Evening star., 1942-08-25

would owe him refund or credit
on this $500 differential This
amount would be credited on his
tentative tax liability for 1914
The Ruml plan would place tax
payers with relatively stable in
comes on current basis Earnings
of many persons, however, vary
widely from year to year. To assist
taxpayers in this group Mr.. Ruml
suggested that a relief" provision
might be added to his plan. per-
mitting taxpayers whose earnings
fluctuate sharply, to report tentative
taxes based on current income,
rather than on income for the pre-
vious year.
Eliminates Tax indebtedness.
A principal objective of the Ruml
plan is to free taxpayers from in
debtedness to the Government. For
every taxpayer, under the present
system, is always in debt to Uncle
Sam.
Adoption of the Ruml plan, ac-
cording to its proponents, would be
particularly helpful to those who
enter the armed forces, or the Gov
ernment service, at lower pay, and
those whose income has been re-
duced as result of losing their jobs
in non-war industries. Freedom
from income tax debt also would
be an advantage, both to the Gov
ernment and the taxpayer, they
point out, when wartime income
ceases, and the country faces the
difficult period of postwar readjust-
ment.
Another advantage of the pay-as-
you-go income tax plan, on which
its proponents place great stress, is
the fact that it would make i'm
mensely easier the transition to a
withholding tax imposed at the
source.
Seen IS Imitation Check.
AS a further argument for its
adoption, Its advocates see in the
Ruml plan an additional curb on
inf1ationary trends In our national
economy. Pay-as-you-go taxes, they
explain, would tap rising incomes
almost instantaneously, whereas the
present system involves q time lag
of q year before a tax curb is ap-
piled to expanding purchasing
power.
Though in theory the Treasury
would lose q years collections from
individual income taxes. Mr.. Ruml
contends the plan would not
prejudice Federal revenues. The in
dividual, he points out, would con-
tinue to pay tax in every year,
and the reduction would come only
when he died, or ceased to earn in
come. This loss of revenue, he
argues, would be spread gradually
over the lifetime of the, present
| generation of taxpayers-a period OF
perhaps so years. This gradual loss
he believes, would be partially Offset
by increased collections from a pay
as-you go system.
The Treasury's side OF the story Is
summed up in Mr.. Paul's statement
last night, as follows:
"In press release OF August %,
1912, Beardsley Ruml criticizes the
Treasury's objections to his original
pay-as-you-go income tax plan. He
directs his comments principally at
two points: % the Treasury's state
ment that the plan would be un-
acceptable without collection at the
source and 90 the modified method
of tax cancellation suggested by the
Treasury.
"Mr. Rumls statement reveals "a
serious misunderstanding of the
Treasury's position. Before pro-
ceeding with any changes in the in
come tax SO revolutionary as that
suggested by Mr.. Ruml, it is essentia.
that this misunderstanding be
cleared up, and that the basic issues
be clearly understood.
Present Method "Unsuited."
"The basic objective OF the pay as
you 60 plan proposed by Mr.. Rum
is to get taxpayers on current
basis. This objective has deserved
ly met widespread public approval
The present method of collecting in
come taxes is poorly suited to q
mass tax at high rates.
THE amounts individuals pay il
any year depend not at all on thei
income in that year. but rather OF