Evening star., 1941-04-23
~ the Associated Press.

CHlLeQ STATES.
~ the Associated Press.
The first evidence appeared toda,
of developing opposition to th'
TreaSury'S drastic plan for col
lecting from two to six times a
much income tax from taxpayers il
the low and middle brackets.
Part of a program to raise $4,000,
100000 in new Federal revenue, th
Treasury proposal would impose {
schedule of new and higher surtaXe
on every one who pays penn,
income tax.
The plan, if adopted, would hav'
the effect of putting rate as high
as 16.5 per cent on the $4,000 bracket
of taxable income, compared witt,
the present rate on this bracket OF
4 per cent, plus 10 per cent OF that
tax added as special defense levy
In figuring the normal, or basic
income tax of "A per cent a per
cent plus 10 per cent for defenSe), a
10 per cent earned income credit is
allowed. But in computing the pro-
posed II. per cent surtax on the first
$1,000 bracket, no earned income
credit would be deductible.
First Tax Would Be 12.1 Per Cent
The first tax applied in the $4,000
bracket, therefore, would be l21 pei
sent I'll per cent surtaX plus 10 pei
cent defense levy. The "A per cent
normal tax would become effective
on amounts exceeding the earned
income credit, to make the total tax
on the remainder of the $4,000 come
to 165 per cent
For example, childleSs married
couple with a net income from salary
or wages of So, 500 would have per-
sonal exemption of $1,000, leaving
$500 taxable. The SurtaX would be
III per cent of $500. or S6050 The
normal tax would be "A per cent OF
$3.50 $500 minus earned income
credit of 10 per cent of s2.500) OF
sl1. The total tax. which includes
the 10 per cent defense levy, would
be s715O.
Under present law the tax would
be A. per cent of $3.50 or S1l.
IL WdS eSIllIldIeu IIldI UIltSS
rates would yield an estimated
100000 of the new revenues
sought. Other levles would produce
the remainder.
In normal times SurtaXeS are some
thing that cause no concern to in
come taxpayers in the lower brack-
cts. At present an individual must
y "a nf 10,
$4,000 before he has to pay surtaX.
If the Treasury program is adopted,
however, the SurtaX and the basic
tax would apply simultaneously-to
the very first dollar of taxable in-
come.
Defense Supertax Included.
Both the current and the proposed
income rates include the 10 per cent
defense supertaX-or taX-On-a tax
imposed by Congress last year
The Treasury SurtaX schedule. it
was reported authoritatively, al
ready has encountered opposition in
the staff of the Joint Congressional
Committee on Internal Revenue
Taxation, at least as far as some
details go.
This also was said to be the case
with some members of the House
Ways and Means Committee, which
will do the actual drafting of the
big new tax bill
After the Treasury program was
submitted and discussed at the COM
mittees closed meetings Monday and
yesterday, several committee men,
bers limited that they were not en-
thusiastic about some of the pro-
posed Surtax rates, especially those
applying to the lower incomes. They
declined to comment for publication
on the Treasury plan until it is
announced officially by Secretary
Morgenthau at public hearings,
starting tomorrow.
Hypothetical Cases.
In the lower brackets. this is what
the surtax-plus- -present-tax plan
would mean in two hypothetical
cases
A single person with an earned
income of 81 900 after all allowable
deductions except his personal $500
exemption and earned income credit
would have to pay tax of s29 in
stead of the present 81
A married couple with two chill
dren would pay s100 instead of the
present SIS on an earned net income
of $500, after all deductions except
the $4,000 family exemption.
The Treasury plan, in brief, is as
follows:
The present per cent basic rate
would be retained. In addition sur
taxes would be imposed. beginning
at II per cent for the first $4,000 of
taxable income. To this total of Is
per cent would be added the defense
surtaX, which is one-tenth of the
combined basic tax and the surtax.
Thus the effective rate on the bot
tom bracket would become 16.5 per
cent.
The program was submitted
to the Ways and Means Commit
tee behind closed doors and first
oral reports from several commit
teemen were that the Treasury
had recommended a boost in the
normal income tax from 4 to 6
per cent-44 to sc after adding
the supertaX A typewriter
statement of the Treasury, OBJ
tanned later, showed no such
proposalD
Proposed Rates.
The suggested new surtax, starting
ut the very bottom of taxable income,
contrasts sharply with present rates
beginning at 4 per cent on taxable
income above $4,000.
In addition to the II per cent rate
on the lowest bracket, the Treasury
proposed: IA per cent on $4,000 to
$4,000; Is on $4,000 to $4,000; 10 on
5000 to $4,000; 81 on $4,000 to
$4,000; % on $4,000 to $4,000 Is
on $4,000 to $4,000; 27 on $4,000
to $4,000; % on $4,000 to $4,000;
81 on $4,000 to $4,000; 80 on $4,000
to $4,000; 36 on $4,000 to $4,000.
From that point on the rates climb