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Pa^e 4 



The Illinois Agrricultural Association Record 



September 1, 1926 



Tax on Income Can 't 

 Bje Shifted, Declares 

 Watson; Tells Why 



By JOHN C. WATSON. 

 Diijector Taxation and Statiatica. 



1 C. WaUoo. 



TH S most desirable feature of a tax- 

 iiig system is th^ fair distribution 

 of the tax burden 

 among the popula- 

 tion. Taxes cannot 

 be fairly distrib- 

 uted if some people 

 can easily shift 

 them to others to 

 pay, while others 

 cannot shift them 

 at all or have the 

 jfreatest difficulty 

 in doing so. In a 

 previous article it 

 ha s been shown 

 that taxes on agri- 

 cultural land can- 

 not be shifted. The 

 same is usually true 

 of taxes on urban 

 land. In theory, owners of land, whether 

 agri<altural or urban, can usually shift 

 tiixe; on their improvements, but there 

 are londitions under which this is not 

 true. The owners of farms on which 

 the 1 uildings are unoccupied, frequently 

 #oun I in parts of Southern Illinois, are 

 one I :Iass of taxpayers who cannot shift 

 the 1 axes on their improvements. 

 Staivment Not True. 

 It is sometimes said that all taxes are 

 shifted to consumers. The statement is 

 not true. There is one kind of tax 

 whic 1 can be shifted only with extreme 

 difficilty, if at all. This is the tax on 

 net income, especially the progressive 

 tax, with graduated rates increasing 

 with Higher amounts of net income. 



Tl e question is sometimes asked why 

 one kind of tax can be shifted, while 

 anot ler cannot be shifted. The purpose 

 of tHs discusion is briefly to answer the 

 ques ion. 



A !at tax, the amount of which can be 

 anti<ipated with approximate accuracy, 

 and irhich if shifted, does not increase 

 the Amount of tax in a later year, offers 

 the 1 nost favorable conditions for shift- 

 ing. The general property tax, at least 

 on s fme classes of property, offers con- 

 ditio IS favorable to shifting. A sales 

 tax 1 Iso is usually easily shifted. But a 

 grad lated tax on net income differs 

 shar )ly from both the general property 

 tax 1 ind from a sales tax. 



Why Can't Be Shifted. 

 There are two principal reasons why 

 grad lated taxes on net income cannot 

 easil T be shifted. 



Fi -st, those who pay taxes on net in- 

 come cannot shift them because they 

 mnsi compete with others whose net 

 incoiie is not high enough to be taxed. 

 Those who pay the higher rates on net 

 incoiie cannot shift them because they 

 must compete with those who pay lower 

 ratei or pay no tax at all. 



Sc :ond, those who pay taxes on net 

 incoi [les, or anticipate that they may 

 have to pay them, cannot shift them 

 beea ise, by doing so, they only increase 

 the J. mount of their net income and thus 

 inert ase the amount of their tax. The 

 tax, of course, does not increase as fast 

 as tie net income, but any taxpayer who 

 trie! to adopt this policy will not long 

 be a >le to continue it. He can shift the 

 X >nly by increasing his net income. 

 i \d tT ordinary conditions he can in- 

 a « his net income only by increasing 

 tAe )rices of his goods or his services. 



Mid-West Farm Bureaus 

 Adopt Uniform Plans for 

 Future OrganizationWork 



The organization committe repre- 

 senting eight Mid- West states as- 

 sembled at Saugatuck, Michigan, re- 

 cently adopted a uniform plan for 

 carrying on membership work in 

 the various states. Here are the 10 

 recommendations adopted by the 

 committee: 



1. That a permanent membership 

 is paramount if the farm bureau is 

 to function in an educational, social 

 and economic capacity; and that the 

 farm bureau, county, state and na- 

 tional, must build its program, per- 

 sonnel and budget with membership 

 as the primary consideration. 



2. That a membership policy must 

 be built on an appeal for an ade- 

 quate standard of living on the 

 farm, and a farm income to main- 

 tain it. 



3. That membership work be 

 based on volunteer effort. 



4. That to have a healthy and per- 

 manent farm organization, farm 

 leaders must have the courage to 

 teach the membersh i p that each 

 American farmer owes to his occu- 

 pation and his community a decent 

 contribution of money, time and ef- 

 fort. 



