Evening star., 1943-01-15
Restraining Tax
Studied toCurb
Luxury Buying
Tentative Plan
Would Exempt
Only $500 in Sales
BY the Associated Press,

$SSS III S01SS
By the Associated Press,
Something new in the way Of
taxes-a Restraining tax de-
signed to keep persons from
spending too much on non-es-
sentials, while permitting them
to buy a certain amount OF
goods tax free-was talked
around on Capitol Hill today as
possible compromise to over
come the administrations hos
tility toward a general sales tax.
The restraining tax, it is UNDER
stood, embraces the sales tax prin-
ciple, but would carry exemptions OF
possibly $500 or so worth of pur-
chases year.
/ II such law were written, with
a $500 exemption, then coupons in
small denominations would be issued
IN that amount to each gainfully
employed person, and he could use
the coupons for making tax-free
purchases until they were exhausted.
Anything bought without coupons
would be taxable at whatever per-
centage Congress decided on.
One prominent legislator expressed
the opinion the administration prob
ably would suggest that the possi-
bilities of further income levies, a
spending tax and compulsory loans
be explored first, with the modified
retail sales tax the fourth choice in
the struggle to raise the additional
SIG 900 100000 which President
Roosevelt has said is needed this
year for war purposes.
A restraining tax would be in
tended not only to raise part Of
the additional revenue, but would
discourage wartime purchases Of
luxury goods.
Representative Robertson, Demo-
crat, of Virginia, member Of the
! taX-framing House Ways and Means
Committee, has announced he would
propose an outright sales tax on all
commodities when the committee
takes up the revenue problem a
week or two hence. He said this
was "the best way left to dis
tribute sacrifice we cannot
escape"
The committee disregarded a SIM
liar proposal last year after the
Treasury had contended it would
be unfair to low income groups.
Meantime, Overwhelming strength
appeared to be arrayed behind the
pay-as-you-go principle for col.
lecting individual income taxes
though there was division of opin-
ion as to how it should be framed
Pay-As-You-G Go Proposal.
Treasury officials were reported
authoritatively to have discussed a
modified pay-as-you-go income tax
collection plan with congressional
tax experts.
Under the tentative plan, lower
bracket taxpayers would be put on
a current basis, with last years tax
liabilities wiped out. High bracket
individuals would be forgiven part Of
last years liabilities and permitted
to pay the remainder in installments
so they too could achieve full cur
rent-payment status in two or three
years.
The lowest bracket would include
taxpayers with not over $4,000 OF
surtaX net income.
The plan would provide forgive-
ness of the first 19 or 20 per cent
of the rates on 1912 incomes-at
least the per cent normal tax and
the 13 per cent first-bracket surtax.
For simplicity, it was reported. the
Treasury was inclined to favor a
20 per cent withholding tax at the
source, which would be applied
against the taxes on 1943 incomes.
approximately three quarters Of
all income taxpayers come within
the first bracket, where the total
normal and surtax is 10 per cent Of
income above personal exemptions
and other deductions.
Modifies Ruml Proposal.
The normal tax and first bracket
surtax on 1912 income would be for
given the higher bracket taxpayers.
too, but they would have to arrange
to pay the remainder of their 1912
tax in installments, with perhaps
per cent interest on the unpaid ball
ance.
The plan, still in the discussion
stage, does not go as far as the sys-
tenn advocated by Beardsley Ruml,
New York banker and merchant,
who proposed forgiving all 1912 taxes
to get the average citizen abreast
of his flnncial obligations to the
Government.
Representative Carlson and Sem
ator Capper, Kansas Republicans.
have introduced bills based on the
Ruml principle.
Senator Clark, Democrat, of Mis-
souri, is the author of another meas
ure which would forgive taxes on
1912 income, place a total with
holding tax of 10 per cent dncluding
Victory taxi on all incomes from
1924 to S1,248 year and "a per cent
on incomes above $1,248.