below those of last year and on the other hand income and excess profits taxes will fall far below the 1920 figure, which reached nearly four billion dollars...

...Those urging a sales tax do not ordinarily work one quarter of 16 hours per day it Is safe to say and yet travel in private cars and limousines...

...Proceeding from another angle the United States Chamber of Commerce tax committee representing all the Chambers of Commerce in the country conducted a separate investigation...

...It is a game for an "annual prize of upwards of a billion dollars and it justifies the employment of many tax experts, newspaper comments, editorials and press education on the beauties of a sales tax and other expenditures for propaganda without limit...

...Should this tax be shifted...

...Quoting Seligman again, "The sales tax represents an attempt to put an undue, an extravagant burden upon the consumer instead of on the producer or the possessor of wealth...

...When advised that French collection estimates for January, 1921, realized only 35% of the amount predicted by French government experts they say we will collect taxes better here...

...When you do repeal that tax we demand further that you permit us to retain all our gains honest or illgotten which we have accumulated during and since the war and let "business" move on "unrestricted and undisturbed...

...The issue is one of moment, it has for it ultimate purpose the destruction of the income tax system, it means that tax burdens now dis-tributed in some degree according to ability to pay are to be shifted over to the backs of the hewers of wood and drawers of water...

...The price is too great to pay and one that even those possessed of large wealth and power may well hesitate to collect...

...In the words of James Good, Chairman of the Appropriation Committee "it is a tax on the backs and the bellies of the people and any party passing the tax law is doomed to political defeat...

...Nation's Financial Condition GETTING down to concrete facts the public debt in round numbers reaches $24,000,-000,000 of which $9,580,923,677 represents war loans to European governments all of which failed to pay any interest last year, Expenditures for the fiscal year 1920 reached $6,403,-343,841 while total government receipts for the mount in round numbers $323,000,000 was collected from customs...

...9th tax, retailer to customer...

...Every turnover would add the tax and also a liberal profit and when the retailer finally pased it on to the consumer the article would have pyramided in price until its cost would be double its cost without the tax...

...if young soldiers who sacrified during the war in France and whose mothers and fathers back home bought Liberty Bonds until it hurt, if they had been advised that thereafter they were to be called on to pay or make good the excess profits tax of corporations, that they had saved from German indemnity...

...These bankers and brokers and retail dry goods men and candy makers and other like interests are deluging Congressmen today with demands for the passage of a sales tax...

...Notwithstanding many billions have gone into our private coffers through such net profits we will allow our plants to deteriorate if not given this business relief...

...One of the greatest tax experts in the country told me that the ultimate purpose of the sales tax propagandists is to displace and replace all income taxes with a sales tax so that the efforts of years to compel those best able to pay under an income tax would then be wiped out by a turnover sales tax...

...With that situation we learn from high an thority: 1st.that a sales tax is dangerous to business...

...The high surtaxes on personal incomes take so much of individual profits or income that such incomes are being placed in tax exempt securities that cannot be reached without a constitutional amendment so the higher surtaxes are likely to be reduced...

...3rd.that it is a political liability of prodigious size...

...When asked what a 1 per cent proposed sales tax would bring in they say anywhere from one billion dollars to five billion, or over ten times the proportionate amount realized in the Philp-pines...

...By compelling such distribution treasury experts estimate this tax will bring in $190,000,000 annually and the amount thus released and passed into personal income tax statements would add another $400,000,000 annually according to the same authorities...

...That is the ultimatum...

...Rich Could Then Escape By JAMES A. FREAR (Congressman from Wisconsin) Propaganda for the passage of a con-sumption sales tax by Congress is vigor-ously being waged...

...That briefly is the situation...

...Game of Millions Athousand million dollars collected last year from excess profits of prosperous corporations and from surtaxes on individual incomes, are hereafter to be shifted on to the backs of the general public — that is the plan and that is the stake...

...We shall invest our money in 6% tax exempt securities and allow the plants to fall down if you do not repeal the excess profits tax...

...Following is a special article by Mr...

...Many Plans Offered MANY plans are offered for raising the billion dollars lost by repealing the excess profits tax law if additional revenues are needed...

...These figures are from the highest government authorities and are set forth in order to show the untenable position of Consumption tax propagandists whose main purpose is to escape tax, if possible...

...One is to increase the normal tax on corporation profits from 10% to 15% which will add nearly $400,000,000 annually Another plan is to tax undistributed profits of corporations 20...

...Quoting Seligman again "A sales tax on the necessaries of life would evoke a political struggle the like of which we have never seen in this country...

...As stated the item of excess profits and reduction of surtax will reach less than a billion dollars in 1921 according to estimates...

...If the tax was passed on to the ultimate consumer he would eventually pay the tax from the time the raw cotton or leather hide started on its journey until it was finally sold to the ultimate consumer in the form of shirts, socks, of shoes...

...That tax paid by the ultimate consumer would be unjust and wicked because the farmer with a wife and five children would have seven people to feed and clothe whereas Rockefeller with his bowl and milk without children to provide for would pay less tax than the man who is working 16 hours a day to support his family...

...Any expense would be warranted if the billion dollar tax now paid by less than 5% of the population, those best able to pay, could be shifted over to the remaining 95% who do not understand excess profits or frequently any profits at all but live from hand to mouth and are now to pay through a turnover tax on the shoes, shirts, bread, butter, milk, sugar, coffee, tea and everything they consume...

...Their purpose is no idle threat but a plain legislative proposal advocated by powerful financial interests that during the past year have organized one of the strongest and best financed propoganda ever pressed on Congress...

...That is the way a turnover sales tax works and that is the purpose of the bill to be placed before Congress...

...An extra burden of several billion dollars placed on the general public through profit pyramiding is the program in order to release capital that fears investment because the government takes part of its excess profits over eight per cent and because capital wants no restrictions on profits, That is the plea and that is the threat...

...Consumers Pay Tax TWO great business concerns have made an exhaustive tax investigation during the past year with the understood purpose of advocating a sales tax...

...H. C. McKenzie summed it all up in one paragraph when he said "I want to say that the farmers who are represented in the American Farm Bureau Federation will never in the world stand for that proposition" and George P. Hampton of the Farmers' National Council says: "American farmers who this year have lost billions through the slump in farm prices will fight to the end the plan of selfish privileged interests to saddle the huge war debt upon our people...

...Both committees came to the same conclusion that a sales tax would be disastrous to many lines of business where the tax could not be passed on the ultimate consumer because it would then become a tax on gross sales and with numerous turnovers this would destroy smaller concerns, whereas ''integrated" industries that had the advantage of covering all stages from the raw product to the finished article would only have one turnover tax to pay and a consequent great business advantage...

...This belief is now quite general...

...The principal influences behind this movement have been fully disclosed to the American Congress, the propaganda proudly admitted and predictions of success repeatedly made by high authority...

...IF during the war any one had suggested that within a few months thereafter the American Congress would be asked to repeal the excess profits tax on corporations which reach about one billion dollars annually, and then load that burden on the backs of the consumers of the country...

...The system and loglo of the sales tax champion is wonderful in its complexity...

...Yet that estonishing proposal, however improbable three years ago, has been made and if possible is to be enacted into law...

...3,945,000,000 from income and excess profits tax and miscellaneous $2,426,000,000...