Show SOMEONE'S PICKING YOUR POCKET Its It's the tIle Hidden Tax Collector Collector He He Respects Not Even the Real Necessities of Li Life e and How He Wallops Your Budget By WILLIAM WILLIAl C. C UTLEY 0 YOU make a D DO month If you do you'll be interested interested and and perhaps a little surprised to to learn that the tax collector picks your pocket to the tune of one- one eighth of your income He sneaks enough from the family family family fam fam- ily wallet in two years to buy buya a new car Yes he picks your our pocket For this take which take which amounts to cents out of every dollar dollar represents indirect or hidden taxes They're not like your income tax or personal property tax or a sta state te retail sales tax for you ou rarely know when you have to shell out for them They're concealed In the price of the goods and services you j buy even the bare necessities of l life e such as bread and shoes Death and taxes arc arc inevitable inevitable and and all too often otten invisible These are only a few of many illuminating il illuminating il- il revelations to come out o of a survey just completed by bythe bythe bythe the Family Economics bureau of ot the Northwestern National Life Lile Insurance Insurance In In- company of Minneapolis The study was started in November November November Novem Novem- i ber 1935 Records of concerns public utilities insurance companies companies companies compa compa- nies manufacturers jobbers and retailers were retailers were investigated ted in an effort to measure as accurately as possible the proportion of prices paid by the consumer for which taxes taxes federal federal state and local local are are are responsible All AIl levies which would not normally normally normally nor nor- mally be included in the cost of goods and services sold were o omitted omitted omit omit- t- t ted in the calculations which followed followed followed fol fol- lowed from the original producer to the retailer The principal taxes entering into the picture then were Farm and urban realty taxes personal personal personal per per- property and general property property property prop prop- erty taxes of business concerns excise excise excise ex ex- cise taxes licenses fees and franchises franchises franchises fran fran- moneys and credits taxes gasoline and oil taxes on truck deliveries import duties and the tax element in freight costs involved involved involved in in- in the various steps of dis dis- dis Taxes Are Passed On To understand the figures it is necessary to understand how some of these indirect taxes work In Inthe Inthe Inthe the case of ot a retailer who owns the building which houses his store says the report real estate taxes are shown on his books as an item of overhead and their participation tion in the markup which he must add to his cost prices can be measured with considerable However if it he rents his store building the taxes on the building are necessarily contained in the rental paid and are just as surely a portion of his ov overhead expense even though concealed in the entry rent In the wholesale price which the retailer pays for his merchandise is necessarily contained an overhead element consisting of the real estate taxes on the building occupied by bythe bythe bythe the wholesaler and just as necessarily necessarily necessarily taxes on the factory which produced the goods contribute a portion portion portion por por- tion of the price charged the jobber by the manufacturer This study 1 the report continued continued continued contin contin- has undertaken to include in inthe inthe inthe the figures finally attained the principal principal principal prin prin- cipal elements affecting ultimate prices charged whether actually listed as taxes on the books of the business or contained as a portion portion portion por por- tion of some other entry Social security taxes were not considered considered considered con con- because they are in a sense deposits for future withdrawal withdraw withdraw- al al Gasoline asoline taxes were computed because gasoline and oil arc are subject subject subject sub sub- to local taxes in ill all 48 states and the District of Columbia in addition to the federal lev levy Tax-Grabber Tax Is Killjoy The researchers estimated that the average workers worker's family with an income of a month spends for food of this 71 per cent or goes to the hidden tax colI col col- col- col lector Of the 30 spent for shelter I hidden taxes take more than a 3 quarter They account for or 8 per cent of the 16 clothing bill or Fuel and light cost 11 but 95 per cent of this or represents represents represents rep rep- resents indirect taxes The tax grabber really cuts into the family's enjoyment of l life e. e The cost of an average used car including including including ing license and gas and oil sales tax is 1450 a month hidden taxes get per cent cent And the the month a family c can m set aside for recreation includes 30 cents for the tax grabber who seldom shows his face Insurance bears a lighter tax load Of Ot the spent monthly for that protection only 26 per percent percent percent cent or 13 cents falls into the hidden hidden hidden hid hid- den tax barrel Sundries and miscellaneous miscellaneous miscellaneous mis mis- i items items toothpaste toothpaste jewelry jewel jewel- i ry tobacco etc which which cost 27 a 3 month a are r e burdened with taxes amounting to per cent or The hidden taxes which eat away at an 80 monthly income are arc slightly slight slight- ly less in proportion since it is assumed that such an 10 income does not ordinarily permit the ownership ownership owner owner- ship or o operation of ot an automobile s fu r What the salesman doesn't always tell you The cost of a used car carand carand carand and its operation include hidden taxes amounting to per cent If U UIt it were a new car the figure would be per cent Heres Here's the way the tax collector fares with that one of Taxes Amount Cost Found of 01 Tax InPer InPer in inPer Per Month in Cost Dollars Food 2700 2100 71 11 92 1 Shelter 1800 Clothing 80 72 12 Fuel and Light 95 57 Transportation Streetcar 44 Recreation 20 Insurance 26 05 Sundries MIscellaneous MIscellaneous Miscellaneous Mis- Mis 1200 1200 Total Annually l Taxes on Income There is a slight difference in the proportion of ot hidden taxes to