Legislative Messages of Hon. James V. Allred, Governor of Texas 1935-1939 Page: 50 of 263

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In
a bulletin published by the American Legislators Association, analyzing
the general sales tax, statistics are cited to show that under a 2%
general sales tax persons with an income of one thousand dollars, or less,
will pay $12.18 per thousand dollars of income; whereas, persons receiving
more than a million dollars a year will pay only 20 per thousand dollars.
Under a 3% general sales tax incomes of one thousand dollars or less,
will pay $18.27 per thousand while those with incomes of more than a
million dollars a year will pay only 30 per thousand.
These statistics do not reflect a theoretical tax structure, but show
actual application of the general sales tax.
The suggestion has been made that the general sales tax be submitted
as a proposed constitutional amendment to the people with the inducement
that a portion of it be used for the purpose of retiring local bonded
indebtedness. May I respectfully remind the Legislature that the people
have already spoken on this issue. Further, that a general sales tax
is a tax on poverty, irrespective of the purpose of which it is levied.
To illustrate: the chief proponents of a sales tax are the chief opponents
of an income tax. They advocate a 2% sales tax which is nothing more
than a 2%c income tax on the average man because he is compelled to
spend all he makes for the necessities of life. As pointed out above, those
with great incomes spend only a small part in such manner that it would
be reached, their investments being chiefly made in stocks and securities
beyond the boundaries of the State from whence their profits flow.
I want it distinctly understood that I do not intend to criticise or question
the motives of all who advocate a general sales tax. Many of them
are patriotic citizens sincerely concerned with the welfare of their state.
They have, however, perhaps unconsciously, become followers of the chief
proponents of a general sales tax-the so-called American Taxpayers
Association and other lobby organizations which Congressional records
show have been financed by contributions from the utilities, the investment
bankers, the Mellon interests and others. These same advocates
of a general sales tax would cry out "Injustice! Injustice!" if the Legislature
proposed even a 2% income tax so as to reach those who are really
able to pay.
Selective Luxury Tax
As contrasted to the general sales tax, a selective luxury tax has been
suggested. It is my belief that such a tax may help to fill the gap in our
system of taxation and produce much needed revenue.
While a selective luxury tax is in effect a tax on a few retail sales, it
is to be distinguished from the general sales tax in that it is essentially
a tax on privilege and wealth. Like the income tax, it embraces that
cardinal principle of ability to pay, and at the same time provides a
wider spread. That is, people in all walks of life are liable to become
subject to this levy, but only at their option.
The tax should not be levied upon any necessity-only upon non-essentials;
and when one's purchases, by his own choosing, enter the realm
of luxuries, he is thus evidencing the possession of a surplus amount of
wealth over and above that necessary for the sustenance of life. It is
but fitting, therefore, that he should contribute a small portion to the
government that made possible the accumulation of this surplus, pro