Forgotten Tax

New Deal campaigners have said a great deal in general about the blessings of the Government's Old-Age Pension Law, practically nothing in particular about the tax feature of that act. Beginning Jan. 1 a tax of 1% per year will be levied on the pay of every U. S. wage earner, great & small.* An equal amount will also be collected by the Treasury from the employer. Example: A factory superintendent 40 years old makes $3,000 per year; his annual tax to begin with will be $30 (1% of $3,000); the factory management must match his $30 with another $30 and the $60 will be turned into the Treasury to build up the Old-Age Pension Fund; at 65 the factory superintendent may retire to draw a maximum of $62.50 each month from the Government. Though the Federal Social Security Board in Washington has been working quietly for months with plans to inaugurate this vast pension scheme in 1937, few wage earners were aware until last week of the practical details of the plan as it affected their pocketbooks. Then Republican strategists suddenly popped this whole Pension-tax setup squarely in the centre of the campaign stage.

Anti-New Deal employers began putting up placards in their plants and offices saying: "You're Sentenced to a Weekly Pay Reduction for All of Your Working Life. You'll have to Serve the Sentence unless you help Reverse it Nov. 3." Others slipped notices about the forgotten tax into pay envelopes. Still others distributed pay envelopes bearing the printed legend: PAY DEDUCTION

Effective January 1, 1937, we are compelled by a Roosevelt "New Deal" law to make a 1% deduction from your wages and turn it over to the Government. Finally this may go as high as 4%. You might get this money back in future years . . . but only if Congress decides to make the appropriation for that purpose. There is NO guarantee. Decide, before November 3-election day, whether or not you wish to take these chances.

At this New Dealers abandoned their discreet silence on old-age pensions, accused Republicans of trying to "intimidate" labor. In his speech at Worcester, last week, Franklin Roosevelt volleyed:

"I want to say a word also to the wage earners who are finding propaganda about the security tax in their pay envelopes. . . . The fund necessary to provide that security is not collected only from workers.

The employer also pays an equal share, and both shares-yours and the employers'-are being held for the benefit of the worker himself."

Even the Social Security Board jumped into the fray, announcing that the Republican statements are "nearly all misleading. . . . Every worker eligible-and it is estimated that 26,000,000 will be eligible at the outset-will receive a monthly return benefit . . . larger than he could purchase from any private insurance company with the taxes he will have paid the Government. These monthly benefits will range from $10 to $85 a month. If a worker dies before reaching age 65 a lump sum payment is made to his family. This lump sum will amount to 3 1/2% of the total wages he has earned after 1936."

Beginning in 1940 the tax on employe and employer will jump to 1 1/2%, in 1943 to 2%, in 1946 to 2 1/4%, in 1949 to 3%. The statement that the tax may eventually reach 4% is not predicated on the present law but on the possibility that collections at the 3% rate will not raise enough money to pay the benefits provided by the Act.

*Prime exceptions: farm laborers, domestic servants.

This file is automatically generated by a robot program, so reader's discretion is required.