Evening star., 1944-05-28
No Relief Ahead
for taxpayers
By owen {. Scott.

taxpayers, with another tax INSTALL
ment due June Is, can be consoled with
the thought that the income taxes they
are paying this year are about as high
as they will be during or after this war.
At the same time, some comfort can
be had from knowledge that the prob
lem OF making a final tax return next
January-15 or March is win be simpler
than 1t was last March Is.
That much cheer. however. is about
as much as the ordinary individual can
draw from the longer-range tax OUT
look. The reason is that taxes on in
dividual income probably cannot be
reduced to any appreciable extent after
the war II there ever is to be balanced
Federal Government budget, or If any
thought ever is to be given to the DOS
sibihty Of reducing what now Is an
astronomical debt.
In Congress there Is talk about ths
prospect of so per cent reduction In
taxes once the war ends. The outlook
for reduction of that size appears to
be very bright on the surface. Con-
gressmen note that existing taxes, at
the existing rate of national income.
will yield about $45.oO0, 100000. They
then note that most estimates OF post
war costs Of the Federal Government
range from $4,000, 900 900 to s25.000.-
100000 year. Consequently, tax8 can
be reduced so per cent.
1t Is not to be as simple as that. how
ever. There are many complicating
factors.
When war ends, Government no
longer will be printing the pump with
war outlays of 500 ,000, 900 900 year. It
is inevitable that as Government expen-
ditures contract sharply, as they will,
the national income will decline. A
conservative estimate Is that national
income will decline about rs per cent,
This means that there will be a smaller
income to tax and a smaller yield from
existing taxes.
1t likewise Is clear that, In postwar,
the Federal Government cannot retain a
80 per cent tax rate on corporation
profits that are classed as excessive"
Neither can it take away as much al
80 per cent of the income of corpora
ton as 1t does at present. II it did
there would be little incentive for cor.
porations to venture. In postwar, too,
1t will be necessary to remove or lower
many excise taxes that are imposed in
war to discourage consumption. There
will be political and economic reasons
for removing or easing income taxes
on lower income individuals who nor
mally spend all that they earn.
All Of this means sharp reduction
in Government revenue. That reduc-
ton viii occur before any reduction is
made on the tax rates of middle or
upper income individuals.
In fact, experts who do the oficial
estimating figure that If corporation
normal and surtaxes are held at 40 per
cent, If most excises are retained and If
individual income tax rates and exemp-
tions stay where they are, the result
ing revenue on the basis of q probable
postwar national income of Sis, ,000, ,OOo,-
600 win be around SOS. .000, 900 600. That
would mean balanced budget, but 1t
would net mean so per cent tax reduc-
tion for the ordinary individual tag
payer. It would mean that, even with
taxes on individuals as high as they are,
there would be little or no reduction ii,
the national debt through larger Fed
eral income than outgo.
There is no great amount of cheer for
taxpayers in that prospect. Instead,
there is evidence that, after all, war
cannot be fought and paid for without
some element of sacrifice and some ele-
ment of change. The present war will
add permanently to the cost of Govern
ment. That cost, in turn, either must
be met or it must be translated into
further debt that some day win force an
accounting.
Elements of governmental cost after
the war viii be rather rigid, so that tax
payers can hope for relatively little re-
lief in that direction.
x **
Interest on the public debt alone will
amount of $4,000, ,000, 900 a year, or a to-
tai greater than the cost of government
back in 1882. Then there will be a cost
of between $4,000, ,000,0 900 and S., 900 ,0O0,-
000 year for veterans in pensions, hos
pitalization, education, adjusted COM
pensation, etc. After that, it is esti-
mated now that the Army, Navy and
Air Forces in postwar years will cost
minimum of IS 000,000,00o annually to
maintain. Aids to farmers, public
works, various Federal payments to
States for one thing or another, plus the
ordinary operating expenses of govern
ment will add another $4,000, 900 900
even before there is any deliberate pump
priming or any work relief for unem-
ployed.
The result of all of this is that the
individual taxpayer after the war prob
ably will be forced to go on paying a
rate of tax not much reduced from the
present level. If there is any reduction
the chance of balancing the budget or Of
reducing debt will be very greatly re-
duced
Most plans for postwar tax readjust-
.nent call for tax relief for corporations
rather than for individuals. In fact.
there is growing interest in the idea Of
an end to direct taxes on corporation
income as such and tax, instead, on
this income in the hands of individual
stockholders. Corporations would be
forced to distribute the larger part of
earnings CT to invest them in expansion.
It is the individual income that the