Evening star. [volume] (Washington, D.C.) 1854-1972, 1943-02-04
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greater with the same tax rates than
under the present system"
| 'Windfall' Taxes.
Insisting that he believed that as
"a matter Of principle" changes In
collection should be made appli-
cable ito all alike" Mr.. Ruml said
he did not think 1t would be possible
to make provision to catch all OF
what he called "windfall" cases
where an individuals 1912 income
was much greater than that In
either 1941 or 1913.
To catch the most Objectionable
cases" he proposed that the income
tax on capital gains not be can
celed, that a special death tax be
provided to cover "wtndfalls" during
some appropriate transition period,
and that In cases where claim for
credit exceeds an amount which
Congress deems advisable, an aver
age for 1941, 1912 and 1913 be taken.
Three Big Differences.
The three most important. differ
ences between him and the Treasury,
Mr.. Ruml said, ARE one point of
fact, one point Of principle and one
point Of policy"
For more than a year Mr.. Ruml
has proposed about cancellation Of
one years taxes to put individual
income taxpayers on a current basis.
Vigorously disagreeing with
Treasury opposition, MIR. Ruml told
the committee:
There Is no escaping the conclu-
sion that the income tax on 1912
incomes must be either dropped or
deferred"
Treasury Opposes Plan.
The Treasury. in opposing the
Rumh plan. told the Ways and
Means Committee that under such
q proposal 1t would lose $40, 900 ,000,-
600 Of paper assets" It did sug-
gest, however, that Congress might
find 1t desirable to defer" or "for-
give" some part of the tax due next
month on 1912 incomes to accom-
plish a transition to pay-as-you-go.
Questioning Of Randolph Paul.
Treasury general counsel, brought
out yesterday that the Treasury
had given serious consideration"
to turning the tax clock back so
as to apply 1941 rates and exemp-
tions to 1912 income, on which
taxes must be paid March Is.
Mr.. Paul emphasized that II such
proposal was adopted all tax
payers liable under present law to
file returns March Is would still
be required to do so, but would later
be credited against future taxes
with any amount they overpay.
Sees Danger Of Imitation.
Mr.. Paul said the Ruml plan would
lead to imitation and public clamor
fer wage increases.
Income tax debt has become a
modern form of peonage that locks
men and women into their present
work and level Of income, Mr.. Ruml
testified. 'They cannot afford to
lose their jobs, to become sick or to
retire"
He insisted that the Government
would, in the long run. lose no
revenue through cancellation of
taxes due on 1912 income and pay
able this year and urged that the
cancellation should be made appli-
cable to taxpayers in all brackets.
The Treasury Department had
objected to blanket cancellation of
obligations on 1912 income largely
| on the ground it would be of greater
oene1t to persons with large in
comes.
Adoption Of the pay-as-you-eo
system, Mr.. Ruml contended, would
bring "a just relief to millions who
viii one day be injured because Of
our present income tax procedure"
! Assails Income Tax System.
, In 1914, he said, when the first
income tax was levied on 1918 in
come, I'VE got started on a vicious
practice of paying out of one year
income tax on the year that had
gone"
AS the rates of taxation increased
with the years, he continued, the
debt which people owe to the Fed
eral Government for tax on their
last years income has become a
national danger" and under present
law must be paid, regardless of the
taxpayers economic position or his
ability to pay.
There are two broad purposes for
reforming our historic income-tax
practice In order to place our income
taxes on current basis and to elm
mate the accumulated income-tax
debt" he testified. THE first pur-
pose relates to the financing of the
war, to the reduction of potentially
inflationary purchasing power ano
to the preservation of the integrity
OF our lncome-tax system through
obtaining the highest possible leye
OF collections and the lowest possible
level OF defaults. The second pur.
pose springs from the personal ane
humane desirability of remoyinl
from millions of citizens the constan
1 S~AA WV VA AAPoAN tdA 0CDU, u uCU
imposed under a faulty tax sys.
tenn" -
, Tax authorities, he said, ARE an
prehensive about income-tax collec
lions and defaults. Can we expec
the new taxpayers, or even the OLE
ones, to keep up their payment.
for tax on their last years in.
come at present rates If their cur.
rent income should slacken OF
abruptly cease?"
80 Million in Debt to United States
A second broad purpose" for in.
come-tax reform rests on persona
and humane grounds" Mr.. Rum
continued. "On the first OF January
under Our present system some 80,
100000 citizens were in debt to thu
Federal Government for income tax
If we estimate one or more person.
back Of each taxpayer, we have
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