Evening star., 1942-01-26
Savings
Held Necessary
Writer Sees Security
Of Family ImperiIed
By Heavy Costs Of War
BIZ S. H. De Vault.

~ ~. ~. 6O 1uSGs
There has been q great deal Of discus
sion Of the increase in the national In
come and the amount Of money that il
available for taxes and savings. Little
consideration has been given to the
effect of the increased living costs on
the amount of money available for taxes
and savings.
Normally, the percentages Of the total
income that 60 for cost Of living are q
follows: Rent. IS per cent; food. 30 per
cent insurance, 8 per cent; automobile,
10 per cent; household items, IL per cent;
savings and taxes, Is per cent. On the
basis Of these figures. it is apparent that
the cost Of living consumes about IS
per cent Of the total national income,
leaving IS per cent for taxes and saw
ings. Certain personal taxes are In
cluded in the IS per cent OF the income
which goes for family living.
In 1910 the total national income was
rs billions Of dollars. Assuming that IS
per cent of this went for items of family
living. this would give total OF 646
billions of dollars. The IS per cent of the
national income would be equivalent to
ia billions of dollars available for taxes
and savings.
From August, 1899, to December, 194l,
the cost of living rose II per cent The
national income in 1941 has been esti-
mated at 90 billions of dollars. There
fore the amount of money available for
family living was 1872 billions Of dollars;
the amount available for taxes and saw
amount available for living is Debated
by II per cent, the equivalent OF the
rise in the cost of living, there is left
688 billions Of dollars as the real cost
Of living. When this is added to the 1873
billions OF dollars for taxes and savings,
1t gives q total of 826 billions OF dollars
Of real income. Had not the cost Of
living risen IL per cent in l941. there
would have been available an additional
94 billions Of dollars for savings and
taxes or for improvement of the stand
ard Of living. This means that the in
crease in the gross national income can
not all be syphoned OF in the form Of
additional taxes without affecting ad-
versely the standard of living.
The national income for 1912 is esti-
mated at about ITO billions of dollars. Of
which cost Of living will consume 93.5
billions Of dollars, leaving 165 billions
Of dollars for savings and taxes. How
ever, the cost Of living will probably rise
to 20 per cent above the August, 1899, f1g-
93.5 billions Of dollars is debated by 20
per cent, there is left 748 billions OF
dollars as the real cost of living Adding
this to the 165 billions of dollars gives
913 billions of dollars as the real in
come. Had the cost of living not risen
20 per cent above the August. 1899.
figure. there would have been available
an additional 1877 billions of dollars for
savings and taxes or for improvement
of the standard of living
Federal taxes in 1910 amounted to
s6 829, 900 900. leaving S4571 900 900 as
savings. Federal taxes in 1941 are esti-
mated at l3 billions of dollars. The
money available for taxes and savings
in 1941 was 1873 billions of dollars, Ieav-
ing 08 Of billion dollars for savings in
addition to the items Of savings included.
In the cost Of living. such as equity in
property, life insurance ETC. These fig-
ures are on calendar year basis and do
not indicate the true situation. For
example, certain taxes. such as income
taxes levied against 194l incomes. are not
collected until 1912 and the real burden
of these taxes will not be felt until about
March Is, 1912
The amount Of money available in
1912 for taxes and savings is 165 billions
of dollars. As the rate of increase in
national income exceeds the rate of in
crease in cost Of living, more OF the
total national income Is available for
savings or taxes.
The Federal Government expects to
collect in taxes in 1912. % billions of dol
lars. or 9 billions Of dollars in excess Of
the l941 collections. 1t is apparent then
that if taxes absorb % billions of dollars
in 1912 nothing will be left for saw
ings If an adequate standard OF living
is maintained. Increased war produc-
tion, however, substantially will reduce
the quantity Of goods available for civil
Ian use. which may reduce somewhat
that proportion Of the national income
going to family living.
1t should be kept in mind that these
figures are general and apply to all oc-
cupational or income groups. Persons
with fixed salaries will be at decided
disadvantage because a 20 per cent rise
in the cost Of living is equivalent to al
most q 20 per cent reduction in salaries
or wages. Likewise, the businesses en-
gagged in the manufacture or sale of cer-
tain civilian goods or in the manufacture
or sale Of goods now needed for defense
purposes will be affected adversely This
applies specifically to businesses such as
Germs engaged in the selling Of certain
manufactured articles, such as washing
machines, vacuum cleaners, radios, etc.
The savings Of most people in the low
and medium income brackets 60 into the
accumulation Of equity in their mort
gagged property and into life insurance
savings. These items alone may take as
much as IS or 40 per cent of the family
gross income. Families with these fixed
obligations may find it difncult to pay
taxes and NAV be either forced to borrow