The Nonpartisan Leader Newspaper, June 27, 1921, Page 5

The Keller Tax Bills and the Farmer A Little Discussion of Taxation by the Editor, idian Explanatlon of a New Revenue Plan for Uncle Sam BY OLIVER S. MORRIS s3] TATE SENATOR A. A. LIEDERBACH #| of North Dakota, elected recently by North Dakota Nonpartisan . league farmers as chairman of their state committee, for some time has had a standing offer of $100 posted as a re- ward to any one who would prove certain conten- tions relative to taxes. He says he will give the money to any one who will prove that the banking, mercantile and manufacturing business or the rail- + roads pay any taxes. Nobody has been able to win the $100. Seems as though somebody ought to. have grab- bed this money before this, doesn’t it? But as a matter of fact Senator Liederbach has a “heads I win, tails you lose” proposition. - His $100 is safe. For merchants and manufacturers pass what-taxes are assessed against them on to the consumer. Banks hand them down to the borrower, and the railroads transfer them to those who ride on the railroads or use goods transported by the railroads. These businesses do not pay the taxes assessed against them. They simply add enough to their selling prices, interest or rates to cover this item, and the ultimate consumer pays it. Did that ever occur to you before? The truth of this has been fully ad- mitted lately by advocates of the sales tax—a proposed tax on retail sales to be paid by the buyer. This tax has been ‘advocated by big business in place~of the corporation tax, the ex- cess profits tax and other forms of taxation. In arguing for it they ad- mit frankly that all taxes in the end are paid by the consumer, and that it is better for the consumer to pay the tax directly, when he buys the goods or gets the service, than to pay it in- directly in the price of the product or service. The worker not only pays his own taxes on his home, money in the bank and everything else he may own, and on-his income if it exceeds the mini- mum can be taxed, but he pays the taxes of manufacturers, wholesale men, retailers, railroads, banks, ete. The farmer is in the same fix.. True, he produces -food and raw material which he sells, like a manufacturer, - but unlike the manufacturer the farm- er does not fix the price he gets for his . products. The farmer does not figure his costs, Including taxes, add a profit to the total, and then charge enough for farm products to get taxes and other costs back. The farmer does not charge what he wants or needs for his goods; he asks what will be paid, and has to take the offer. So the farmer..can not pass his taxes on to consumers. This is one of the chief reasons farming‘is an un- profitable and unsafe business in comparison” with other businesses, WHY LAND TAXES ARE $ -DIFFICULT TO ESCAPE : Also, the chief tax that a farmer pays is on his land. He pays more land taxes, proportionately, than other business or industry. And land taxes can not be handed down to consumers as readily as other taxes. land taxes can not be handed down at all—that they must be paid by the owner of the land. This is certainly true in the case of unused, vacant or un- occupied land, because the holder of such iand pro- duces nothmg from it or by reason of it, and hence sells nothing to the price of which he can add his land taxes. The argument' that no land taxes at all can be handed down is based on the” followmg reasoning: The supply of land is constant. It never increases or decreases. face of the earth today as there was yesterday, and as there will be tomorrow. The price of .any- thing can be increased only by restricting the sup- ply. The supply of land can not be reduced or re- trip. a-brass band. members. entertainments. Many political economists claim that There is just as much land on the . stricted, hence the price can not be increased and held at a point which, if the land is sold, will re- turn the owner the value of the land plus the taxes he has paid on it. The price of land may go up and stay up and an owner may sell at enough more than he paid to get back the taxes on the land he has paid, but the increase is not due to the owner adding his taxes to the price with the intention of getting his land taxes back. The price of land is controlled by other considerations entirely. But in the case of shoes, for instance, the supply is not constant. The price is readily increased by restricting the supply. In other words, if a shoe manufacturer can not get a price for his product which returns a profit after all costs, including taxes, are paid, he qults making shoes, or makes fewer shoes. The price immediately goes up and he then gets his profit over and above all costs, in- cluding taxes. This is the argument on which is based the con- tention that no land taxes can be handed down. Whether the reasoning is valid or not, the fact re- mains that taxes on unused, unimproved or vacant land can not be handed down to others, and that it A NONPARTISAN LEAGUE BAND Last issue we printed a picture of Nebraska Nonpartisan leaguers on a hunting Above is a picture of Leaguers of Golden Lake, N. D., who have formed J. Arthur Engen of