Evening star., 1941-02-26

adopted by Con- David Lawrence.
gress after nearly three-fourths of
the year 1910 had passed and the
taxpayers in many instances either
had disbursed their earnings or COM
nitted themselves to expenditures
that could not be Cancelled.
While it is true the Government
may get a substantially increased
revenue this way, there is no Ger
tainty that on the expenditure side
the Government will not cost itself
good deal more. Thus, for in
stance, many citizens will retrench
drastically in their purchases and
this in turn will cause certain re-
adjustments, and, in some instances,
temporary unemployment. While
some of the unemployed will in time
find jobs in defense industries or its
by-products, the interval in which
the unemployment occurs causes an
expense to the Government either
in the form of unemployment in
surance or w. P. A. jobs. 1t would
not be surprising now if the w. P. A.
will be declaring against further cuts
in pay rolls during the present year
Notwithstanding the increase IN
defense employment.
Upsets Personal Budgets.
The tax situation has been
clumsily handled by Congress. Had
the tax been made effective Janu-
ary /. 1941, the citizen could have
adjusted himself to the new levy,
but he has no way now to pay back
taxes without materially cutting
into his 1941 budget. Many a tax
payer will be found going into debt
to pay his personal income taxes
this year.
The extent to which the new
taxes applicable to 1910 income will
affect taxpayers can be inferred
from a reading of the new table OF
surtaxes which starts jumping up
ward at much lower levels than
heretofore. A person with a $4,000
income will pay S3,575 and a person
with $4,000 will pay s13,750 If
either is married and has two de-
pendents. The increases are such
that persons in the 100000 class
will pay at least S42, 1000 in Federal
taxes
Not only have surtax rates been
Increased, but a special defense tax
of 10 per cent has been added
against every individual. This
means that after the normal and
surtaxes have been assessed, the
Government imposes 10 per cent
more on the total tax.
In many instances the taxpayers
IN the middle brackets will be ask
ing their respective businesses to
pay them higher salaries or fees
as the case may be. But this does
not afford the individual much re-
lief, for on every additional $4,000
paid him above $4,000, he will have
to pay the Government approxi-
mately half in additional taxes.
Further Increases Seen.
The Treasury Department expects
to raise two-thirds of the cost of
government by taxation and about
e-third through borrowing. The
outgo is to be about s18o0O000,00
at least in the next fiscal year and
1t Is calculated that the income
from present taxes will bring about
S90O0,000000 This means that a
way must be found to raise an ad-
ditional $3,000,O00,000 if the Treas
ury formula is to be fulfilled. To
get that amount of money it is
argued here that further increases
in taxes must be made on 194l
n
Talk of another law is in the air.
To take $4,000 100000 in taxes
out of the national income for the
Federal Government alone is to
double the highest year of tax re-
ceipts in our history. The theory
that more money can be derived
from higher tax rates has been
exploded by experience, but the
Treasury has refused to accept it.
Again and again it has been DEM
onstrated that the lower the surtax
rates the higher the total income
for the Treasury
One effect of the new taxes doubt
less will be to cause public opinion
to insist on retrenchment in non
defense items in the Government.
1t is very likely that the Congress
which is up for election in Novem-
Der. 1912, will find its record on
economies in non-defense appropri-
ations under close scrutiny. The
effect on the economic system of
these sudden applications of higher
rates and the def1ationary results
that may ensue therefrom are
bound to come up for debate in the
coming political campaigns.
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