5. That the future of cooperative 

 marketing and cooperative purchas- 

 ing, can only be assured through an 

 appreciation by the farmer, that 

 such activities are only factors that 

 help to make possible an adequate 

 standard of living; and that he must 

 recognize and appreciate the neces- 

 sity of loyalty to, and understand- 

 ing of these fundamentals, rather 

 than a consideration only of im- 

 mediate and direct monetary re- 

 turns. 



6. That publicity, properly adapt- 

 ed and directed, is indispensable to 

 getting and keeping members; and 

 its form and appeal must be of such 

 character that it will create and 

 maintain interest in the Farm 

 Bureau. 



7. That all farm bureaus should 

 adopt an adequate uniform member- 

 ship fee. 



8. That financial support from 

 Commodity Associations should be 

 received only for specific services 

 rendered, and should not be recom- 

 mended as the principal source of 

 farm bureau income. 



9. That prompt collection of dues 

 is fundamental to the success of 

 membership work; and that a dues 

 collection program must be continu- 

 ally in effect, and particularly 

 should a dues collection campaign 

 precede a membership campaign. 



10. That we should look to the or- 

 ganization department of the Amer- 

 ican Farm Bureau Federation for 

 the further development of a na- 

 tional plan of organization and 

 membership maintenance, and that 

 department should have the assist- 

 ance of a competent personnel made 

 available to train leaders and assist 

 in ihe direction of organization 

 work. 



Bunk About Tariff 

 Is Exploded by 



Farm Experts 



(Continued from paee 1. coL 2) 



proljably over $5 per capita, or a 

 tota of $158,000,000 on steel alone. 

 It w ould not be out of reason to say 

 that the tariff costs the farmer, net, 

 in tl e neighborhood of $300,000,000 

 or SIO for every man, woman, and 

 chil I livinff on American farms. . . . 

 Thus the fanner very properly 

 asks what the facts are about his 

 mu4> praised home market. So far 

 as he can see, it works well with re- 

 spe<tt to potatoes, tomatoes, and 

 fresfi vegetables, but fails to work 

 resriecting com, hogs, cattle, wheat, 

 ricel and cotton. For the most part 

 the [prices of these basic commodi- 

 ties »re made on a world market and 

 refltctcd back to American farmers. 



"This is merelv another way of 

 saySng that one of the greatest price 

 mahing influences known is the tar- 

 iff, and the farmer receives little 

 benefit in the way of increased 

 price, but pays bills made much 

 larg Br by the tariff on manufactured 

 goods." I 



Speaking for the* same meeting 



in New York City some' time ago, 



. Pro '. John D. Black, economist from 



the University of Minnesota, had 



the following to say: 



Aaotlier Krfockout. 



" ^0 nation has gone in for stimu- 



lating urban industries on so vigor- 

 ous a scale as has the United States. 

 The duties now generally average 

 around 40 per cent of the value of 

 what few manufactured goods arf 

 imported. Coupled with this, most 

 raw materials of manufacturing 

 have come in duty free, even though 

 they compete with domestic farm 

 products in some cases. Hides, veg- 

 etable oils, and Egyptian staple cot- 

 ton are cases in point. All of this 

 was done in the beginning to give 

 our infant industries a chance to get 

 started. We were largely an agri- 

 cultural nation, and thoughtful peo- 

 ple agreed that we would be better 

 off if we diversified. But we al- 

 lowed the infant to grow so strong 

 that it has over-mastered us. The 

 effect has been to penalize agricul- 

 ture by making farmers pay higher 

 prices for what they buy, while the 

 protection they are receiving on 

 their farm products is adding little 

 to offset it. It must be remembered 

 also that tariff protection for in- 

 dustry raises the whole level of 

 money wages (not real wages) in 

 the cities. The protected industries 

 take labor away from the unpro- 

 tected ones and the exporting ones, 

 until only the more efficient units of 

 these, those which can meet the 

 high wages, are left producing. 

 Along with this is a reduction in per 

 capita output, because the labor is 

 now used in less productive indus- 

 tries. The same analysis probably 

 applies to the land and capital goods 

 also used in production. The result 



Oil Co-ops Succeed 

 In Saving Thousands 

 For Minnesota Men 



Good Cooperation and High 

 Class Management Reasons 

 For Success, Declares J. R. 

