Evening star., 1943-05-03
A Poor Substitute

SlQeraJlOn To-Day SO-called pay-aS-
you-go plan approved by majority
of the Ways and Means Committee
and enthusiastically Endorsed by the
Treasury Department. This COM
mittee bill, sometimes known as the
Doughton plan No. l, would apply
1941 rates and exemptions to 1912
income, with the balance remaining
on the 1912 tax to be paid In three
years. This is coupled with with
holding tax of 20 per cent, to become
effective on July l, which, with the
payments already made this year,
would be applied against the 1943
tax Thus, with rates presumably
frozen for three years, the taxpayer
would be liable for the equivalent Of
his 1943 tax for the next three years,
plus one-third each year of the
balance due on his 1912 tax.
Sponsors of this committee plan
had opposed the Ruml plan as
matter of principle because it "for-
gave" years taxes. There was
something iniquitous, they said, about
this forgiveness. Yet the committee
plan "forgives" about A per cent OF
last years tax liability, mostly in the
lower brackets. Strangely enough,
as the committee and the Treasury
see it, there is nothing iniquitous
about this and no element of
principle is involved.
The committee plan also is ap-
plauded by its sponsors because it
relieves 100000 new taxpayers of
any obligation on 1912 income, while
imposing only some" doubling up
on old taxpayers. It is interesting
to take a look at what this "some"
amounts to. A married man with a
$4,000 net income is liable for 1912
tax of $746. This lacks only SIS of
being equal to his total tax liability
for the preceding five years, indicat-
ing how this class of taxpayers was
affected by the 1912 rate increases.
Under the committee plan, including
the some" doubling up, he will have
to pay $1,117.58 in each of the next
three years. Or take the case of the
man with a $3.50, 900 income Under
the committee plan his taxes over
the next three years will be in excess
of his total income, and, what is
more, he has to pay it or face a
penalty of 6 per cent interest to
secure an eighteen-month extension.
On it's face this is tax plan which
is influenced by narrow political con-
siderations. 1t involves a large ele-
ment of supposedly iniquitous for
giveness. Some 100000 taxpayers
would be relieved of any 1912 obli-
CATION. In the case of those who
would have to- pay something for
1912, the forgiveness ranges from 63
per cent for those in the lowest
brackets to only 10 per cent for
those at the top. The discriminatory
character of such proposal is too
self-evident to require argument.
1t is interesting to note, however,
that the committee plan, in effect,
moves the tax clock back to 1941 so
far as the doubling up feature is
concerned. But if it is reasonable
to move the clock back two years,
why not move it all the way back
to the first year Of the Federal in
come tax, when the inequitable sys-
tenn of levying taxes in one year on
the prior years income first became
operative? This is the essence of
the Ruml plan, the only plan so far
devised which would put all tax
payers on current basis at once,
and not in 1946 or some other re-
mote date. Considering all of the
complexities and inequities of the
committee plan, it is to be hoped
that the members of the House,
having had opportunity over the
Easter holiday to consult their con-
stituents, will turn to the Carlson
version of the Ruml plan as being
the simplest and most satisfactory
pay-as-you-go program which has
uof hooy, c,1nuoctaI