The Care of the Goose

The simple but formidable problem now before Congress is how to get more & more & more golden eggs without killing the goose.

The President demanded last week that $9.000,000,000 more in taxes be levied this year. Last year, the total of all Federal receipts was $8,269,000,000--three quarters of a billion less than the President now wanted in new taxes!

Like a schoolmaster caning a child and then roaring that he must not weep, the President had said: "Until this job is done, until this war is won, we will not talk of burdens." Congressmen crept off into their cloakrooms to groan in quiet--all except the good gooseherds of the tax committees: North Carolina's hamhanded, aged (78) Representative Robert L. Doughton, and Georgia's urbane, grey (64) Senator Walter F. George.

Said bent, big-boned "Old Muley" Doughton: "We face the job of performing a delicate major operation, and when a doctor has to do that, he studies his patient. He doesn't rush in and operate without extreme care, or he will lose the patient.

"As Senator George has so aptly said, we can confiscate only once, but we can tax perpetually, provided we preserve free enterprise."

No one knew off-hand how much taxes the nation could bear. Messrs. Doughton & George were prepared to reserve judgment until the March 15 egg had been safely laid. Probability: no tax bill until mid-April, at the earliest.

The President's general tax proposals were: 1) increase individual and corporate income taxes; 2) cut exemptions on estate and gift taxes; 3) revise upward the present corporate excess-profits tax; 4) perhaps--only perhaps--consider a temporary general sales tax, which the Administration has long and strongly opposed; consider selective excise taxes; 5) make the interest from future issues of state, municipal and authority bonds subject to Federal income taxes; 6) re-examine depletion allowances and special tax provisions affecting oil and gas firms, life-insurance companies; 7) increase Social Security payroll taxes.

Many a Congressman was ready to join the cry for a general sales tax. But a new argument was used against it: that it would increase costs and force increases in OPA's price ceilings, starting a cycle of inflation. Other tax possibilities: > Corporation taxes, now 24% (normal) plus 6% or 7% surtax, may be upped to 30% plus more surtax. > A withholding tax on personal incomes may be levied. This would operate by a flat percentage deduction from salaries and wages. By levying a 1% tax on all incomes, at the source and without exemptions (by withholding money from payrolls), Congress could raise about 560 million dollars. Great probability: a 5% withholding tax as an offset against the following year's income taxes--or even, perhaps, in addition to present levies. > Mandatory joint returns, one of the big income-tax loopholes will probably be enacted, getting the Treasury some $325,000,000 to $500,000,000 more--a provision aimed at the eight States which have community-property laws. > Corporation excess-profits taxes: last year Congress raised all brackets 10%. When the Vinson Committee reports soon on shipbuilding profits, some of which range to 200%, such a squawk is expected that taxperts figured that Congress would raise rates so steeply as to pick up another billion dollars. > Manufacturers' excise taxes: if Congress can be kept from providing exemptions this tax can be made to pay almost any sum--unless it cooks the nation's goose. > Estate and gift taxes: almost certain to be raised to the last possible notch. > Proposals to cut off all income above a certain figure have very little chance of enactment. This tax would work so that no one could have an income after taxes of more than say, $25,000.*

The U.S. was going to have to pay through the nose. Spreading like bird shot, income taxes would hit more & more U.S. citizens. The 7,818,000 persons who filed returns in calendar 1940, the 15,000,000 in 1941 will be some 22,100,000 in 1942 and still more if personal exemptions are again lowered. By Feb. 1 every one of the 36,000,000 motor vehicles in the U.S. must bear a windshield sticker signifying that the motorist has paid a $2.09 tax for the privilege of using a car. Then after five months the motorist must buy a $5 sticker, good for the 1942-43 fiscal year.

Next will come March 15, dreaded more deeply than ever Caesar dreamed. By late spring, Congress will probably enact a withholding tax. By midsummer scarcely a citizen will be left untouched, the golden goose will be laying its Treasury eggs like shad roe.

* Last year in Britain only 200 people had $20,000 net after payment of all taxes. In order to have that much residue, each had to have a net (not gross) income of $264,000.

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