The Waterbury Democrat., 1941-04-21

The tax research boys in the Treasury have been collecting all the information they can, get- ting 1t ready for the House Ways and Means Committee which must draft the bill. Every possible new source of revenue is being consid- cred, with the hopeless assurance that all won't produce enough, no matter how high the rate, or how low the level reached. The prob lem is to raise additional taxes for defense - set your own figure at from one to five billions - in the least objectional way possible. FUN
 AT HOME
 There are plenty of misconcep. tions about the amount of revenue that might be raised from some of the tricky new suggestions that have been made. If you go in for math- ematical evenings at home, there is much indoor sport to be derived from taking @ cooked hat and knocking some of these dizzy tax proposals into 1t.
 Confiscation of all individual in- come above $50,000 year is one of the most frequently heard sug- gestions. It would raise only $500 million. Incidentally, only cou- pie Of people have paid the very highest tax rate since the sched- ule was changed few years ago.
 Repeal of all income taxes, and substitution of general manufc- turers' sales tax is another pet. Well, since all manufacturers sales now total $35 billion a year, the general sales tax rate would have to be seven cents on the dollar if the $2.5 billions now raised from income taxes were equaled, and how would you like that?
 Finding where taxes hit hardest Is another nice game the Treasury experts must play. Taxes on cigarets for instance, don't necessarily hit the same people who pay estate taxes. And people with incomes of $5,0O0 a year pay smaller percent- age Of their earnings in taxes than people who make less or people who make more.
 Tn the case of sales tax at the retail level, people of low income would pay relatively more than people of higher income unless such things as food, rent, clothing and drugs were exempt. Determin- ing what exemptions to make from any tax is touchy problem, and the frequently advanced idea of a general flat tax on all income with out exemption is, therefore, clear out of the question.
 Simplification of the tax law is another reform that hasn't worked AS you may have noticed, income tax laws become more rather than less complicated and the reason is simply that an effort has been made to distribute the tax burden more equitably. by added exemp- tons and impositions.
 TWO SIDES
 TO THIS
 What effect taxes have on sav- ings, consumption, and the general economy must be taken into consid- eration and here you can start fight. One side argues a tax on sav- ings would discourage investment of savings funds in new industries. The other argues that since savings are now at the highest levels a tax on savings would force this money into circulation and thus improve bus- mess.
 Up that same alley there has been advanced as @ defense meas- ure the idea that taxes can be used to control prices and prevent in- fiation. If aluminium is scarce, for example, tax on aluminium goods would raise the price and force people to buy less expensive sub- stitutes.
 Another idea is that as the de- fense effort increases prosperity at better wages demand for con- sumers' goods will increase. With the productive effort tied up on defense work, however, there will be a shortage of consumers goods, and therefore prices will go up. Taxing out of existence the added income of the workers, just to keep prices down, Is one pro- posed cure, and as you can see it's only slightly worse than castor oil.
 The wackiest proposal of all is the Idea of flexible" taxes. They would be changed from month 10 month in an effort to control the economic factors and imitation mentioned above.
 If you haven't had @ headache in a long time, and want one, come on down to Washington and help write the new tax bill.