 Bent, Following Visit 



"Cooperation aided by good manage- 

 ment is saving the farmers of Minne- 

 sota thousands of dollars annually on 

 their gas and oil bills," declared J. R. 

 Bent, director of farm supplies who just 

 returned from a study of cooperative oil 

 and gas companies in Minnesota. 



".Minnesota has 40 cooperative dis- 

 tributive stations in operation, said 

 Bent, most of which are of recent origin. 

 But the older companies have been pay- 

 ing almost unheard of dividends on their 

 investments. The Cottonwood, Owaton- 

 na, and Freeborn county companies have 

 made a pronounced success of their op- 

 erations in both service and savings. 

 Their earnings are almo:it too good to 

 be true." 



The Freeborn county company with a 

 capital investment of only $20,000, but 

 capitalixe^or $25,000, earned more than 

 $16,00(^-^t last year. A surplus of 

 $1,600 was set aside, and a patronage 

 dividend of $14,000 was declared for 

 payment next year. This money in the 

 meantime will help augment the working 

 capital. 



The Freeborn county company has a 

 central bulk station at Albert Lea and 

 three outlying bulk stations. There is 

 only one retail filling station, and that 

 is located at Albert Lea. According to 

 Bent, the retail station is the least 

 necessary part of the distribution sys- 

 tem. The managers are not altogether 

 convinced that the filling station is an 

 asset. Each bulk station is equipped 

 with one or more delivery trucks. 



The Central Cooperative Oil Co., at 

 Owatonna has been successful since its 

 organization in 1922. It has only one 

 bulk and retail filling station. Both are 

 located together in Owatonna. 



This company organized with 1000 

 shares of stock at $25 per share. Seven 

 hundred shares only were sold. The 

 last audit on January 1, 1926, showed 

 the net worth of the company was ap- 

 proximately $16,000 with refunds for 



1925, not paid, at $14^71.17. 



The net profit for last month, July, 



1926, of the Owatonna company amount- 

 ed to more than $4,300 net. The Free- 

 born county company showed a profit 

 for July of over $4,500. These figures 

 are exclusive of taxes, insurance, and 

 depreciation, but they are above all 

 labor, management, and other overhead 

 expenses. 



"The chief reasons for the outstand- 

 ing success of these companies is the 

 splendid way in which the Danish, Nor- 

 wegian, and German farmers of those 

 sections cooperate in patronizing their 

 own companies," said Bent. "Then, too, 

 the companies got into the field early 

 when there was little competition. Their 

 profits may decrease somewhat as more 

 competition develops. 



"These companies buy their gas on the 

 open market, and purchase lubricating 

 stock following specifications on a con- 

 tract basis." 



The Freeborn county association has 

 approximately 1300 accounts on the 

 books. Between Mar. 1 and Dec. 31 

 last year it sold 555,138 gallons of gas- 

 oline, 188,738 gallons of kerosene, and 

 22,082 gallons of lubricating oils. A 

 patronage dividend of 9.4 per cent on 

 sales was declared. 



The Illinois Agriculturnl Association 

 is prepared to offer complete service and 

 advice to counties interested in the 

 formation of such companies. A detailed 

 summary of the experiences of the Min- 

 nesota companies with facts and figures 

 about their operations is being prepartd 

 for the benefit of companies organized 

 in Illinois. 



The I. A. A. is cautioning its members 

 to be sure the local people are ready to 

 support the cooperative venture before 

 launching their organization. An ag- 

 gressive and active board of directors 

 and manager are essential to the suc- 

 cess of such companies. The oil co-op 

 is being looked upon as one of the great- 

 est opportunities ever offered for farm- 

 ers to save money. Minnesota, appar- 

 ently, is more successful with its 

 cooperative ventures than other states, 

 largely because its Northern European 

 population thinks in terms of coopera- 

 tion. 



is that nearly all the things which 

 the farmers buy from the city, not 

 just the dutiable goods, cost appreci- 

 ably more. 



