If the fiscal problems and difficulties caused by a war would end with the war, the task of the fiscal official would be materially lessened. The problems, however, do not cease, but, on the other hand, the return of peace frequently makes the solution of the problems more difficult. The cessation of hostilities does not immediately disband armies or pay interest on a huge public debt, so that war expenditures really last much longer than the war. The end of the war, however, produces a change in the nature of the taxpayer. Taxes that were willingly paid while the war was in progress are now evaded or grudgingly paid. The low prices of the readjustment period make taxpaying all the more burdensome and distasteful. Some important sources of revenue, such as excess profits or war profits, begin to melt away. Legislators are confronted with the problem, then, of readjusting the revenue system so that a sufficient amount of funds will be received with as little injustice and objection as possible.

Many Changes Suggested. - There has been no dearth of remedies suggested to Congress as a cure for the present ailments in the fiscal system. Some have suggested that a tax on the undistributed earnings of corporations, and a flat tax on corporation profits or incomes, be substituted for the now dwindling and highly unsatisfactory excess profits tax. Another suggestion has been to remodel the tariff on a purely revenue basis. Some have advocated a tax on gasoline as well as one of varying amounts on the owners of passenger automobiles. An increased taxation of land values, especially upon those of unimproved land, has had its share of advocates. Opinion has generally been favorable to the removal of the excess profits tax and the higher surtaxes on personal incomes.

Secretary of the Treasury Mellon made some recommendations to Congress for remedying the situation. He would repeal the excess profits tax and make good the loss of revenue by means of some other tax on corporation profits or by an addition to the income tax on corporations. He would readjust the income tax rates so that for 1921 the maximum combined normal and surtaxes would be 40 per cent, and 33 per cent thereafter. He asked for the retention of many of the sales taxes, such as those on transportation, admissions, and such goods as tobacco, but asked for the elimination of those that had proved a nuisance. such as taxes upon sales at soda foun-tarns.

Advantages of Sales Tax. - One of the most strongly advocated and widely discussed changes has been for the adoption of a general sales or turnover tax. This might take a number of forms, but the plan that has been most widely advocated has been a 1 per cent tax upon all sales of whatever nature. The Tax League of America has set forth the following arguments in favor of the sales tax: (1) It will undoubtedly produce all the revenue needed. (2) Under it the flow of revenue will be prompt, constant, and dependable. (3) It will be paid by the whole body of the people, but in infinitely small amounts, by each individual. (4) It is simple in operation and will be promptly, completely, and economically collected, without burdening anybody. (5) When supplemented by a moderate income tax it will rest equitably upon all. (6) It will abolish the present harmful method of class taxation, and business will promptly get back on its feet and prosperity return. (7) It will reduce the high cost of living without reducing the profits of the producer.

Many advocates of the tax refer to its successful use in other countries, such as the Philippines, Canada, and France. The dissimilarities in the tax used, or in the business conducted, however, make the argument from analogy of little weight.

Objections to Sales Tax. - The favor with which the proposition of a sales tax was at first received decreased materially as it became more generally studied and discussed. The important objections that have been brought out have been summed up as follows: (1) The general sales tax is essentially unjust in that it is a tax levied according to needs rather than according to ability to pay. (2) The general sales tax is grossly discriminatory. In so far as the tax cannot be shifted, it is distributed according to gross income, which furnishes no measure of tax-paying ability. The tax treats as being alike transactions which are fundamentally unlike; it subjects to very unequal risks taxpayers in substantially similar positions; it affords an indefensible bounty to the large, integrated industry, as compared with smaller industrial units. (3) The tax rests upon an artificial basis in that it turns upon the mere form of business transactions, and would lead to undesirable changes in business practice.1

Shifting and Incidence. - One of the most common and weighty objections to the sales tax as well as to most forms of corporation taxes is that the burden will be shifted to the consumer. Consequently, the mass of the population with small and moderate incomes will be bearing the bulk of the tax burden. This appears particularly objectionable in the sales tax, since it is thought all the taxes on sales from the production of the raw materials to the final disposal of the finished product will be pyramided and rest on the consumer. The American Federation of Labor and numerous other organizations are, consequently, opposed to the introduction of the sales tax. Protests have also been registered by a number of manufacturers' and merchants' associations, which would indicate that they are not so sure about the possibilities of shifting the burden.

The same underlying principles of shifting and incidence that were discussed in Chapter VIII. The Shifting And Incidence Of Taxes apply to sales taxes and the various taxes on corporations. The laws of price

1 Arthur A. Ballantine, The Annals of the American Academy of Political and Social Science, vol, xov, p. 214, are the determining factors. No one will want a good to any greater extent because it is taxed, and consequently will be willing to pay no more for it. In case the demand for the good be very inelastic, then it will be possible to shift practically the entire burden and dispose of the same number of goods. A review of the principles upon which the shifting of taxes is based will indicate that it is impossible to categorically state whether or not sales taxes and corporation taxes will be shifted.