FINANCE.

Te Aroha News, Volume XLI, Issue 6604, 26 May 1925, Page 7

FINANCE.

HOW TAXATION WORKS Mr Coolidge (U.S. President), and Mr Mellon (U.S. Secretary of State), are violent antagonists of taxation. The latter quotes with approval Adam Smith’s observation that taxation should not obstruct industry and discourage business which might give employment to large numbers. The tax might be collected, but might diminish or perhaps destroy funds which might be available for increasing general prosperity, Mr Coolidge illustrates his antipathy by a single example: “A farmer ships a steer to Chicago. His tax, the tax of the railroad transporting the animal, and of the yards where the animal is sold, go into the price of the animal to the packer. The packer’s tax goes into the hide to the New England shoe manufacturer. The manufacturer’s tax goes into the price to the wholesaler, and the wholesaler’s tax goes into the price to the retailer, who in turn adds his tax in the price to the purchaser. So it may be said that if the farmer ultimately wears the shoes he pays everybody’s taxes from the farm to his feet. It is for these reasons that high taxes mean a high price level, and a high price level in its turn means difficulty in meeting world competition. It is essential, therefore, for the good of the people as a whole that we pay not so much attention to the tax paid directly by a certain number of taxpayers, but we must devote our efforts to relieving the tax paid indirectly by the whole people.”