Evening star., 1943-02-21
Hope for the RumI PIon

Decision of the Ways and Means
Committee to leave the framing of
an acceptable pay-as-you- tax
plan to a special subcommittee is
distinctly encouraging. It implies
committee acceptance of the prin-
clple Of pay-as-you ugo tax payments,
coupled with collection at the source.
And 1t follows the committees in
ability to agree, after months con-
sideration, on any of the distortions
Of the Ruml plan which have the
effect OF making taxpaying more
difficult, instead of easier.
The committee did not vote on the
Ruml plan itself. The four votes,
not recorded, were on variations of
the Runll plan. And this fact offers
room for hope that after exploring
all the possible substitutes, the COM
mittee eventually will agree with
many others that the best pay-as-
you-go device so far offered is the
Ruml plan, coupled with whatever
safeguards from the tax collectors
point of view may seem reasonable.
Advantages of the Ruml plan are
30 appealing that further elaboration
Is unnecessary. But these advan-
tages are lost when the basic prin-
ciple of the plan, which is to treat
all taxpayers alike by changing the
basis of income tax assessment from
last years to current income, be-
comes confused with efforts to differ
entiate between large and small in
come taxpayers by regarding heavy
taxes as penalties, the heavier the
better and small taxes as burdens
which might be lightened.
II the Ruml plan favored the large
taxpayer at the expense of the small
taxpayer, or if its application re-
duced the Governments collection
of revenue in wartime, it would have
no standing in court and would de-
serve none. If the Treasury's con-
tention that the Government would
lose ten billion dollars in the form of
assets" on last years income could
be sustained, there would be an ad-
ditional reason to discard the Ruml
principle.
But the large taxpayer is not ia
vored at the expense of the small
taxpayer, nor does he receive any
special favor through the Ruml plan.
Taxes on capital gains in 1912. unlike
taxes on 1912 income, would not be
skipped. They would be paid as
usual. Death taxes, in the case of
heavy taxpayers, would recover a
substantial portion of unpaid 1912
income taxes. Where marked varia-
tion of income in the higher brackets
indicates windfall for the taxpayer
whose 1912 taxes would be skipped,
Mr.. Ruml has suggested a tax liza
bility based on an average of income
In 1941, 1912 and 1943.
The Treasury's conception Of l943
tax liability as ten-billion dollar
asset wiped off the books does not
stand up under study. The Treasury
would be no poorer by the switch OF
assessments; in fact, there seems to
be agreement that tax collections
would increase, rather than decrease.
Old taxpayers lost would be offset by
new taxpayers gained. 1t is hard to
demonstrate that any one would be
the loser, provided the slightest at
tempt is made to weigh the definite
advantages fairly along with the al
legged disadvantages of the Runl
plan.
The month of study and hearings
by the Ways and Means Committee
has not been wasted time. 1t has
demonstrated that TO date no ac-
ceptable substitute for the Ruml
plan has been advanced from any
quarter.