Evening star., 1936-09-17
SOCIAL SECURITY
TAXES DEFENDED
Act Is Termed Constructive
Legislation In Address
by Winant.

Terming ths social security act as
"the most constructive piece Of social
legislation which has been enacted in
the United States in our lifetime"
John G. Winant, chairman OF the
board, yesterday defended the taxing
structure Of the Federal old-age
benefits section of the act. The de-
fense was made before members Of the
National Press Club, where Winant
delivered luncheon address.
The taxes at issue become effective
next January with employers and
employees each to pay per cent levy
on wages up to $1,000 yearly. The tax
is to be stepped up gradually until
each party is paying 3 per cent in
1949.
The weight of this tax and the plan
to build up q tremendous old-ase re-
serve account in the Federal treasury
frequently has been criticized by foes
Of the social security program as now
constituted. Speaking Of the addition
Of this tax burden to industry, Winant
said:
Industry Is constantly called upon
TO face changes in cost factors, and
frequently faces and successfully
adjusts to much greater fluctuations
In certain factors than the taxes under
the social security act will ever entail.
Holds Charge Is Just.
"I know the criticism has been
made that these taxes on wages paid
constitute an indefensible addition TO
the cot Of production. submit that
the cost OF amortizing over q period
of time the cost of worker obsolencense
is a perfectly just charge against the
cost Of production Of the goods into
which the worker has put something
Of himself and has moved by that
fraction 50 much closer to the time
when his retirement from active pro-
duction will be necessary. To my
mind. the taxes with respect 10 wages
provide a method for a more orderly
social accounting Of the costs Of in
security and old-age dependency
which seems to be the inevitable by
products Of our advancing Industrial.
ization.
"Old-age benefit payments to in
dividuals will be made direct from the
Treasury, out of the old-age reserve
account, to which, under the act,
Congress makes periodic appropria-
tions based upon accepted actuarial
principles. There has been criticism
Of tie reserves proposed under this
method. Essentially they will consti-
tute only a means Of meeting the
Governments liabilities over q period
Of time, and in theory are wholly
| within the precedents set by various
| sinking funds and reserves which the
Federal Government has set up in the
past. 1t will be 10 or a dozen years
| before the reserves under the act will
have accumulated sufficiently to con-
stitute financial problem. Before
that time we shall have developed the
system sufficiently to permit judg-
ments based on greater knowledge
and experience"
States Cooperating.
The chairman informed his listeners
that every State in the Union In now
cooperating in three or more Of the
welfare programs set up by the act.
At the same time, he said, Is States
and the District of Columbia have
enacted unemployment compensation
laws on the general model set forth
by the act. These 16 laws, he pointed
out, will cover more than 5000, 900
| workers.
| Winant took occasion to refute
rlunors that the Federal old-age bene-
fits provision of the act is to be dis
carded, declaring fatty that the act
will be administered as now set up.