Evening star., 1943-03-12
House Unit Approves
Proposal 10 Discount
Prepaid Income Taxes
levies Would Be Cut
On Rates Roneine
Up to d Pct.
F. the Associated Press

F. the Associated Press
The House Ways and Means
Committee today approved a
plan to reduce by as much as 4
per cent the tax obligations of
persons paying income taxes be-
fore they come due. thus en-
couraging individuals to go on a
pay-aS- -you-go basis.
Under the committees proposal a
taxpayer renting any part of the
taxes on his current years income
by March Is would be given a dis
count OF per cent on that part; by
Nale Is. 3 per cent. September Is.
, per cent and December Is. per
cent.
Thus If any taxpayer desired to
estimate the tax obligation on his
1943 income and pay up before next
December Is IN addition to paving
his 1912 tax obligation, he would get
the discount depending on how early
the payment was made.
BY this method. Chairman Dough-
ton said, it was hoped to provide an
incentive for taxpayers to achieve
y-as-you- -go-that is the payment
OF taxes in one year on the basis Of
income the same year. instead OF on
income of the previous year. as at
present
Would Extend Appeal Period.
In addition to approving the dis
count plan for taxpayers, the House
committee also adopted resolution
which, if it passes the Congress
would provide:
!. Corporations may have unit!
September Is, instead of April 81, to
file with the Internal Revenue
Bureau petitions for adjustments un-
der the relief provisions of the eX-
cess profits tax. The 1912 tax law
recognized that some hardshipS
might occur from the systems Of
determining excess profits. due to
variations in histories of previous
earnings and the capital structure
of corporations, and relief provisions
were provided.
2. Extension from three months to
one year the period in which post
war credit bonds may be granted to
corporations after the date Of filing
returns on income. Corporations
are given such bonds by the Gov
eminent for postwar credit on any
taxes paid above 80 per cent of their
net income.
The incentive discount for income
- a,.t Nf
the compromise tax collection sys-
tenn approved by the committee
Wednesday to make pay-as-you-go
optional. with each taxpayer con-
tinuing to remit one basis of income
of the past year, if he desired. or
going on a current system by dou-
bling up to pay on the past year
while at the same time remitting
the tax on income of the current
year,
Under the discount plan, however
no part of the discount could be ap-
piled on taxes based on 1912 income
since technically this liability was
due as of last January l. The earli-
est the discount could be applied
Woulo be on l943 income.
Under the committee plan. a 20
per cent withholding levy is pro-
vided against the taxable portion
of all wages and salaries, effective
July !. Such collections would not
be an additional tax but would be
applied against actual taxes as now
provided by law.
Could Double Up.
AS an illustration of how the in
centive discount could work, a tax
payer might estimate his tax on
1943 income and, by paying it before
June IS, could get per cent dis
count.
Thus in the first half Of 1943 he
would have paid all of his l943 tax
and the first two quarters of the
tax on 1912 income--a total of one
and half years in the six months
Then the withholdings against his
earnings after July l would be
applied to the obligation against
his income in the last half of 1912.
On January /. 1914, the taxpayer
would be on a complete pay-as-vou-
go basis, the earnings withholdings
then being applied against his tax
on 1914 income
Similarly. taxpayer could make
partial advance payment at any
time in the future on taxes based
on the then current year income.
get the percentage discount and
gradually achieve a y-as-you-go
basis.