Evening star., 1962-05-19

DCoPAOC al uO61lldLAC hSSCI-
tions to the contrary, there is
one group Of honest, taxpay-
ing citizens who would not
only be affected" by the
proposed Withholding tax on.
dividends and interest, but
very seriously and unjustly
hurt by it.
They are the ones who have
no income other than from
these two sources. For them,
the amount withheld would
be entirely disproportionate,
not only to their actual tax,
but also to that withheld
from wages and salaries.
The difference is this: The
present system protects all
basic standard exemptions
and allowances of the indi-
vidual, including his depend
entS. The tax withheld Is that
applicable to his net taxable
income. Whereas the new
proposal would subject the
people In this one group to a
withholding Of 20 per cent of
total income.
The method Of collecting
may be the same. But the
basis on which the levy is
made, the principle involved,
is diametrically opposite. The
first recognizes and honorS
the right. and the need, of
every citizen to retain a
specified portion Of his in
come, free and clear, to live
on. Not deferred, not as a
refund. but Immediately, for
his personal use, to meet the
demands Of daily living.
When refunds do occur, they
stem from personal factors,
not from an inherent in
justice in the law. Never has
the taxpayer been deprived
of the vital, non-taxable por-
ton Of his income.
Where interest or dividends
are supplemental income. a
further withholding Of 20 per
cent on these would seem
fair enough, though seldom
exact, since all or part may
be absorbed in a bracket on
which the tax is otherwise
paid; while in the upper
brackets the tax actually due
will range from % to 81 per
cent.
But where total income is de-
rived from these two sources
alone, this acknowledged
right, enjoyed by all others,
would be set aside The in
dividual would be denied
access to as much as 18 per
cent Of his legitimate income
not Q minor adjustment,
but q financial dislocation
Of catastrophe proportions.
He would be faced with in
surmountable economic strie-
lures, and placed at an
insupportable disadvantage
relative to the rest Of the
population.
The enormity Of the differ
entail could not be more
glaringly demonstrated than
by the example given in the
House bill itself: An elderly
couple whose true tax was
$l20, but from whom 81 zoo
would be withheld Exactly
10 times the amount Of their
tax! 81;
This Is casually written of
on the basis that, through the
quick refund" they would
have recovered all but $500
by the end of the year -
which may be q satisfactory
solution. to those who have
had no experience in coping
with the economic problems
Of the lower brackets. But
what would it mean to the
people who would have to live
with 1t?
It would not be a matter oi
filling out Q simple slip at ths
post office. Nor would it, ir
terms Of living, be quick.
The best obtainable estimate
was 6 weeks after the end oi
the (tax) quarter. Henct
these people would have II
live for five months on dras.
tically depleted income befor,
they could recover the refunc
due on the first three.
They would previousl!
have been meeting Cant
budgeting) their tax obliga
ton in quarterly payments o
$50. But from each quarter
income. $500 would be with
held. Thus they would b
$50 short in their running
expenses, each month. 70
January, February an,
March. and again for Apr
and May - during whicl
period they would also hav
to meet the final payment o
the previous years tax, an
their State income tax a
well.
Economists may argue tina
a huge governmental defic
Is q desirable thing. But
personal deficit Of $3.50 over