"The total offset is not forty per 

 cent, but it is surely more than the 

 two per cent that certain quaint 

 jugglers of figures managed to get 

 inserted in President Coolidge's re- 

 cent Chicago speech. 



"Also the wages the farmer pays 

 his hired labor are higher because 

 of the competition of the protected 

 city industries. Thus the farmers 

 who are near the margin arc crowd- 

 ed out just as are the marginal city 

 producers in unprotected indus- 

 tries. 



Higher Prices for 



Beef Cattle Coming 

 Is Govt. Prediction 



HIGHER prices for beef cattle 

 are in prospect within the next 

 eighteen months for both the feed- 

 ers and range producers, according 

 to the report on the outlook for beef 

 cattle made by the Department of 

 Agriculture recently. An upward 

 trend is probable over the next two 

 or three years the department says. 

 The numbers of breeding stock, of 

 cattle on feed, and of young stock 

 seem to be materially lower than for 

 several years so that reduction in 

 the market movement is expected. 



While no considerable reduction 

 in the number of stock held by range 

 men was made for some time after 

 the break of 1920, the number of 

 steers has been reduced during the 

 last three or four years accomp- 

 anied by a less rapid reduction in 

 the number of cows. The increasing 

 number of cows and heifers now 

 being slaughtered indicates further 

 reductions in breeding stock still be- 

 ing made. It does not appear, 

 therefore, that the number of cows 

 is sufficient to long maintain the 

 present high rate of slaughter, the 

 report shows. 



All indications are for smaller 

 supplies of cattle on the markets 

 during the next few months also, 

 the department states. The move- 

 ment of all cattle so far during 1926 

 has been less than for the same 

 periods last year, and the best in- 

 formation from the range States in- 

 dicates a considerably lighter run of 

 grass cattle during the next three 

 months than a year ago. In the 

 Southwest there are lighter supplies 

 of cattle available than a year ago. 

 As the 1926 calf crop was good, Uie 

 number of calves to be offered from 

 the Southwest this fall will compare 

 favorably with the past three years, 

 however. Good range conditions 

 and an improved financial situation 

 have placed the southwestern cat- 

 tlemen in a position so they would 

 not be forced to sell on an unfavorv 

 able market. 



Survey In Forty- 

 Six Counties Shows 

 Wealth Farm Bureaus 



Net Worth Nearly Half Mil- 

 lion Dollars and Represents 

 An Industry Valued at 

 Three Billion 



FORTY-SIX county farm bureaus 

 picked at random over the state 

 of Illinois are worth approximately 

 a half million dollars, they serve an 

 industry in these 46 counties valued 

 at three billion dollars, and they 

 represent a total paid-up member- 

 ship of 37,000 according to a survey 

 recently completed by George R. 

 Wicker, director of business service. 



The survey covering 46 county 

 farm bureaus whose books were 

 audited by the. Illinois Agricultural 

 Cooperatives Association shows that 

 the average net worth of the 46 

 bureaus was $10,009.85. The 

 wealthiest county farm bureau 

 showed a net worth of $24,623.80 

 while the smallest was rated at 

 $495.02. 



The financial statement shows 

 that most farm bureaus are living 

 within their income because the 

 average of the 46 showed an excess 

 of income over expense of $1,595.92. 



Commercial activities of farm 

 bureaus it was found are compara- 

 tively slight and in most counties 

 are limited to the handling of serum 

 and virus for vaccinating hogs. The 

 total income derived from such ac- 

 tivities amounted to only 3 per cent 

 of the total gross income. Member- 

 ship dues were responsible for 72.97 

 per cent of the total income, receipts 

 from state and federal appropria- 

 tions represented 18.82 per cent, and 

 commercial activities about 3 per 

 cent. 



Total expenses of the 46 farm 

 bureaus included in the survey were 

 $269,130.33 representing 90.3 per 

 cent of income, resulting in an ex- 

 cess of income of $28,899.46 or 9.7 

 per cent of total income. 



"The survey indicates that the 

 farm bureaus whose expenses ex- 

 ceeded income last year, did not pay 

 sufficient attention to the collection 

 of membership dues," said Wicker. 

 "The budgets in such cases did not 

 take account of the delinquencies." 



