Detroit evening times. (Detroit, Mich) 1921-1958, 1942-08-27
Senators @.
Pay deductions
For |neonne Tax
Committee Rejects
RumI's Plan for
Paying as You Go
BY ARTHUR HACHTEN

BY ARTHUR HACHTEN
International News Service Stan Writer
WASHINGTON, Aug. 27.-Thel
Senate finance committee today
rejected the so-called Ruml "pay-l
s-you-go" federal individual, in-|
come tax plan by vote OF Is to 3.
A treasury department sugges-
ton for a modified Ruml plan
coupled with withholding tax
also was defeated, IL to 6.
The committee approved with
a provision in the
House revenue bill for withhold
ing tax of 5 per cent beginning
next January and increasing to 10
per cent in 1914. The vote was
10 to 6.
PAY DEDUCTIONS
Under this proposition, 1t w1
employers throughout
the nation. beginning next Janu-
airy, would begin making deduc-
tions from employees pay amount
ing to 5 per cent of the income
taxes they will have to pay on
1943 income.
Senator Walter F. George fD)
of Georgia, chairman OF the COM
mittee, explained that it was the
purpose of his committee to SIM
pity the calculations to be required
of employers in figuring employees
tax bills, so as to relieve them OF
a mass of bookkeeping and detailed
probing into their employees fiscal
situations.
The committee agreed, he said,
to eliminate from the House bill a
withholding tax at the source on
bond interest and interest pay.
lments from building and loan asso-
Citations, credit unions and other
that distribute small
amounts to individuals.
PAYMENTS OVERLAP
George also noted that in 194a
individuals would pay their regu'
lar taxes on 1912 income and al
the same time face the 5 per cent
deduction for application to take.
on 1913 income.
Under the Ruml plan, originated
by Beardsley Ruml, chairman o.
the board of the New York Fed
eral Reserve Bank, the Taxpayer
would use the amount of his in
come in 1871 as a base for pay
ment of taxes periodically during
1912 on the rates and allowance.
prevailing in 1912.
At the end of 1912 his tax bill
would be adjusted upward or down
ward depending upon whether hi.
1912 income would be greater OIL
less than in 1941. theoretically, q
years taxes would be forgiven
temporarily by the government
although proponents of the piar
Explained there would be no inter
Eruption in payment of taxes, anc
that ultimately the government
would not lose any revenue.
Ruml and others have advanced
the plan as way to enable tax
payers to pay their taxes as the,
receive their incomes, and thereby
avoid difficulties faced by many
taxpayers in raising money to pa,
their taxes during the year after i
has been earned.
DEBATED FOUR HOURS
After the finance committee hat
debated the Ruml plan for nearl.
four hours behind closed doors
with treasury tax experts partici
lpating, George told newsmen TIT
CONSENSUS of his committee wa
that the Ruml plan opened trair
tof complications which it wa
believed wise to avoid.
There werc objections by the
treasury department." he said,
continuing:
at was believed that the plan
would afford a windfsll for those
who had high incomes in 1871,
and that It. would not actually
create a strictly pay-as-you-go
basis, because of adjustments
that would have to be made In
refunds by the treasury or addi-
tional payments by the tax
payer"
However, II was believed tha
the committee. in approving Will
revision the House plan for
per cent withholding tax. hat
moved toward the principle Of
pay-as-you-go taxing system.