Evening star., 1942-03-06
Proposed Tax Scale
Seen Sidestepping
Farmers and Labor
Moreenthuu's Program
Falls More Heavily on
Old Revenue Workhorses
BY JAY G. HAYDEN.

The outstanding characteristic of
the tax proposals of Secretary of
the Treasury Morgenthau is the
degree to which they shun new exac-
tions from the only two vested in
terests" this war so far has created
organized labor and farmers.
Inadvertently, perhaps, Mr.. Nor
genthau himself stresses this point.
Arguing against any general sales
tax, he says: 1T stimulates demands
for higher wages and adds to the
parity prices of agricultural prod
uctS."
Stated more badly, if new taxes
are imposed on industrial workers
and farmers they will use their
political poWer-demonstrated over
and over again in the last few
months-to compel a commensurate
increase in their income. Chiefly on
this account the Treasury finds no
way to collect the $7,o0O,0OO 900 in
added revenue, which the President
asked for, excepting the same old
tax sources.
Nearly Doubled Again.
Individual income tax PAYERS, In
brackets up to S25,000, whose taxes
were doubled last year, are to have
them nearly doubled again.
Corporation taxes are lifted so
nigh as to cause Mr. Morgenthau
TO suggest that they may leave lit
tie incentive for the maintenance
OF efficiency in business operation. i"
Estate and gift taxes, already far
above the British level, undergo an
other hike.
Of S1,345, 100000 increase from
excises well over 80 per cent is i'm
posed on six tried and true tax
work horses-distilled liquors, $780,
100000; gasoline, s242,000, 900; Gig
arettes, s188,000,0O0; soft drinks,
s147000,000; beer, s117,0O0OOO tele-
phone and telegraph messages, $78,-
100000.
The program does not contain
single important new wrinkle.
And how does it stack up from
the standpoint Of Mr.. Morgenthaus
urgent stipulation that it must be
so devised as to check imitation"
by withdrawing "the greatest pos
sible volume of purchasing power at
this time, when money incomes are
high and the quantity of goods for
civilian use is shrinking day by day
because of the demands of our war
effort"
1t is an axiom that increased
spenders are chiefly people who sud-
denly receive more money than
they received before. Who are the
people whose money income has
risen as result of the war? Prin-
cipally the farmers and wage earn
ers.
But the whole Treasury tax plan
seems designed to tread as little as
possible on the toes of either of
these groups. General sales taxes.
the one form Of tax that reaches
the farmers the same as all other
classes, are rejected completely. The
payroll withholding tax, which
Treasury officials themselves orig
inally suggested as a means of
draining off part of the war in
crease in industrial earnings, is
transformed into a device merely
for making income tax payers cough
up ahead of time. Income tax ex-
emptions Gin nowise reduceG apply
TO it and income withheld this year
Is to apply on next years income
tax.
Considering the size of the war
burden (even If the tax proposals
produce all that Is estimated about
s4O,000,00OO00 will have to be
borrowed in the coming fiscal year,
nobody should object to the in
creases Mr.. Morgenthau has sug-
gested. The fault Is that the
program does not tax enough. AS
it stands. a small segment of the
population not only continues to
carry most of the load. but the
same group is likely to suffer more
from initiation, caused by rush
of buying by the relatively untaxed.
Excise Tax Sidetracked
Combined opposition by President
Roosevelt, organized labor and
farmers certainly would defeat an
unlimited manufacturers sales tax,
but when the tax issue was up
year ago Congress probably would
have adopted numerous specific ex-
cises, except for the administra-
tion's opposition.
Colin F. STAN, chief congressional
tax expert, then proposed levies on
sugar, coffee, tea and cocoas, but
these were rejected with horror by
Mr.. Morgenthau as "a tax on the
poor mans table"
The fact, of course, is that the
Government already is socking
American sugar consumers to the
tune of one-half cent a pound in
farmers processing tax, plus IL
cents tariff on the one-third Of
American consumption that comes
from Cuba All Mr.. STAN proposed
was an additional one-half cent to
produce $69,000,000
Prices of staples, such as sugar,
coffee, tea and cocoa, are easily