The processing tax on wheat

This tax illustrates the other side of the doctrine that "the power to tax is the power to destroy." The processing of wheat was taxed 30 cents a bushel, or 51 per cent of the value of this grain at the time of the initial levy of the tax, not to cripple the industry of growing wheat but to aid it. This tax was on the whole collected efficiently, despite the difficulties that arose in its administration. Moreover, as measured by the ratio of the tax liability for processing wheat, to the number of bushels processed, the effectiveness of the administration of this tax was improved considerably by the Bureau of Internal Revenue in the second year of its levy. A large revenue was realized in both years. The economic effects of the processing tax on wheat were: a shifting forward of the burden of the tax; a small decline in the consumption of wheat; and possibly some contribution to economic recovery through the redistribution of credit resources brought about by the tax.