Evening star., 1943-02-03
1reasuryWeighs
Plan 10 Revert
To Al Tax Rates
Would Cut Burden
On incomes Under
SIC, 900 in Half
b the Associated Press.

$IO,WO IN Halt
3, the Associated Press.
The Treasury disclosed today it
had given serious consideration,
without reaching a definite con-
clusion, to reverting 1912 income
taxes to 1941 rates and exemp-
tions as a possible expedient to
put taxpayers on a pay-as-you-
60 basis.
Such a plan, if adopted, would re-
lieve taxpayers with incomes of less
than $4,000 0-and there are many
millions of them-from something
like half Of the tax liability they now
face March Is on 1912 incomes at
rates increased last year.
Randolph Paul, general counsel of
the Treasury, told of the study un-
der questioning by Chairman Dough-
ton of the House Ways and Means
Committee. He emphasized that no
conclusion had been reached.
Earlier, Mr.. Paul had asserted at
the hearing that outright forgive
neSs Of 1912 income taxes, as pro-
posed In the Ruml plan, would set
Oh m imitation spiral that might
bring widespread demands for wage
increases. He. expressed favor for
the Treasury proposal Cor a With
holding tax Of 10 per centaon income
1t the source.
eees wage Stabihzation.
17,e Treasury plan, Mr.. Paul said,
would ptovide safeguard against
in1ataou and would contribute to
stahtlfnetton Of wartime wages.
A%tholgh M. Paul did not elab-
oeate ID the idea Of moving 1o42
t1x4e e 1911 bases and rates. some
u lnittee members sdid they as
os1d that under such ! plan there
WoliId he i doubling up In taxes for
some taxpayers. They said they
belteEod taxpayers would have to
pey thear 1942 taxes, at the lower
rats, 1t the same time thAt deduc-
tiogas were being made to apply
against A43 taxes next year.
Latef Nr. Paul explained 10 news
papermen that if the plan TO revert
the taxes On lol2 iiic0uak TO ~the
lo4l base Nere adopted II Nolild NOT
remove the necessity th4t taxpayers
ale income returns hy March Is.
paaal1fae Nl1at wpl111 likely be
the procedure. ~ s6N TINT persons
payin9 a. 1e43 anDogne Jlould have
aIly aln0anE of overpayfnent, caused
By shiftine the rates hAck, applied
to thelr 1913 tax ohIeattons.
.oeveral millions OF persons who
under present law must pay taxes
un last years income would be ex-
c1Dod," Mr.. Paul commented, but
he emphasized again that returns
mssa& be hled March Is by al made
QahlA under present law.
Calls Propseal Tighter"
a Decision to revert to either 1041
Or lol2 rates for tax payments due
next month, Mr.. Paul said, would
reduce the tax obligation for q large
number Of pcrsorfs by . percentage
points, since the 1o41 rate was 4
per cent normal tax and s per cent
liret surtax bracket, on taxable In
come, as compared with the 1912
levy Of 8 per cent normal and Is
perscent on the first bracket surtax.
The proposition was described by
Mr.. Paul rs much tighter" than
the proposal by Representative
Robertson, Democrat, Of Virginia,
Ways and Means Committee MEM
Der, that the normal s per cent tax
and the first bracket surtax be
abated for al taxpayers on 1912 in
come, In going over to 4 pay-as-you-
20 basis. The ofIicial added This Is
much nearer no forgiveness at all"
He estimated that by the Robert
son plan, assets Of $1,000 600 900 to
g. OK. 900 900 would be wiped OH the
Treasury books, whereas by the re-
version to loll rates and exemptions
for 1917 income, the assets lost
would amount to only about half
that 1lgure.
Under the lo4l tax law the per-
sonaf exemption for single persons
was $3.50. compared to $500 in the
Law applicable to 1912 income, $500
for married persons against $l,ZuU,
and $500 for each dependent,
against $3.50.
Questioned on Pressure"
Representative Dingeu. Democrat,
Of Michigan interrupted at one
point during Mr.. Paul's testimony
to inquire where is the most pres
sure coming from to remit all OF
le42 taxes as proposed under the
Ruml plan?"
Mr.. Paul did not answer this
question directly, but said it was
perfectly clear the greatest bene-
Ats 60 to the higher Income brack-
cts, the higher the more"
Representative Dingell then said
It was his opinion the pressure was
coming from that source
While opposing outright forgive
ness OF all 1912 income taxes in
~ VIC