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Frank Demby

New Tax Proposals Hit Those
Who Can Least Afford Them

(May 1941)

From Labor Action, Vol. 5 No. 18, 5 May 1941, p. 2.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The Treasury Department has recommended to Congress the adoption of new taxes designed to raise slightly more than three and a half billion dollars – about half of the cost of the Lease-Lend program. While it is too early to say definitely what the final bill will be, as the various big business groups are now engaged in the highly edifying American pastime of passing the buck – on to consumers and other business groups – through their powerful lobbies in Washington, all the proposals made point to the strengthening of the already reactionary tax structure of the country.

While the capitalist press has headlined the scheduled increases in the income tax rates, the really significant aspect of the Treasury’s proposals are the additional $1,233,600,000 of indirect taxes. These are the taxes which are passed on to the consumer in the form of higher prices. The workers, those who can least afford it, will foot the largest portion of the bill designed to make the world safe for American imperialism. The middle class (those with incomes between $2,500 and $10,000) will pay the next largest share. And, as usual, the big capitalists will pay the smallest portion of the cost of their war.

Over $200,000,000 will be raised through additional tobacco taxes. This means that cigarettes will go up another two cents a pack. Almost the same sum is expected through a higher liquor tax. This means much higher prices for beer, wines, whiskey, etc. Over $842,000,000 will be obtained through excise taxes on some 25 items; some representing additional taxes on those already in existence, like another cent on each gallon of gasoline (expected to bring in $255,000,000); others representing entirely new taxes, like the proposed one cent a bottle on all soft drinks (expected to bring in $133,500,000). One and a half billion dollars is to be raised through additional income taxes by higher surtax rates on the middle income groups. For example, under the Treasury’s program a married couple with no children who have a net income of $2,500 a year would pay an income tax of $72 instead of the present $11. A single person with a net income of $1,000 who now pays an income tax of $4 would pay $29! Many of those in the middle class (around $5,000) will pay six to seven times their present income taxes.

Compare these proposals witt the measly additional $400,000,000 to be collected in excess profits taxes and you have a true picture of how the capitalists are trying to unload the cost of the war onto the backs of the workers and other people who work for a living. Especially, when it is recalled that the present excess profits lax, which was supposed to bring in close to a billion dollars in 1940 is now estimated as having brought in only $100,000,000!

While you are mulling over these typical illustrations of capitalist “justice,” let me spoil your appetite further with these additional items as food for thought:

  1. Representative Doughton, chairman of the House Ways and Means Committee, which has charge of the bill, said he expected that “every conceivable tax” might be offered in the committee when it starts to “mark up” the bill within two or three weeks.
  2. Under present tax schedules, those in the lowest income groups (representing two-thirds of the population) pay 20 per cent of their incomes to the government in taxes (most of them being hidden or indirect taxes) while those in the highest income group (representing one-tenth of one per cent of the population) pay only 38 per cent of their incomes to the government in taxes.
  3. The new and increased excise taxes will have a cumulative effect in helping to bring about higher prices.

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Last updated: 27.12.2012