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R. Fahan

Ruml Plan: Its Purpose Is to Aid the Rich

(January 1943)

From Labor Action, Vol. 7 No. 4, 25 January 1943, p. 4.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Seldom has there been as unscrupulously misleading a journalistic campaign as that conducted by sections of the daily press – especially the Scripps-Howard newspaper chain – on the problem of taxation. The New York World-Telegram, for example, has been campaigning long and loud for the so-called Ruml tax plan as a means of solving the taxpayer’s headaches. This plan has been put forward as a means of painlessly settling the painful problem of taxation by a mere wave of the Ruml hand.

On examination, however, one can see what a fraud the Ruml plan is and one can also see exactly what the motives of the capitalist press are in promoting this or similar taxation plans. The Ruml plan is really very simple. It proposes that the nation’s taxation be put on a “pay as you go” basis. Up till now, when you go to pay your income tax in March of one year, you are paying taxes for the previous year; that is, taxes paid in March 1943 count for the year 1942. Ruml proposes, however, in order to avoid the difficult situation whereby a person may have to pay the heavy taxes of the previous year out of the earnings of a greatly decreased income of the present year, that the tax paid in March 1943 be counted as the first quarterly payment for 1943.

Thus far, however, his proposal does not differ in any important respect from the proposals of other tax plans put forward by congressmen. Treasury Department officials of the President himself. They are all agreed upon the necessity of basing tax payments on present, instead of past, earnings. Where the distinctive feature of the Ruml plan comes in is in his suggestion that 1942 taxes be wiped off the books completely.

The Fly in the Ointment

At first hand this proposal may seem to be beneficial to the American worker. Wipe out 194w taxes? Why not? It makes it easier to get along and as everyone knows it’s pretty hard to pay taxes these days.

But a moment’s consideration will show that such reasoning is superficial. The United States is now conducting the most expensive war in its history. It is estimated that in 1943 America will spend some eighty billion dollars and that of this somewhat less than twenty-five billions will be collected by taxation. If the problem of getting this additional revenue is met, the major method will have to be increased taxation. Present estimates indicate that sixteen billion dollars of additional revenue will be secured by taxation.

Now it is clear enough that, regardless of whether these taxes are labelled “1942” or “1943,” they will have to be paid. If the taxes due for 1942 are cancelled, then what will happen is simply this: new, additional sources of tax revenue will have to be found.

The real problem involved in discussions of taxation is not the question of for which year taxes are to be earmarked, but rather the question: WHO is going to pay the taxes? Which section of the population, which economic class will bear the burden of taxation?

And when we ask this question we can see exactly why the Ruml tax plan is so reactionary. For it proposes that taxation be abolished for 1942, the year in which the war industrialists, the giant corporations and big business in general made the greatest profits of recent history. It is the year for which they would have to pay the largest taxes. The Ruml plan would offer them the gigantic lollypop of just erasing these taxes from the books. It would mean that the income that would have accrued from big business would now probably be extracted from the poorer classes which are less able to pay taxes. That’s why the Scripps-Howard press is so enthusiastic about this plan.

Program Weighted for the Rich

As it is, the nation’s tax program is heavily weighted in favor of big business. While, in the past year, the income tax paying section of the population increased to 27,000,000 as opposed to 15,000,000 in 1941, it will reach the figure of 50,000,000 in 1943. And everybody earning as little, as $12 a week will have to pay a five per cent “victory tax” on that wage. Not to mention the fact that there is now a movement afoot in Congress to increase the “victory tax” to ten per cent.

While the workers suffer these outrageous tax burdens, all of the mechanisms with which big business evaded payment of even that unequal section of the tax bill still remain: tax exempt securities, various depreciation and amortization allowances, the “alternative” method of calculating corporation taxes, etc.

These paragraphs are written before the submission of President Roosevelt’s new tax bill. But there is little reason to believe that this latest program will differ materially from the previous ones. While there is no doubt that the rich will have to pay quite a few pennies in taxes to keep their war effort running, they will not, we can state with certainty in advance, have to really cut into their fortunes of wealth the way the workers have to cut into their daily necessities of life.

A fair tax program would impose a 100 per cent tax on all war profits; it would exact a capital levy on accumulated fortunes; it would sharply raise corporation taxes. It would soak the rich. They, and not the workers, should be made to bear the financial brunt of this war; it’s their war and they can afford to finance it. The workers are having enough trouble just getting by.

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