Evening star., 1935-03-13
Social Security Taxation.

If Congress and the community are
to give needed, intelligent considera-
ton to the various forms Of social
security" legislation proposed for the
District, the questions relating to
financing and cost are Of great I'M
portance. For that reason Represent
ative Ellenbogen of Pennsylvania,
sponsor of the proposed unemployment
insurance bill in the House, has done
well to make available for study at
this time the income tax by which he
would raise a part of the necessary
revenues.
Up to this time local income tax
has been put forward as substitute
form Of taxation to take the place OF
the present intangible tax on personal
property. 1t found some proponents
among those favoring one form OF tax
alton as against another-but it was
not designed primarily to increase the
total burden of taxation.
Mr.. Ellenbogen's income tax bill Is
frankly offered to raise the additional
money to finance, in part, unemploy-
ment insurance and old-age pension
measures. 1t would constitute heavy
increase in the total tax burden. The
yield, estimated on the basis of the
latest statistics of income tax available
Chose for 1882, would begin in the
neighborhood of $1,500,OOO. 1t would
directly affect less than half of the
Federal income taxpayers of the Dis
trict-those with incomes of more
than $4,OO0-and more than half OF
the money raised would be furnished
by corporation taxpayers, to whose
Federal income tax would be added
another levy of 40 per cent.
Under the provisions of Mr.. Ellen
bogen's two bills-the unemployment
insurance measure and the income
tax measure-the greatest burden
would fall on the employer. First, the
employer would be called upon to
pay per cent tax on his pay roll,
and, on top of that, the corporation
tax-paying employer would be as
sessed an additional 40 per cent of
his Federal income tax. The total
tax would doubtless fall so heavily on
some employers as to raise question
as to their ability to remain employers.
1t has been testified, during the Sem
ate hearings on the social security
measures, that 8 per cent pay roll
tax will in some cases amount to a 26
per cent tax on net income, and this
tax varies with the nature of the
business.
These heavy additional forms of
taxation are not being proposed to
meet the demonstrated demands for
revenue to finance tried and proven
governmental functions. The unem-
ployment insurance bill, as drawn for
the District, is entirely new and its
theories are as yet untried. 1t dees
not follow the lines of unemployment
insurance abroad, nor is it patterned
on the only State law so far in effect
that Of Wisconsin. Congress will pro-
coed cautiously before slapping addi-
tional tax burdens on the community
to yield millions of dollars for financ-
ing an untried scheme, with the tax
payers wholly unrepresented in the
administration of the funds.
Specific suggestion has been made
to Mr.. Ellenbogen that the employe,
who IS to receive benefits of the in
surance, should participate in the
payment of the premiums. At the
same time, more thought should be
given to the wisdom of taxing pay
rolls-a tax that may have the unde-
sirable result of shaving pay rolls and
increasing uninsurable unemployment
and of levying an additional in
come tax on incomes already bur-
dened and facing the inevitable pros
pect Of additional drains to finance
other national unemployment relief
plans.
The theory of unemployment insur-
ance is sound in principle and is a
desirable protection that should work,
In the end. to the interest of any
community. But only employers can
increase employment. To soak them
heavily and as class with additional
taxation may prove contradictory to
other efforts to increase employment.
Increasing employment is manifestly
more important at this time than in
sllring against unemployment.