the spending of a family with an income income income in in- come of a month This is again accounted for by the automobile as shown Cost A of 01 Taxes Per Found Tax In Inin Month in Cost Dollars Food 71 Shelter Clothing 2200 80 Fuel and Light 1400 95 Transportation Auto bought new 2000 Recreation tIon 60 Savings Insurance 12 1200 00 26 31 Sundries St Miscellaneous Mis Mis- Miscellaneous Total 24 2437 2427 87 Annually Also includes license and gas and oil oll sales taxes Tax Tax ratio to total time and demand deposits in banks studied was 2 per percent percent cent However the effect of ot this tax would obviously not be to increase the savings ings depositors depositor's outlay but could only affect him film by reducing the interest yield on his savings The mone moneys s 's and credits taxes levied by many states are paid directly by depositors with wide variation in rates rates' and md in minimum exemptions After arriving at general tax ratios for the various lines of goods and products represented by the concerns studied says the report further studies were made of inn in- in n r K r FI M hrS D I sp k S y m You'll never recognize em madame madame madame ma- ma dame but hidden bidden taxes will account for eight per cent of what you pay for that dress products in certain lines lines lines- in the case of food products bread pork beef sugar etc The results of these studies gave an additional series of checks though necessarily individual items varied rather widely widely wide wide- 1 ly in some cases from the tax pro pro- proportions proportions proportions portions arrived at for the general group of goods The loaf loa of bread for lor which you pay a dime dune bears In its cost 64 of a 3 cent In hidden taxes the study disclosed Beef prices contain indirect indirect indirect in in- direct taxes amounting to per percent percent percent cent pork prices per cent centA A pound five bag of ot sugar costs a n nickel more than it would if there were no indirect taxes concealed in it Rent Boosted by Ta Taxes es l if the man of the house buys a n asuit asuit suit o of clothes for 25 a portion of ot that amounting to helps clothe the tax collector If the lady spends for a 3 pair of shoes she will never be happy to learn that she could have bought them for were it not for the inevitable taxes The great proportion of indirect taxes to residential rental costs was investigated with the aid of ot real estate companies in 48 c cities ties records records records rec rec- on representative local properties properties properties prop prop- were taken at random from their files A total of single and multiple family dwelling units were covered by the final averages These revealed revealed revealed re re- re- re that taxes represented 28 per cent of the current rental rate of ot the one-family one dwellings studied per cent of ot the rental rates of the duplexes and per cent of ot the rental rates of ot the apartments The notably lower ratio of taxes to apartment dwellings is due says the report first to the fact that a portion of the apartment rental dollar dollar dollar dol dol- lar represents fuel water rent janitor janitor jan jaR service etc second floor space is more intensively occupied in apartment buildings and third apartment rental rates have in general general general gen gen- eral recovered somewhat faster than house rental rates In many communities communities communities com com- however tax rates are mounting approximately as fast as rental rates are Average Motorist Taxed 48 The automobile today has passed the stage where it may be classified as altogether a luxury But its it's a afree afree afree free luxury for the tax grabber in fact its it's soft picking for him Motorists Motorists Motorists Mo Mo- paid an average of 48 apiece in taxes direct and indirect contributing contributing contributing con con- a total of of ot 10 10 per cent of the nations nation's entire tax revenues during the fiscal year ended June 30 1937 according to the study In a detailed advance estimate the report sets total federal state and local tax collections at for the fiscal year just ended General property taxes contribute and income taxes- taxes federal state and local 2629 local 2629 according to the study with the owners of twenty eight million motor vehicles ranking a 3 strong third as a source of ot revenue Gasoline and oil taxes totaling make up the bulk bulk of motorists' motorists current t. t tax contributions Combined federal and state taxes on gasoline average slightly over five cents per gallon for the country country country coun coun- try as a whole The purchaser of a 3 new priced low-priced car pays in taxes direct and indirect during his first year of ownership according to the study He pays approximately 64 In taxes taxes' as a part of the original purchase purchase purchase pur pur- chase price the study shows This figure includes estimated tax content in the freight costs 1441 in in excise t. t taxes and numerous direct direct direct di di- and indirect taxes which accumulate accumulate ac ac- ac cumulate in material and production production production tion costs to an estimated amount of Computations Conservative If the motorist operates his car miles a season his gasoline and oil sales taxes will total approximately approximately ap ap- ap- ap proximately ly 23 with an average cost for his new car license of ot I 1450 a 3 motorist thus contributes I some in taxes during his bis first year of ownership If 11 however the 64 of taxes contained contained contained con con- in the original purchase price Is averaged down to an annual depreciation depreciation depreciation de de- de- de basis of 1042 assuming assuming assuming assum assum- ing resale or trade-In trade at the end of the third year for the motorists motorist's motorists motorist's motor motor- average tax cost becomes annually for the three years the stud study shows This figure Is computed computed computed com com- on the very conservative operating operating operating op op- basis of ot miles per season season season sea sea- son the report points out The owner of a 3 used car in its fourth to seventh year of service contributes an average of 35 annually annually annually an an- in taxes the study shows If he operates his car a modest miles per season 0 Western Newspaper Union |