The Tax Bill

Pressure groups have frequently lobbied constructive legislation to death in Congress. The present campaign of the nation's savings and loan associations against the President's tax bill continues this destructive tradition. As President Kennedy said in a recent press conference, the associations have misinformed the public on all aspects of the bill in order to gain support for their cause. Their success would ruin one of the most reasonable pieces of legislation designed by this administration.

The bill proposes that corporations deduct part of their technical improvement costs from taxes, that they withhold twenty per cent of all dividends and interest, and that savings and loan associations pay increased taxes on earnings. The associations claim that the with-holding proposal involves new taxes, would take money unjustly from honest taxpayers, hurt elderly widows and orphans, and create red tape.

These accusations are false. First, the bill does not create any new taxes on dividends and interest--it merely ensures the collection of already existing ones. The Treasury Department estimated that the government loses $800 million in annual revenue through failure of taxpayers to report $4 billion of personal income from dividends. Their evasion merely increases the tax burden on other taxpayers.

The associations' statement about elderly widows and orphans is even more absurd. The new law would principally involve the seven per cent of taxpayers earning $10,000 or more per year who receive 80 per cent of the dividend total. Any person whose income is too low to be taxable could exempt himself from any tax on interest and dividends by filing a simple form. The accusation about red tape, especially after recent streamlining of the bill, cannot be justified. In fact, withholding a tax on interest and dividends before they reach the taxpayer would require far less red tape than tracking down evaders under the present law.

The proposed tax on the revenue of Savings and Loan associations is perhaps the most sensible part of the bill. During recent years the associations have paid approximately 1.3 per cent taxes on earnings. Since the associations earn several billion dollars a year, they should be taxed at a much higher rate. The offer of deductions to corporations for technical improvements should remove any doubts about the moderation of the legislation.