Evening star., 1943-04-07

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nate January David Lawrence.
next as the date on which withhold
: Ing payments at the source will be-
gin. This gives everybody ample op-
portunity to adjust This or her affairs
to the pay-as-you-go principle.
Second, consider 1943 taxes as de-
ferred but not forgiven. A tax re-
turn for 1943 would be made by
everybody as heretofore but only
one-twentieth Of the tax would be
due on March IL, 1914, when the
return for 1943 normally would
have been made.
Third, payment Of 1943 taxes
would be put on basis of 20 annual
installments and discount could be
given to all taxpayers who anticipate
tho future payments-a discount de-
signed to bring into the Treasury a
large amount that would otherwise
be deferred. The discounts could
vary according to the amounts In
volved and according to the number
Of payments that are made ahead Of
due date.
Fourth, on the death OF the tax
payer, the back taxes would be due
and payable in full by his estate but
would be subjeq to the same dis
count that wous be given the tax
payer If he haAanticipated future
payments.
Might Start July /.
Thus, the Treasury eventually
would collect all of the preceding
years taxes and yet would get the
taxpayers on current basis with
out the hardships of heavy double
payments. A vast number Of tax
payers would take advantage Of the
discounts for anticipating payments
and in this way the Treasury would
collect much larger sum than 1t
could under the existing system OF
taxation.
If the plan is approved for Janu-
ary next, then it could be put into
effect on July 1, too, depending on
whether the Treasury could handle
the administrative task of estab-
fishing withholding tax as early as
July /. Assuming that July would
be the effective date, then the pay
ments already made in the current
year could be treated as part pay
ment on 1943 taxes and the with
holding tax could apply for the sec
ond half Of 1943, adjustments OF diff
ferences being worked out in a final
payment at the end Of the year in
the return made perhaps on Decem-
Der 81.
In that event, the 1912 taxes could
be treated as a deferred item. A
special place might be inserted in
the income tax return for the COM
putation Of one-twentieth OF the
1912 taxes. So when the one-twen-
tieth. or per cent, Of 1912 is added
10 the 1943 taxes, which would be
paid in full by the end Of 1943, the
taxpayer would be on a pay-as-you-
90 basis in every instance where the
income deductions for 1912 and
1913 were the same.
Could Equaline Discrepancies.
As for those taxpayers who have
Q discrepancy in income received
and taxes due, 50 that 1912 is larger
than 1913, the new law could pro-
vide for equalization. In other
words, the receipts by the Treasury
during 1943 need not be less than
that which was due for 1912.
Assuming that mans taxes based
on 1912 were $1,000 and the taxes
for 1943 are $1,000, the Treasury
would require current payments
during 1943 to be $1,000 just the
same, but would credit the taxpayer
with $4,000 toward the 1912 tax bill
and, instead Of paying per cent per
year on $1,000, the taxpayer would
pay 5 per cent per year on $4,000
for the 20 years thereafter.
In this way there would be no
windfalls due to lower taxes in
1943 as compared with 1912, and the
pay-as-yougo plan would be real
lied without loss to the Treasury.
The incentive or discount plan,
however, would give the taxpayer
. chance to reduce his obligation,
but this, in turn, Is in line with
established theories with respect to
20-year debt. The present value of
debt due in 20 years is always
less than what 1t is at maturity,
and multiplication tables have been
worked out giving the present value
for each year before maturity date.
The Importance of collecting taxes
on a pay-as-you-go basis is recog-
nized by all parties and all fac
tions. The only controversy has
been as between those who want to
forgive all or part of the preceding
years taxes and those who want to
double up whole year or half
year or quarter year. The above
plan avoids both difficulties.