The Burden

Franklin Roosevelt wanted a few more hours in which to study the 1941 tax bill before he made it law by his signature. In his quiet library at Hyde Park he spread the bill open under his shirt-sleeved arms, began to check it against the Treasury's analysis.

Well might the President consider carefully before signing that mammoth document. It is the biggest tax bill in U.S. history. To the $9,500,000,000 which the U.S. would have paid next year under the present tax rates, it adds another $3,553,400,000, a sum that in 1927 would have run the U.S. Government for a whole year, but next year will last less than eleven weeks.

In polls, in the press, in letters to their Congressmen, the U.S. people have indicated their willingness to pay whatever it will cost to see their allies Britain, Russia and China through the war, to defeat Adolf Hitler. But it was Franklin Roosevelt's duty to consider whether the burden is distributed equitably.

By lowering personal exemptions to $750 for single taxpayers, $1,500 for married couples,* the new bill adds some 4,911,000 small wage earners (with salaries as low as $14.50 a week) to the 17,197,000 people who must file returns in 1942. About 2,256,000 of these small wage earners will actually pay taxes. Of $303,000,000 in extra revenues provided by lower exemptions, these new taxpayers will contribute a scant $47,000,000. The other $256,000,000 will come from the pockets of the 10,925,000 people who now pay taxes--by lifting their incomes into a higher surtax bracket.

Like most other provisions of the new income-tax schedule, lower exemptions produced the biggest percentage increase in the taxes of people with small and moderate incomes (see box). And most of the new tax burden had to be borne by people of moderate means. For all but a meager 10 1/3% of the nation's aggregate income goes to people who earn $15,000 or less. And the taxes of the rich are already high--43% on a $100,000 income, 72% on a $1,000,000 income.

The $1,144,600,000 in new personal income taxes is only part of the new tax load. The bill which Franklin Roosevelt studied calls for another $1,382,100,000 in corporation taxes. It piles $179,900,000 more on capital stock, gifts and estates. And it adds another $846,800,000 in excise taxes and miscellaneous "nuisance" taxes on travel and entertainment.

These last are the levies which bear most heavily on the poor, who pay no income tax. These taxes will fall on virtually everything the U.S. citizen enjoys, starting Oct. 1. Excise taxes (which are in effect sales taxes) range from a $1-a-gallon increase on whiskey to a flat 10% on cameras, musical instruments, washing machines, jewelry, cosmetics, rubber goods. Nuisance taxes include such penny-snatching tribute as: 10% on theater tickets costing 10-c- or more; 5% on nightclub bills; 6% on telephone bills for local calls; 10% on telegrams and long-distance calls costing 25-c- or more; 11% on club dues over $10 a year; 5% on train tickets, transportation by plane or bus or boat, when the fare is over 35-c-.

President Roosevelt had to ponder. But the hour was growing late: the U.S. had already contracted to spend at least $22,000,000,000 in fiscal 1942--some $9,000,000,000 more than it will raise with the aid of new taxes.

He took his pen, wrote "Approved," and scratched "Franklin D. Roosevelt" across the page. The 1941 tax bill was law.

*For the first time in a U.S. tax law, personal exemptions put no premium on marriage. A man and his wife together get exactly the same exemptions they would get separately, if single. But they still have the privilege of dividing exeptions as they please.

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