Evening star., 1949-03-10

VI eiAe olIoi CCoillIlSS Oh Jnelr SchOOlS-ShOrt-
comlngs which are so obviously due to poor
administration and SUPERVISION
MILDRED TURNER.
An Income Tax IneQuity
To the Editor OF The Star:
Your editorial Pensions and Income
Taxes" in the Star of February Is, overlooks
some OF the worst inequities in the taxing
OF annuities. The present income tax law
IS conf1Scatory in this respect as I may
illustrate by citing my own experience
The worst sufferers from annuity taxa
ton are not those who belong to the
gimme" army, but are those who by thrift,
economy, self-sacrifice. and planning, strive
to build for themselves, in the one time
AMERICAN way, modest necessity income
for later years. Joseph Young is on record
in your columns as stating within recent
months. the Government jobholders have
their pensions settled upon them at terms so
favorable as to make ridiculous any COM
parison with annuities independently pro-
vided for themselves by persons not EN-
ployed by the Government
Having suffered severely from the depres-
sion, both by reason of investment losses
and by protracted unemployment, I found
myself in 1884 facing a very precarious
future. This prospect is now somewhat
alleviated. due to Is years of rigid economy
and careful planning. My only "out," with
out gambling on my wifes future as we'll
as my own, was to take what remained of
our life savings, divert them from intended
uses for the future, and convert them in
stead to annuity income. This had to be
done. of course, at prevailing rates, which
are very unfavorable as compared with
generation ago. During the working years
still left to me, the very modest income
from these annuities can be put into new
savings fund for later use.
Law Does Not Work.
The Federal law. and the D. c. law
which apes it. blandly state that you are
entitled to recover your cost tax-free,"-
that is, the money you paid for your an
nuity. This would be a just provision if
the law did not then proceed to make it.
for many, and perhaps even for most who
are not government-employed impossible of
attainment. This is done by imposition Of
the so-called "3-per cent rule This
iniquitous rule amounts to double taxation as
may be seen by figuring out at what age
the annuitant would get back his own, tax
free"
In my case. the seven small annuities I
have managed to establish, out of funds
already taxed once by the Government,
would under the present law be returned
tax-free" at the following ages, respectively:
80. rs (about 1000, SO, SO, 102, 101, 98. The
76 figure, although computed in accordance
with tax-sheet instructions, Is virtually
fictitious value, the effective value in this
particular instance being about 100, as given
in parentheses.
All these annuities were taken out after
go. At the time when the last of the seven
was arranged my expectation of life accord
ing to actuarial tables was to age II. 1t is
not hard to see what a grim joke is this
statement that you are entitled to recover
your cost tax-free." The fact that this law
bears most heavily upon those who are at
the greatest disadvantage may be described
as "accelerating the swat" Congress might
at least set some modest maximum figure
such as $1,000 of annuity income per person.
below which no annuity tax would be re-
quired. This would remove the injustice in
some cases, but the law would still be un-
just.
The extra $500 exemption for persons of
IS or over is concession desperately needed,
I suppose by millions of people, and es-
pecially, may I say, by those who did not
get their annuities the easy way and who
also, apparently, are the ones making the
least clamor w. F. R.
Editors Note: Mr.. Woods criticism of
the so-called per cent rule is well founded.
The Internal Revenue Bureau and the Joint
Committee on Internal Revenue Taxation
are on record to the effect that the rule is
unsatisfactory. The House last year passed
bill to provide more equitable formula,
but it died in the Senate. A similar bill
is pending before the House Ways and
Means Committee.
Education on the Constitution
To the Editor Of The Star:
note that the press and along with it
Henderson Bogart. constantly refer to the
current debate on the cloture rule as being
fllibuster, when, as a matter of fact, it is
an extensive educational campaign, and
faith. it is greatly needed, because of the
abysmal ignorance of the public on the
controversial provisions and clauses of the
Constitution.
If this debate serves no other purpose than
to kill of the idea that majority may close
debate, it will have been well worth the
time consumed. Majorities can be as tyran-
nical as other numbers. One Of the curses
Of the world has been that of majorities
prosecuting minorities. It might have been
well to require tWo-thirds vote to pass any
law. When note a lot Of present-day
doings, am strongly inclined to the view
that such should be the case. The Constitu-
ton has been perverted, and now may be
further perverted by the bills that are the
apparent cause Of the present debate Any
lawyer with an ounce of common sense and
the slightest knowledge of the Constitution
and the history of suffrage knows that the
Cororoec Ioc MT tbo cliohteSt RIGHT tn strike