The Waterbury Democrat., 1942-07-15
Canada New Payroll Deduction Tax Is Seen as '"TeSt Tube" for U. s. Law
DOMINION PAYS ON >1o42 INCOMES, GIVING "PREVIEW" lOF CONGRESSIONAL MEASURE WHICH OPERATES IN 1o43
. N a [. a
By JAMES MANTAGNES (NEA Service COrresDondet)

Congress is debating income tax col- lection at the source and the ad- visibility of forced savings, Can- adds Parliament has announced that Canadians will start paying on their 1922 income from their pay en- velopes on September l, and will have to pay as part of their tax a portion which will be refundable after the war.
 Canada has overhauled her in- come tax set-up for an all-out war effort, has set 8 pace for steep in- come taxes and a new method o1 collecting them, just as she set the pace for price ceilings nearly six months ahead of the United States.
 Canada is becoming the eco- homie test tube for the North American continent.
 Canada's new income taxes brought them much closer to those of Great Britain, leave them much higher than those proposed by Con- gress. An American under the new income taxes now being ifoned out in Washington committee rooms will pay about $540 if he earns $5,00O, is married and has two dependents. TEN TIMES
 1888 RATE
 Under the new Canadian tax plan his Canadian counterpart starts paying in September a total of $1662 on his 1942 income, will receive $500 of it back two years after the war ends with 2 per cent interest. Or, if he saves that amount in life insurance, annuities, pension funds or principal payments on his home mortgage, can deduct that much from his tax and only pay the actual income tax of $1062.
 Last year that same Canadian paid $735, in 1888 he paid SIS. His British brother pays practically the same amount, $1655, part of which is refundable after the war.
 Canadians staggered under the impact of the income taxes when they were announced at Ottawa on June g by Finance Minister J. L.. Ilsley. But they approved, even though it meant a definite drop in their standard of living. No sacri- flee, they felt, was too great to beat the Axis. They were willing to cut their living expenditures. But in debate in Parliament, Canadians asked that Ottawa also curb its nor nal expenditures, not increase them 10 per cent as shown in the big gest budget in Canada's history requiring $500, 100000 for the 1942-43 fiscal year, the equivalent of the national income in 1889.
 Canada this year will spend 52 per cent of her national income o nthe war, including $1,000, ,000,- 900 gift in food and war supplies to Great Britain. TAX IS
 ANTI-INFLATIONARY
 Because the new tax is a de- parture from Canada's income tax history, the plan allows exemptions never granted before. The tax is recognized as so severe that Ot- tawa will now allow deductions for medical and dental bills over 5 per cent of total income, but not ex- ceeding $1,000 for a married man and dependents.
 Because of compulsory feature of the plan is anti-inf1ationary, meant to curtail buying of com- modities requiring raw materials needed for war production, 1t safeguards the persons with sav- ings commitments such as life in- surance, pension funds, annuities and home mortgages.
 These can be deducted up to half the tax, which will otherwise be refundable after the war. But these deductions may not exceed, in the case of single persons 8 per cent of their income, or in the case of married persons 10 per cent ot their income with one per cent al- lowed for each dependent.
 Canadians who are employed will find their pay envelope light CT each pay day after September 1, 1922. Ottawa is distributing de- duction tables to employers so that they need not ask each employe his personal savings. The tax will be deducted according to the tables and these take into account the marital status of each person and the fact that National Defense Tax has already been collected since the beginning of the year and which now becomes the basic or normal income tax.
 IS COMPLICATED
 FIGURING TAX
 The pay day deductions also 1n- clude one-third of the compulsory savings. When the employe makes out his income. tax form in the summer of 1943 he will settle with the government regarding the other two-thirds of the compulsory sav- ings and any additional income and exemption which he claims. The in- dividual who is not employed but has his own business pays quarter ly, starting September IS, on his es- timated 1942 income.
 How does a Canadian figure his new tax? It's fairly complicated He must earn $660 if he is single $12O0 if married. If he earns more and his tax would bring his income