Evening star., 1936-10-31
Member Of the Associated Press.
Who Pays the Tax?

= Employers who inserted notices in pay
envelopes regarding the one per cent
Income tax on employees which goes into
effect next January were actuated by
political considerations. They hoped to
beat Roosevelt. AS political coercion
through the pay envelope is always to
be deplored, the stunt may deserve the
Presidents appellation of contemplate"
But the Presidents explanation Of why
the employers are trying to wreck the
social security act does not hold water
and can be put down as mere rabble-
rousing. The employers are not inter-
ested in wrecking social security. They
are interested in wrecking Mr.. Roose-
welt, using the tax business or anything
else as means to an end. What Mr..
Roosevelt said about their reasons for
opposing social security was this:
Why do these employers seek to re-
peal the social security act? Because
@under the act they have to pay far more
than half of the insurance given to the
workers. Three for one! There's
the rub. That is what these propa ganda-
spreading employers object to.
They are now trying to frighten the
worker about the workers one-dollar
premium, so they won't have to pay their
three-dollar premium.
The employers under the social Sc
curity act, pay several times as much as
the employees through pay roll taxes
But who pays the pay roll taxes? Let
us call on DR.. Edwin E. Witte, executive
director of the Presidents Committee on
Economic Security, which prepared the
administration social security legisla-
ton. Testifying in March, 1885, on the
pending social security bills for the Dis
trict-modeled to conform with national
legislation-Dr. Witte was asked about
what he thought of making the employe
contribute as much as the employer.
He was against it and for these rea-
sons:
A tax on the pay rolls of employers
, will be shifted to the consumer in the
long run and it should be so shifted 1t
: is not sales tax; it is a part of the
wage bill and it should be SO regarded.
The employer should pay the wage bill,
which means that it is added to the prices
the consumers pay for goods. The
employers contribution is normally
shifted to the consumer. In the case of
the employe, the contribution cannot be
shifted to the consumer The employe,
moreover. as consumer, pays for his
part of the contribution of the employer
And there you have it. The pay roll
=. tax is not in the end paid by the employ
= er, but as part of the cost of operation
is passed on to the consumer, who is also
an employe, and is added to his cost of
living. When the employer is unable to
pass the tax on directly to the consumer
in the form of prices he will be inclined
to chisel it out of his employees through
wage cuts, and as every new employe
means higher tax or an increase in cost
OF production, the tendency may be to
cut down on employment. That is one
OF the acknowledged weaknesses of the
social security act, for which no remedy
has yet been found.
The employers who are emphasizing
the employees compulsory contribution to
social security in the hope of beating Mr.
Roosevelt, however, may have thrown a
boomerang. The employe does not con-
tribute anything in the case of unem-
ployment insurance, although such con-
trihution was urged at the time the leg
islation was enacted. But one result of
the hullaballoo over the one, two and
i three per cent tax on wages for old-age
: pensions may be move in the next
Congress to eliminate all employe con-
.tributions and supply the difference
through higher pay roll taxes or special
, income taxes. The consumer might still
pay the bill, but the tax item would be
concealed as far as the individual en-
ploye is concerned.