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Show Under the chairmanship of Sen. John Sparkman, the Senate Small Business Committee has been holding hearings on an issue that could well become one of the most destructive threats ever posed to small business. The issue arose out of a Su- preme Court decision 4n February which upheld' the principle that states, could levy income in-come tax on that portion of the earnings made by a company In an- " f i V For example, one small food packer, putting- out some specialties special-ties of very limited use, but with distribution in all 50 states, pointed out that while his firm does $10,000,000 worth of business busi-ness a year, in the course of conducting con-ducting that business, it sends out 150,000 invoices. Thus, if this firm is to make put tax reports for the present states with such laws, it will have to keep track of each case and note where it is shipped, what special prices, or deals were involved, how much profit accrued from the sales of each of these items in each state, and in affect, go through a whole mass of paper work. Some small businesses will have an expense of several hundreds hun-dreds of dollars in preparing data and returns just to pay some state a tax bill not exceeding $10. There is also the question as to whether or riot such a tax is collectible. There seems little doubt many business firms will let various state tax collectors whistle, from sheer necessity. There could also be a complete breakdown of retailer service and distribution in many lines. Thus, the situation is serious. And by far, the silliest part 'of the entire situation is this. For many businesses selling in a number of states, the amount of taxes that would even be paid to these states would be quite small. But the cost of preparing the tax reports would be ruinous. And in many cases the collecting processes by the states will cost more than the revenue realized. Thus, the tax system has finally evolved to a point where everybody every-body loses money, but they make an awful lot of work for an awful lot of people. other state on C. W, Harder the sales in the taxing state. There are now 35 states with such income tax laws on their books, plus eight cities. The Supreme Court decision was 6 to 3, with strongly voiced minority opinions to 4he affect that this does nothing but set up trade ..barriers between states with all the attendant evils that ' for centuries plagued the economy econ-omy of Europe. Many huge companies are not affected by this ruling, as they often operate on a local basis with their own subsidiary firms, or distributorships, that pay local lo-cal state income taxes as a business busi-ness headquartered in that state. But the ruling is so broad that any food packer who sells through brokers, any small manufacturer who has sales representation rep-resentation in a state, can be required re-quired to pay a tax on profits of the business from that state. In the hearings held so far there was ample evidence that many small firms will never be able to make out tax returns for the various states even if they hire armies of accountants. Nttlontl Federation of Independent Buln |