Rain Breaks Up 

 State Picnic at 

 Mt. Vernon, Aug. 12 



Horseshoe Championship to 

 Be Decided at Fairbury, 

 Sept. 6. Marshall-Putnam 

 Plays Knox County, Ind., 

 In Interstate Championship 

 Series 



A crowd estimated at 15,000 most- 

 ly from the lower third of the state 

 got a wet reception at the I. A. A. 

 state picnic, Mt. Vernon on Thurs- 

 day, August 12. 



Intermittent showers throughout 

 the day terminated in a downpour 

 at 3:00 p. m. that sent picnickers 

 scurrying for shelter in every direc- 

 tion, and before the torrent which 

 bordered on a cloudburst had sub- 

 sided the picnic grounds were swim- 

 ming, and all >hopes for continuing 

 the program had vainshed. 



Between showers, Marshall-Put- 

 nam's crack nine led by "Parson" 

 Thompson, who preaches in Lacon 

 on Sunday and pit<!hes for the farm 

 bureau team diiring the week, man- 

 aged to rout Henderson county in a 

 fast game by the score of 12 to 2. 



This is the second state champion- 

 ship in the Illinois Farm Bureau 

 Baseball League for the winners. 

 Phelps and Wallace each brought in 

 three runs for Marshall-Putnam, 

 while Rickets and Keeney scored the 

 two runs for Henderson. Wallace 

 for the winners, and Keener for the 

 losers each made home runs. 



Marshall-Putnam was scheduled 

 to play an interstate' game with an 

 all-star team selected from the 10 

 farm bureau te^ms of Knox County, 

 Ind., at the former's picnic, Lacon, 

 on Aug. 28. A series of games is 

 planned to decide the interstate 

 championship. 



The hog-calling contest delayed by 

 rain until afternoon brought out 24 

 entries, 21 of which reported for 

 competition. It didn't take the 

 three judges, Sam Sorrells, Clair 

 Hay, and C. T. Hufford long to 

 award the little gold pig trophy to 

 Walton Hodge of Jefferson county. 

 V. E. Robison of Tazewell county, 

 last year's champion, was among the 

 contestants. 



Hodge won hands down with a 

 penetrating, musical W-H-0-O-E-Y 

 delivered from the side of the 

 mouth. 



Peterson Brothers from Marshall- 

 Putnam and the Torbert boys from 

 Dewitt were battling for the silver 

 cup in the horseshoe tournament, 

 when the deluge dampened their 

 ardor and made a puddle out of the 

 new clay courts. 



Marshall-Putnam coming; through 

 the day without a defeat had won 

 the first gaihe when the contest was 

 called off. Arrangements were made 

 later to play off the championship 

 at the state horseshoe meet to be 

 held at Fairbury in Livingston 

 county on September 6. 



• Senator Jim Watson of Indiana, 

 the speaker of the day, merely had 

 time to walk out on the platform, 

 say a few nice things about the 

 tariff, comment briefly on the fight 

 for surplus control, and tell his lis- 

 teners, "it's time for us to look about 

 for protection," as the patter of 

 rain drops announced the coming 

 storm. 



Mr. Watson's speech was reported 

 in detail in the 16 page Special Pic- 

 nic Edition of the I. A. A. Record 

 published at Mt. Vernon in cooper- 

 ation with the Register-News the 

 day of the picnic. A large part of 

 the crowd left the grounds before 

 the the special edition could be dis- 

 tributed. Souvenir copies may be 

 had by writing the I. A. A. office, 

 Chicago "or the Register-News, Mt. 

 Vernon. 



Mrs. Chas. Sewell of Otterbein, 

 Ind., director of community and 

 field service for the American Farm 

 Bureau Federation spoke to the 

 women following the rain in the 

 morning. "The morale of the hus- 

 band is largely determined by the 

 mental attitude of the wife," she 

 said. "The farm woman can help by 

 supporting the farm bureau and in- 

 sisting on maintaining a high stan- 

 derd of living on the farm." 



Mrs. T. L. Stookey of St. Clair 

 county won the chicken calling con- 

 test in a field of seven entries. 



Peaches were given away and sold 

 by the Illinois Fruit Growers Ex- 

 change. Peach grading demonstra- 

 tions acquainted many visitors from 

 afar with the methods used in sort- 

 ing and packing fruit for market. 



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