With excess profit taxes expiring in January, the Administration has been frantically exploring means of raising new revenue. Among these is a 10 per cent tax of finished manufactured goods, suggested in 1950 by the National Association of Manufacturers. This would take the form of a uniform excise imposed on all end-products other than food, and would bring in, according to NAM estimates, approximately ten billion dollars a year. This is eight billions more than now collected under selective excise takes, and a significant portion of the budgetary deficit.

A manufacturers' excise tax, though, is little different from a retail sales tax, which the Administration has refused to consider. Indeed, the proposed levy is a nothing but a concealed sales tax. For the manufacturer will pass on the ten per cent charge to the consumer, and its makes little difference how the books are kept when the money comes from the consumer's pocket. A general manufacturers' excise would perhaps be more expensive than a retail sales tax, since wholesalers and retailers might place an additional mark-up on their increased cost, and increased investment in inventories would almost surely develop at all levels of distribution. In addition, because it is often difficult to distinguish "finished" manufactured goods, this tax would have a tendency to pyramid rapidly.

The NAM has denied that such a flat-rate excise "would shift tax burdens from the big fellow to the little fellow," since foodstuffs would be excepted. But while the levy would thus be slightly progressive, it would not be nearly so progressive as present income and luxury taxes. Further, this tax would almost certainly militate against the well-being of business itself. It is a regressive tax, falling on the lower and middle income groups, and by cutting the real incomes of these groups it may stifle an already saturated and competitive economy. When first proposed during the Korean War inflation of 1950, a manufacturers' excise tax may have had merit; but in an economy rife with deflationary potentials--high inventories, cut-backs in defense spending, falling farm prices--enactment would be dangerous, unfair and ill-advised.