Evening star., 1941-11-17
Tax on Incomes
At Source'Debuted
Writer States Pro
And Con Of Discussion
Of Treasury Proposal
Bu Bertrdn, Benedict.

ployer pay your income tax for you-or
at least most of it-before 1t Is due? He
would do so by deducting something
every week from your pay envelope or
salary check. That's what the Treasury
suggested to Congress on November 5.
Already the present income tax rates
are hitting us where it hurts. And now
the Treasury is beginning to call, like
Oliver Twist, for more. Even though
the new income tax payments may be
made quarterly instead of in one lump
sum, they are going seriously to en-
barrass persons with smallish incomes
and no financial reserves to fall back
upon. The Treasury believes that such
persons will be glad, instead, to have a
few dollars taken every week from their
pay envelopes or salary checks.
Also, If the Treasury is going to ex-
anime carefully all the millions OF very
small income tax returns, the cost of
examination may come to almost as
much as the actual taxes to be collected.
But II the Treasury does not make such
examinations, many persons may be
tempted to falsify their returns, if only
by omitting certain sources of income.
! II the tax is collected, however, by the
employer by small deductions every week
from the employees remuneration, the
actual examination of the returns can
be little less rigorous.
Congress seems to have received the
Treasury proposal with considerable
hostility. For one thing as many men,
oh To
ury is really asking for double income
tax payment next year. That is, the in
come tax payer would be paying in
1912 on his 1942 income as he received
1t. While at the same time he would
have to pay in 1912 the tax on his l94l
income also.
To this objection the Treasury retorts
that this very payment on one years
income in the following year is a grave
weakness in our tax system. The pre-
vlous years income has already been
spent. When the inevitable depression
after the war boom bursts upon the
country, everybody whose income has
been shot will find 1t doubly hard to
| pay income tax on his previous wears
~N-~OAAN.
| proposal is a pay-as-you-go plan.
Members OF Congress object also TO
the difficulty in having an employer
estimate just how much to deduct from
the remuneration of each of his en-
| ployes. A married man will have to paw
less than single man, and a married
man with children less than a childless
q rri
may be receiving the same salary. And
the amount Of income tax due will vary
| also by whether the employe had other
| sources OF income, to say nothing of
| different deductions for taxes. for re-
| ligious and charitable contributions. for
interest paid and bad debts incurred. etc.
| The Treasury admits this difficulty.
Presumably all employees would have to
report to the employer their marital
status, also the number of their de-
pendents. Then the amounts taken
each week from pay envelopes or salary
checks would be varied accordingly.
Some kind of adjustment with the
| Treasury would have to be made by most
OF us income tax payers. # we were
subject to more in income tax than had
been deducted for us, We should still
owe the Treasury something. If more
had been deducted for our income taxes
than these actually amounted to, the
Treasury would have to give us a re-
| fund or a credit
But look at the poor harassed en-
ployer,' protest many members of Con-
| h. l. =.
mass Of bookkeeping for his social Sc
curity returns. You want to add to this
a vast amount Of work necessary if he Is
also to pay his employees income tax for
them. He'll be spending half his life
filling out blanks to be mailed to Wash
lngton and being checked up on them. "
well, in England income tax has been
collected at the source for many years. II
replies the Treasury to this objection
Until recently this method did not
apply to British wages and salaries, but
now those have been included. too. What
the British employer can do without
being sunk, the American employer can
| do"
But the British system OF income tax
OF Congress who don't like the Treas
urys new proposal. For one thing. it
Is handled pretty much by local in
spectors who know local conditions
Also. the British taxpayer doesn't work
out his own income tax, as the American
taxpayer does. In Great Britain the
taxpayer merely reports his income, and
then the British treasury computes his
tax for him.
But 1t isn't as though we were sug-
gesting something altogether new" saws
the Treasury. Already income tax is
collected at the source in this country on
payments to nonresident aliens also on
payments to foreign corporations with
no offices In this country An American
employer now has to deduct a certain
amount from such payments before
sending them abroad, to make sure the
American income tax will be paid on
them"
Probably all this doesn't touch on what
is really the strongest objection in Con-
gress to the Treasury's new proposal
This is that most Americans on wages
and small salaries might bitterly resent
having their present pay envelopes and
salary checks reduced each week.
The Treasury feels that since deduc-
tions are already being made for socia
security, the persons affected will tol.
crate something more along the same
line. Congress feels that those from