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Susan Green

“Too-Poor-to-Pay” Hit by New Tax Proposals

Senate Sure to Vote Payroll Tax Deductions

(7 September 1942)

From Labor Action, Vol. 6 No. 36, 7 September 1942, pp. 1 & 3.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

In a recent issue, Labor Action warned its readers to watch Congress on taxes. If you have been watching, you have an idea of what is in store for the worker – who will be paying for the war.

You remember, no doubt, that the bill sent by the House of Representatives to the Senate, lowered the taxable income groups. Poverty is no longer a protection from the tax collector. Single people earning the pittance of $500 annually, or less than $10 a week, and married people earning $1,200 annually, or less than $24 a week, are to be taxed.

The precedent set by the House for making the too-poor-to-pay cough up taxes which – through the machinations of the dollar-a-year technique – find their way into the bursting treasuries of big business, has been followed by the Senate. Without batting an eye, the hard-as-nails Senate Finance Committee took another dive into the pockets of the poor by reducing the exemption for dependents. Heretofore a dependent merited an exemption of $400 – but with the cost of living mountain-high, the Senate declares that $300 is plenty.

Naturally, to the millionaire and billionaire, this reduction of exemption allowance for dependents will not mean a tinker’s damn. To the worker with a family it is going to make a big difference. He will have to pay at least $19 more taxes for each of his children – and that is something he will feel where it hurts most.

If the Senate increases the normal and surtax rates – which in the House bill now stand at $19 on $100 of taxable income – the reduction of dependent exemptions will hit the worker even harder. Increases in normal and surtax rates above those in the House bill are by no means out of the question.

Through the welter of proceedings before the Senate Committee, it seems almost certain that the new taxes will be collected by the withholding method. Whether monthly or quarterly collections will be made or perhaps even weekly – the boss will take it right out of the worker’s pay envelope.

This means, mark you, that there will be strict supervision of workers’ tax reports. All possible loopholes, however tiny, will be plugged up. But how about the evasions practiced by corporations and their high-paid officials behind the smokescreen of legality created by corporation lawyers? Will workers be allowed to check up on their bosses? As far as this writer knows, none of the many schemes presented covers this angle.


The pay-as-you-go scheme of Beardsley Ruml, treasurer of the R.H. Macy Co. department store – by the way, one of the most die-hard anti-union outfits in the country – is very acceptable to big business. This is evidenced by the favorable comment on the financial pages of the capitalist press. The Ruml plan means no taxes at all for the year 1942, the pay-as-you-go collections to begin in 1943 on 1943 income. For big business 1942 is a tremendous year. Why should it not be jubilant over the prospect of keeping for it’s very own the war profits for this boom year!

As far as the working class is concerned, not to pay taxes for one year is no particular favor. For any taxes upon the workers for prosecuting the war is shifting upon its shoulders a burden that justice requires should be carried entirely by the capitalist class – through capital levies and through the confiscation of all war profits.

For the time being, the much-discussed Ruml plan has put the sales tax in the shade. Also, fear of the electorate in November has made legislators less vocal on this subject for the present. However, Arthur Krock, Washington correspondent for the New York Times, has the following to say about the sales tax:

“While Chairman George has said he would favor a sales tax only as at last resort, it appears to a very great many that this last resort was reached some time ago.”

To conclude: The prospect for the worker – the poorest and the best-paid alike – is not at all rosy. His “stabilized” wages will be reduced by unprecedented taxes, collected at the factory and at the store counter.

Mr. Henderson, price administrator, predicts the cost of living will be up 30 per cent in the coming year. The workers’ purchasing power will have the same relation to the cost of living as a pimple has to a pickle.

Why doesn’t Congress confiscate all war profits and dip into the vast accumulated wealth of the “haves,” instead of mulcting the “have-nots”? Because Congress is pledged to preserve the profit system and the ill-gotten wealth of the profit-collectors.

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Last updated: 11 September 2014