BRASS TACKS

The country is still faced with the imminent danger of inflation. Part of the responsibility of Congress in considering the tax legislation was to check inflationary trends with adequate taxation. For the fiscal year 1943 the national income will be 110 billion dollars, and by the end of next year, according to the Treasury, it may well be over 130 billions. This means, in terms of possible inflation, that Americans next year will have 40 billion dollars more to spend than there will be goods to buy. On top of this there is an 18 billion dollar excess this year. Price fixing can hold back the tide only so long. The handwriting is on the wall. This fabulous sum must be reduced or frozen soon.

Congress did not pass a thorough-going anti inflation measure. The Treasury proposed two plans to do the job as far as taxation could: the famous spendings tax and forced savings. Congress ignored both and filled the gap with one of the most unfair taxes in recent history, Senator Barkeley's "victory tax" of five per cent on all income.

It is a weak compromise between compulsory savings and a sales tax, and inferior to the Treasury plan. It should have been defeated for at least five reasons: (1) It will help but slightly to check inflation because the lowest income groups spend most of their wages on necessities such as food, and for larger incomes a five per cent levy is not heavy enough, (2) It burdens the poorest families most, taxing as low as the subsistence wage of $12 a week, $600 a year. In this income area there is scarcely enough to keep a family alive. A third meal a day should not be taxed away, or nearly so. (3) It has the worst elements of a sales tax. The five per cent rate is not graduated according to income. (4) It is a tax on gross income with no deductions allowed of any kind, such as heavy hospital expenses. (5) Nor does it act as an incentive to decrease consumption, as the Treasury's spending tax does. Yet it has two commendable provisions, the post war "kick-back" of forty per cent of the amount of the tax, and the privilege to pay debts as part of the tax.

The Administration's spending tax is one of the most far-seeing, courageous proposals to come before Congress. It was snubbed chiefly because it was so courageous. Its principal purpose was to check inflation by taxing a family according to the amount it spend. A man earning $600 a year would pay nothing, since he spends so little and most of that for the bare essentials of life. But every family earning over $1000 a year would pay a tax on the amount it spends. If it spends little above ordinary necessities it pays little. If it spends a lot, it pays a lot.

This is by far the best plan offered to discourage spending and halt inflation. It would go a long way toward making victory surer if Congress would give it the opportunity.