Evening star., 1934-01-23
LOW INCOMES DUE
FOR TAX SQUEEZE
Euures Indicate D. !. Must
Tap Resources Harder
to Raise Money.
BY DAVID LAWRENCE.

BIZ DAVID LAWRENCE.
TnG most important piece Of news
coming out Of the Government TO, some
tina = buried In tbs table Of figures
rust Issued by the Bureau Of internal
Revenue.
It tells the story Of money and m
dAtion and the future value Of the dol
lar more COMPREHENSIVE than all the
debate now going on In Congress about
monetary and fiscal policies. It brings
out some interesting points as to the
way Uncle Sam Is going 10 be COM
PEELED to "crack down" ON everybody
from top to bottom to collect money to
run the Government.
Wartime tax rates will be considered
relatively insignificant compared to the
tax rates that are coming, If the figures
Just disclosed are accepted as q basis
tor an entirely new tax program II
they are not, then the revenue can only
come from the printing press, and
everybody in the administration denies
any intent to turn out printing press
money.
The first revelation is thst the peo-
pie with incomes Of $4,000 or less In
1881 had a net income which totaled
well over $1,000 600, 900, but they paid
only $40 100000 in taxes. The so-called
nch namely, all people with incomes Of
$4,000 a year or over. had q net in
come Of about $4,000 900 900, but paid
the Government $3.50, ,000,0
Small Part Of Deficit.
111s tax collected from both groups
was about 1924 900 900. which is Just
about one-twentieth part Of the deficit
predicted by the President for this fiscal
gear.
Another way to look at it is to take
She incomes Of all persons over $4,000
a year running up to the highest
brackets and the total is only $685.
100000, which, If confiscated in en-
tirety, would not yield one-third Of the
forthcoming $1,000, 900 900 deficit.
Hence the Government has to look
to the incomes below $4,000 a year.
Examination Of the figures shows that
in the classes between $4,000 q year
and $4,000 q year there is only ST.
600,000,000 Of net income, but there is
at least $1,000, 900 900 in the class Of
5000 q year and under.
The reason the amount Of tax on
$1,000. 100000 Of income Is so small Is
because there Is an exemption, for in
stance. nowadays fdf sll incomes of
81, 900 a year or less. The Government
has never really taxed the people with
incomes below thouSand dollars. The
cost of collection has hitherto been re-
garded as prohibitive. Also there Is no
evidence as to how many people in
these low income groups are not even
fling returns.
Only 1,s64,969 Pay.
Out of total Of 100 ,o00, 900 people,
only 1864, 1863 paid the Federal Govern.
ment any taxes in 1882. This was .
decrease of nearly 1000 from the
Is talking about house-to-house
canvass to collect back taxes, but 1t
looks as II that will be expensive unless
the Government imposes taxes on many
more people in the low income groups.
Naturally there will be higher rates
Of taxes for the people above 5000 .
year, and as for those Of S50, 900 q year
and 50 on they will be soaked" too.
But the chances are slim of getting
much money in these higher incomes
even If 100 per cent Of income is COL
lected as tax, which OF course Is out
OF the question, as the courts would not
With 90 per cent of the American
people paying no income taxes at all
into the Federal Treasury, the size Of
the Federal deficits or surpluses here
tofore has been q matter of indiffer-
ence. Now, however, when the Treas
ury needs money it will have to spread
out its tax collecting machinery and
many millions of persons will feel the
pinch Of taxation for the first time.
This may or may not influence the
ypsuders In the National Capital, but
On the success the Federal Govern
nsnt will have In increasing revenues
from income taxes will depend to no
small extent whether the rest Of the
world will consider the American dol
lar properly valued at so cents or
whether it will expect further depre-
citation.
Other Taxes In OfRng.
For obviously government that
keeps running deficits cannot promise
to pay back its borrowings unless It
can find a productive tax system
The alternative may be, of course,
the virtual abandonment Of any idea
Of getting much more than at present
from income taxes, even with higher
rates, but concentration on some
form OF sales or turnover tax.
American business did not fare %
well, however, in 1882 Only $4,000
firms or corporations had . net income
Nearly 350,00O companies showed net
losses; in fact, the combined deficit was
about $6,5000 100000. The Government
collected only s277 900 900 from the cor
porations that did have q profit. But
the entire net income of that group was
about 81 sc, 900 900, which, if complete
" conf1scated. would not have paid 80
per cent of this years deficit in the
Federal Government.
All these figures are for 1882 and
there is no telling what 1888 will look
like until March returns are received.
But any idea that the Government can
merely dig deeper into the pockets Of
the rich and balance its budget Is not
borne out by the official figures. Even
If losses and deductions and other off,
setting items are taken into considera-
ton. the picture Is not altered in any
material respect. The painful truth
Is that American business did not make
any money. relatively speaking, in 1882
or 1888. and individuals suffered cor
sespondingly.
Printing Press Alternative
All official estimates for the next
year or so are based on the expectation
of 10 per cent revival in business In
comes. but even this is relatively small
to affect budget which is to be un-
bslsnced by seven billions this year.
and by two billions the year after.
Unless a new and better revenue syS-
tenn is provided either for direct taxes
or indirect sales taxes. or both. the
chances Of keeping up the present rate
Of expenditure without starting the
printing presses going are becoming
more and more remote every day.
Governments raise money either by
taxes or by loans. The sources Of the
former are inadequate and II the