The Waterbury Democrat., 1937-11-24

is really @ new income tax and cor- poration tax. 3. That the result Is merely more debt, which will have to be paid by more taxes. 1. That the anticipated peak size of the old- age reserve fund (47 billions by l080) Is a potential menace. 5. That in. stead of @ cash reserve or an il- vestment earning money for the Fgovernment, the reserve fund IS merely a collection of IOU's.
 But according to Chairman Ar. thur J. Altmeyer of the Social Sc. curlty Board, the only real trouble with the reserve system iS that it's so hard to explain and to un. derstand.
 Why should the government ster. ilize or earmark dollar paid II, any more than bank or insurance company does, asks Altmeyer. So- cial Security tax money isn't being used to pay this fiscal years $700,- 100000 deficit any more than any other tax receipts. If Q billion dol. lars of such tax money is paid 1t appears on both the receipts and expenditures sides of the budget ledger, SO that the deficit, if any, Is the same.
 Retire U. s. Bonds
 Since the reserve plan contem- plates gradual purchase of all out. standing government bonds for the reserve fund, the results look bet. ter when the budget is balanced. With 6 balanced budget and . se. curity tax collection of billion dol. lars the amount of government debt now held in private hands would be reduced a billion-say from 36 bil. lions to 34-and a federal promise to.pay of e billion would go into the reserve fund. With Q half-bil- lion dollar deficit the outstanding debt could be cut by but $500, ,000,- 900 while billion in bonds was still being credited to the reserve fund.
 Altmcyer says he doesn't see why the reserve fund bends are any more IOUs than the same government securities in private hands, or any life insurance policy or Liberty Bond. The holder of Q social SC. curity account at least has Q vote, which Is more than bank deposi. tor or policy-holder has in the af. fairs of the bank or company, and the 38,000000 elect Congress aS Q board of directors.
 JJnWOrried by Debt
 The reserve Is being built up to meet future cumulative obliga- tions and since private life insur- ance reserves now amount to 20 billions private companies probably will have e 47.billion dollar reserve sooner than the SSB. Nor do offi- cials see why, when the pre.waf floating debt of around a billior dollars has jumped to 30 billior in twenty years, there should pc un' duo fear of the dislocating effects of an increase from 30 to 47 billions in twice that length of time.
 By 1880 annual payment Of old
 age benefits would reach . peak of three billion year, which
 would be paid 6O.50 from govern.
 fnent interest on the reserve bonds
 and payroll tax collections. The
 policy holders would have taken
 over the government debt and In.
 terest on the debt would be paid
 out in benefits rather than to
 coupon clippers. ..
 A pay-as.you-go plan, Altmeyel says, would require Q maximum lV per cent payroll tax instead oi tnt top of six per cent now provideo tThere would be no reserve Stead. fly accommodating interest) It would also call on the general taxpayer to subsidize Q by no means all"in- elusive group of beneficiaries.
 This article won't settle the ar gument, of course. Copyright, 1887, NEA Service, me-