The Waterbury Democrat., 1943-05-07

~ * z5;2& pay up UO 400UU, SC take the case 0!
 Peter Edsom an -draft-agt married man with no dependents making $4000 year and claiming all personal exemptions. The in- come tax return he filed March IS 1943, would have shown him liable for a tax of around $532. Assume he paid the first quarterly install ment of $l33 then, will pay another $133 come June 15, a total of $266. So far so good, but watch what happens next:
 Under the proposed new tax bill, this $266 would not be counted as payment on the taxes to be col- lected on the mans 1942 income as the man thought when he filed the return. Instead, 1t would be con- sidered as credit against the taxes he will owe on his l943 income. That makes 1t kind of pay-as-he- went plan, kind of current, ad- vance income tax payment on this years income, instead of a pay ment on last years income.
 RUML PLAN VS. NEW PROPOSAL
 But now see what would happen to the taxes on 1942 income, since the taxes already paid in 1943 aren't to be counted against that bill. Un- der the original Ruml plan, those taxes would have been forgiven en- tirely. Under the new proposal they would not be forgiven entirely but would be reduced by applying the 1941 tax rate to the 1942 income. This would not mean that taxpay- CTS would have to make out new income tax return, figuring what they owed in terms of the previous lower rates. Instead, by simple formula in the new tax bill-a table, not a precise calculation-taxpay- CTS would be informed of what taxes they owe on their 1942 income. In the case of the $4,000-a-year-man mentioned above, the next tax on 1922 income would be $236, which the man would still owe the govern ment.
 Under the new bill, the man would be given three years in which to pay this $236 taxes on 1922 income. He would show 1t on the income tax return which he will file March IS, 1914. If the man chose to pay all his taxes on 1942 income at that time, he would get a 6 per cent discount and would have to pay only $221 94. If he paid one-third, or $78.67, on March 15, 1914, and the remaining two-thirds on March Is, 1945, he would get a 2 per cent discount on his total liability or a 6 per cent discount on his remain ing liability and would have to pay a total of $23128. Or. if he paid in the three equal installments, March 15, 1944, 1945 and 1946, he would get no discount at all. In cases of hardship he could even get three-year extensions on any one years payment as it comes due.
 Now go back to the collection of taxes on 1943 income. If Congress does not change the rates, the tax on MT. $4000-a-year's income would still be $532 In addition to this in- come tax, however, there will be 11fO NlCpOly oilAOulltAAi5 VI $115. deducted from his pay, which would make his total federal tax bill for this year $532 plus $1l5 or $647.
 WITHHOLDING TAXES
 But this man has already paid in $266 in his March Is and June 15 income tax payments, as mentioned in paragraph two. In addition to this, the new tax bill proposes to start on July 1, 1943, the collection of 20 per cent withholding taxes, deducted from the pay envelope. Three per cent of this would be considered Victory tax and IT per cent a credit against taxes on 1943 income. In the case of the $4OOO-a- year-man, paid $333.33 month, $l0 a month of which would be exempt from withholding taxes, the with holding tax deduction would amount to $4770 a month. as calculated by taxes in the tax bill itself. For the last six months of 1943, these with holding taxes credited against in- come taxes due would amount to six times $47.70, or $28620.
 Add this $286.20 to the $266 al- ready paid in and it gives a total of $552.20 which the man will have paid-as-fle went through 1943. His total tax bill for the year being $647, however, when the man makes out his income tax return to sub init by March l5, 1944, it will show he still owes the difference between $647 and $552.20 or S04.80 as taxes on his l943 income, payable in 1944.
 Complete pay-as-you-go taxation is thus never accomplished. There's always a day of reckoning in which it will be found the taxpayer owes something else.
 The thing to do about all this right now is-nothing. The bill isn't a law yet, and it probably will be changed. Even if it isn't, the col lector of internal revenue will have to figure this all out for you and send you a bill for what you should pay Sept. l5 and Dec. l5, l943, If anything. Few taxpayers could fig- ure it out for themselves.
 But cant Washington dream up the damnedest things?
 Cnpsank Couo~anf