Finley, N. D., sends us the photograph. Since this was taken the band has purchased “regular” “band uniforms for its The organization is much in demand at meetings and What interesting things are Leader readers doing in your loecality? Send us a picture of it! is more difficult to hand down land taxes than any other kind. So that, besides being unable to get his taxes back through ability to fix his own selling price, the farmer’s chief tax .is a land tax, one of the most difficult to hand down to consumers, it be- ing impossible, as is readily proved, to hand down_ taxes on some kinds of land. Now, in the opinion of many farmer leaders, as well as many business men, it follows from all this reasoning that if legislation that will put more taxes proportionally” on -the privilege of holding land, other than used and productive agricultural land, the farmer and the worker, and the consumer, will greatly benefit. They say a tax would thereby be created hitting those best able to pay it, without penalizing industry or production, and it would be a tax those assessed would have difficulty in trans- ferring to consumers. For, if land taxes can be made- a larger proportion of the taxes paid by in- terests other than agricultural interests, which al- ready pay mostly on land, conditions will be more equalized. These farmers and business men. were back of the Nolan bill in the last congress, and have introduced a new taxation plan based on a land tax, in the present congress. It is important that Leader readers understand the proposition. The Leader discussed in full the Nolan land value : PAGE FIVE oo 2 or site tax bill introduced in the last congress. We did not indorse it, but gave the facts and published the opinions of a large number of our readers both - for and against it. Instead of introducing the same bill in the pres- ent congress, the tax experts have drawn a new measure, together with three other bills, revamping our entire federal taxation system. The biils, back— ed by the Farmers’ Federal Tax League of America and the Committee of Manufacturers and Mer-" chants on Federal Taxation, have been introduced in this session of congress by Representative Osecar Keller of St. Paul, one of the Minnesota congress- men elected with the indorsement of the Workmg People’s Nonpartisan league, the labor union body which co-operates with the National Nonpartisan league. EARNED AND UNEARNED INCOME IS DEFINED A big improvement in the new land value tax bill is its allowance of more exemptlons on agricultural land. A tax of 1 per cent is levied on land holdmgs in excess of $10,000 in value, after the value of im- provements have been subtracted. In the case of farm land the exemptions for improvements include buildings and other improvements on the land, cost of clearing, draining and maintenance of fertility. With these exemptions, only the biggest and most valuable farms would pay the tax. Figures obtained from the United State census for 1920 for 17 states show that on the average less than four farmers out of each 100 would have te pay taxes of $1 a year or more. In other words, over 96 per cent of the farmers are totally exempt. Figures as to farmer exemptions have been prepared in the case of only 17 states, which is all that are available at the census bureau. As soon as the government has the census returns on value of farms compiled for the rest of the states, the Farmers’ Federal Tax league will issue a report as to the number of farmers who would have to pay taxes under the bill in each state. ‘While this new taxing plan will practically exempt used and produc- tive agricultural_land, it will bring a tremendous revenue from unused, un- improved and vacant land both in agricultural districts and in business and industrial centers. The plan is to place taxes.more on privilege and less on industry and production, and to formulate a tax that it will be difficult or impossible to hand down to the con- sumer. One of the effects of the plan would be to make other interests pay more nearly the same proportional amount of taxes on land as farmers pay. The three compamon bills of the land site tax bill are as follows: The first bill repeals all existing transportation and sales taxes except those on tobacco, distilled spirits, oleomargarine, habit-forming drugs and products of child labor. The bill also repeals the excess profits tax and the 10 per cent tax on the in- comes of corporations. The second bill amends the income tax law so as to, distinguish between “earned” and “unearned” in- come. The tax on “unearned” income, together w1th the super-taxes, is retained, but the tax on “earned” incomes is cut in two. “Earned” income is defined as income derived from personal services or from business personally conducted. “Unearned” income is defined as income derived from rents of land or other property, interest on mortgages, notes or bonds, dividends on shares of . stock whether in the form of money or stock divi- dends, and from any source other than the labor, skill or business or mdustry personally conducted of the person receiving the income, The third bill amends the inheritance tax. Begin- (Continued on page 13)