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In 1931 only four states spent any of their money on relief. In 1932 ten states took part. Today 31 states are contributing money from their treasuries. In 1933 when the Federal Government paid 60% of the relief bill, the states spent $107,000,000 for the same purpose. In the first half of 1934, when the Federal Government assumed 70% of the relief burden, the states spent $113,000,000—more in six months than in all the previous twelve. In 1931, 88% of state relief expenditures were provided by general revenues. In the first half of 1934 the general revenue of the states was able to provide only 5% of their relief expenditures. When general revenues became in adequate other sources were tapped: special reserves, gasoline taxes, liquor taxes. Best relief money raiser among new taxes was the sales tax, which in 1933 paid 24% of the states' relief bill. But as expenditures increased the share they provided grew smaller. In the first half of 1934 sales taxes footed only 10% of the bill.
Taxes & Taxes. The 34 Governors who take office in January were, last week, all asking themselves one question: "Where are our bigger relief funds coming from in 1935?" Traditional source of local taxation is real estate. But real estate almost everywhere is heaped high with taxes necessitated by the bond issues of the logo's. Hence the trend of state taxation is to provide relief for property owners. In Ohio and Florida voters have forced reductions in the real estate tax rate. New revenue, therefore, must come from other sources. Most popular alter native nearly everywhere is the graduated income tax. But income taxes fail to raise any worthwhile revenue in states with low per capita wealth. The Inter state Commission on Conflicting Taxation figured that whereas New York raises $5.60 per capita by its income tax, Arkansas raises only 11¢ per capita. Similarly Delaware raises roughly seven times as much per capita by its personal income tax as Virginia raises with a tax that is about 20%. New Mexico gets less than $85,000 a year out of its income tax.
States which already have hefty income taxes—such as Iowa, where the head of a family with three dependents and $2,000 income pays $12—or which can expect little from that type of levy, turn reluctantly to sales taxes. Fortnight ago Ohio plumped for a 3% sales tax to make up for a 50% reduction in its real estate tax rate. Other states will probably follow when their Governors make tax recommendations to Legislatures convening in January. For sales taxes can raise substantial revenue generally within 30 days of passage. Although the revenue per capita from sales tax does not vary so sharply with per capita wealth as with in come taxes, the variation is, nevertheless, considerable.