Evening star., 1951-01-21
Outlook on New Taxes
Those Earning Under $4,000 May Garry
Load of Heavy Defense Expenditures
By Cecil HoIIond

HoIIond
| lively small number, about is
million, earn from $4,000 to SIC, 900
a year.
But the group earning less than
$4,000 a year totals more than 40
million.
In that bracket are more than
million individuals earning from
$4,000 to $500. Below them is
the great mass of wage earners.
many of whom pay but little if
any taxes at all under the present
revenue laws.
Double Advantage Seen
Therefore, it seems fairly certain
that Congress, if it carries out the
Presidents recommendations to
raise more than SIG billion in new
revenue. must tap those pocket
books and tap them hard.
Just how that will be done re-
mains to be seen. There is now
some discussion of lowering ex-
emptions from $500 to $500 as they
were during the war, and other
steps to bring additional millions
under the income tax laws.
The Presidents advisers see a
double advantage in such a pro-
gram. In the first place, it would
bring in needed revenue. In the
second place, it would drain off in
taxes a great deal of income which
would or could contribute toward
imitation.
AS the council says:
ITO hold down consumption,
which is vital to the control of
imitation, the bulk of consumers
must be affected directly by the
tax increase"
Nor is the increase in individual
taxes the only way the council
suggests for getting at the average
taxpayers pocketbook. 1t suggests
heavy increases" in excise taxes
on civilian goods which compete
for materials and facilities with
the defense effort.
The report frankly recognizes
that such taxes may be reflected
in price increases which will bear
more heavily on families OF
Limited incomes, especially in the
absence of rationing and price
controls. This, however. is re-
garded as something which may
be unavoidable" and one of the
sacrifices required by the times.
Sales Tax Mentioned
The presidential advisers also
suggest increased. corporation
taxes and stiffening of the excess
profits levy enacted only a few
weeks ago. They estimate that
several billion dollars can be
raised from these sources and
"still permit corporations 10
maintain reasonable dividend pay
ments.
A neat argument is advanced in
the report for heavier taxes on
business. ut is not convincing" !"
the report says, ito tell the public
that consumption must be re-
duced and personal taxes in
creased greatly, while corporations
maintain profits at high levels. :"
All these suggestions and more
will be aired when the tax hear
ings get under way. So far no
firm opinion has developed in
Congress as to how to go about
raising the additional revenue
that will be required to balance
the Federal budget.
A large part of it undoubtedly
will come from individual tax
payers in the way of increased
rates and possibly lowered ex-
emptions.
Business taxes, already high,
will be increased and quite likely
a much more severe excess
profits tax evolved.
Even with these, other sources
of revenue will be required. There
has been some talk of a general
sales tax but that is discounted
at this time.
There is some question among
the lawmakers whether SIG billion
in new taxes can be imposed with
out seriously injuring the coun-
try's economy. In this connection.
it is often pointed out that in 1945
the Government spent 500 billion
while taking in only $45 billion.
However, the Presidents ad-
visers emphasize that the required
amount can and should be raised.
In 1945 the national income was
about $183 billion; now it is ap-
preaching $240 billion. This tre-
mendous gain affords the tax
backdrop for the projected spend
ing program-and. it is said, for
yo,1ch moro If tho mood aricaS