Candy Taxes and Champion Shoppers
In 1921, Congress held hearings to deliberate the removal of a 5 percent “excise tax” levied on candy manufacturers in the wake of increased national war expenses. The National Confectioners Association, representing some 75 percent of the nations’ candy manufacturers, sent Hubert Fuller as their representative to argue against the special tax and explain why candy, among all the goods which had fallen under the new taxes, should be exempted. Fuller was an attorney, not a candy maker, and his testimony shows skill in the legal arts of dodge and spin. But his pleadings also provide an intriguing glimpse into the state of candy during the first World War and just after.
When the Congressmen thought of candy, it seemed they were thinking of the kinds of candy they were likely to buy for the missus: a nice box of hand-dipped chocolates, selected from a fancy department store candy counter and selling for a dollar or more per pound. These luxury goods seemed fair game for raising extra revenue.
But Mr. Fuller meant to portray the candy business as primarily a business of cheap goods and slim profits. He pointed out that more than 80 percent of the candies produced in the country were “penny” candies and 5 or 10 cent items. You would find these cheaper candy goods in neighborhood shops, in general stores, in “5 and 10 cent” shops. But these stores would not only be selling candy. They had many offerings to entice the pennies and nickels and dimes. And so was it fair, Mr. Fuller demanded, that candy should be taxed, while the rest of the penny universe was not?
Mr. Fuller described the many dazzling alternatives to candy that you might also find at the candy shop. There were other delicacies like cookies, fancy crackers, raisins, stuffed dates, salted nuts. There were toys like marbles, tops, balloons, “squawkers,” paints and crayons [if you know what a squawker is, please tell!]. If none of these were to be taxed, then surely the discriminating customer would gravitate toward the better values for his or her precious pennies and nickles.
The tax on candy manufacture also seemed to unfairly single out confectioners, even when bakers were making sweets that seemed awfully close to candy. The chocolate coated marshmallow on a cheap cookie that was made in a bakery, for example, would not be taxed as candy (something like today’s Mallomars). A Denver candy manufacturer sent a letter to Congress describing a local bakery selling these at 5 cents, in direct competition with the 5 cent candy bars that he was manufacturing. But where the candy maker would give over 5 percent as tax, the baker would pocket that same 5 percent as profit. The Denver candy man imagined a grim future: “they can easily put the candy factories out of business so far as the 5 and 10 cent bars are concerned.”
Today many states are expanding their sales tax to include candy, but exclude “food.” If it has flour, it’s still considered food, even if it looks and tastes like candy. When we look back at this tax testimony from 1921, we can see that even then it was a widely accepted idea that “baked goods” were different from candy in some essential way, and therefore not taxed for extra revenue. But we can also see that the line between “candy” and “baked good” could be quite tenuous.
My favorite moment in the testimony comes when Mr. Fuller explains why children in particular will not stand for the increase in the cost of candy that will come about as a result of the excise tax:
I wish, gentlemen, we could take a child into a store in your presence and give that child a nickel and you could see the child consume half an hour or an hour of the time of the proprietor of that store shopping. Gentlemen, the child is the champion shopper of the country, and he will determine then whether he is getting a penny’s worth or a nickel’s worth or a dime’s worth of candy, or whether he is going to go out and buy something that is not paying any of these taxes, such as the tops or the squawkers or the marbles or these other things.
The child is the champion shopper of the country! Now that is something.
Here at Candy Professor, we are finding that candy explains everything. So now let’s explain the sorry state of American household finances today from the candy perspective.
Since the 1980s, children have been deprived of the chance to wander into a store with a fist full of their own money and figure out if the nickel candy really is a nickel’s worth of candy. So when they grow up, they don’t know a nickel’s worth.
If you’ve never properly shopped for candy, how can you possibly be expected to shop for an exotic adjustable balloon sub-prime mortgage?
Source: Hearings on Internal-Revenue Revision before the Committee on Ways and Means, U.S. House of Representatives, July 26-29 1921. Candy and Confectionery, testimony of Hubert B. Fuller, representing the National Confectioners’ Association