Evening star. [volume] (Washington, D.C.) 1854-1972, 1942-11-27

conflict with the laws of Congress
and unless some more DEGREES are
issued to clarity the muddle, the cit
teen will not know how to make out
his income tax return and the en-
ployer will not know what to with
hold from an employe where the
salary earned is in excess OF $25 900,
For several weeks it has been in
sisted that only the persons with
salaries in excess of s67 200 were af-
fected by the Byrnes law" Now it
turns out that anybody with salary
slightly in excess Of about $468O0
can under certain circumstances be
affected by the anti-management
decree.
The existing regulation reads as
follows:
mo amount Of salary - shall
be paid or authorized to be paid to
or accrued to the account during the
taxable year which after reduction
by the Federal income taxes on the
amount of such salary, would exceed
SOS, 900.
THE amount of such Federal in
come taxes shall be determined by
applying to the total amount of
salary paid or accrued during
the taxable year, undiminished by
any deductions, the rates Of taxes
imposed by Chapter l of the Code
as If such amount of salary
we're the net income latter the al
lowance of credits applicable there
to-, the surtax net income and the
Victory tax net income, respectively,
and without allowance of any credits
against any such taxes"
Nullifies Tax Laws.
The foregoing simply nullifles the
tax laws of Congress by removing
at one fell swoop all the deductions
that a taxpayer is entitled to under
the revenue laws. Congress, in other
words, says the taxpayer may deduct
certain items but the Byrnes edict
says the taxpayer may do no such
thing If he is in certain brackets.
Thus a person with a salary of, let
us say, s46,800. may have had a bad
debt loss of $4,000 and no profits
TO offset 1t. Under the law as passed
BY Congress his net income this
year. for instance, would be only
$4,000 and If he had no other de-
auctions he would pay taxes on 500
oOO But the regulation issued by
the Once of Economic Sterilization
above would erase the bad debt de-
duction altogether next year and the
individual would have to pay the
Treasury everything that remained
over and above $25 900 just the same
because his taxes are figured on the
s46. 300 amount and not on his real
net income.
Since when can an executive
agency nullify the deductions writ
ten into the tax laws by the Con-
eress? If the Office of the director
Of economic sterilization or any
the tax rates at will and disregard
the specific rates of taxation and
allowable credits written into the
revenue laws, then has not a prece-
dent been established whereby in
the future executive agencies can
write whatever tax rates they like
into the executive orders and call it
"anti-infiation"?
Abuse Of Power Cited.
Has Congress granted any such
discretionary power to the executive
bureaus? The men on Capitol Hill
who had most to do with the writing
Of the revenue laws answer in the
negative. They insist that no more
hagrant example of abuse Of power
has been recorded under the whole
New Deal than this attempt to grab
the power to fix tax rates.
The new limitation on top SAL
aries goes into effect January l.
1913, and will not apply to incomes
earned during 1912. but employers
will have to be careful how they pay
out salaries in 1913. <If they pay
more than their employee should
have under these complicated COM
putations they run the risk of being
put in Jail AS well as having the
whole item of salary-not merely
the excess-disallowed in the cor
poration income tax return.
Every employer must sit down
next year with his top executives
and figure out what deductions they
have or might have and go into the
details of the employees tax return
SO as to be sure that there is not