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Gertrude Shaw

New Taxes on Labor – More Due to Come

(21 June 1943)

From Labor Action, Vol. 7 No. 25, 21 June 1943, p. 3.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

That organized labor has not raised a howl against the Pay-as-You-Go Tax Bill that the President has just signed and made law is another sad commentary on the subservience of labor leaders. For this tax law puts a fast one over on labor, if anything ever did.

The outstanding feature of the bill, as far as labor is concerned, is that taxes are to be paid on a given payroll period – that is, by the week, semi-monthly or monthly, as the case may be. The obvious conclusion from this is that while a worker is employed, he will be paying taxes.

Labor Gets It in the Neck

Formerly taxes were reported and paid on the yearly period. A worker paid on the basis of his annual employment. So that, if his yearly income was not taxable, he didn’t pay a tax.

Now the government has decided that it is not interested in the worker’s unemployed periods – BUT ONLY IN HIS PAYROLL PERIODS. Regardless of the fact that his unemployed periods may drag down his yearly pay below the taxable level, he still will have the pay-as-you-go tax on the wages he earned. This is the latest injustice that has been perpetrated against the workers by the President and Congress.

It is true that the bill provides for a yearly accounting on March 15, when a report will be made to show whether the taxpayer owes the government money or whether the government owes the taxpayer money.

If the taxpayer owes the government money, it will have to be paid on March 15 – without any ifs, ands or buts. However, if the worker’s yearly income has fallen below the rate of his pay-roll periods and the government therefore owes him money, he will receive – not a refund – but a CREDIT. So the worker gets it in the neck – and no doubt about it.

Another angle to the pay-as-you-go way of collecting taxes is that it is by no means just a war measure. To the boss politicians the idea of getting money out of workers while they are at work – without worrying about the periods of unemployment – is too good for only temporary use.

Every post-war plan thus far publicized by the promoters of American imperialism involves the continuance of heavy taxation. To police the world will require lots of money. The workers will be expected to pay as they work, regardless of what may happen to them when they cannot find work.

Forgiving the Bosses

Much is being made of the provision in the new tax bill, which forgives the entire 1942 taxes to low-bracket taxpayers. Thus a worker owing $50 for the 1942 taxes will not have to pay it. A worker owing $66.67 will be credited with $50. But –

Taxpayers paying OVER that amount will be forgiven SEVENTY-FIVE PER CENT OF THE 1942 or 1943 taxes, whichever is smaller.

It is not the workers as a class who will benefit by this seventy-five per cent forgiveness. The big boys of industry with salaries running into hundreds of thousands will pocket the benefits of this provision. The big corporations whose war profits mark a new high in “the rewards of private enterprise” will harvest the seventy-five per cent forgiveness. Billions upon billions of blood money will remain untaxed under the new bill.

And here is something else to ponder over. No matter how much money is accumulated in the voluminous bags of the big boys, that money can never – no never – cause “inflation.” But should the workers ask for an increase in wages to keep up with living costs, immediately the bosses and their politicians go into convenient paroxysms about “inflation” – because the workers will have too much money!

FDR’s About-Face

No story on the new tax bill is complete without telling about the President’s about-face on the point of forgiveness. At first he held with Secretary of the Treasury Morgenthau that the government could not afford to cancel any taxes. The President opposed the Ruml Plan. Then, after all, he signed the bill forgiving seventy-five per cent of the taxes, thus making a present of billions to those who can most afford to pay taxes.

Already the effects of this handsome present to the big boys are being felt. The President, needless to say, still wants more money to wage the most costly war in history. In his last message to Congress he asked for $16,000,000,000 additional taxes. The new bill provides only $3,000,000,000 additional. The President is going to deliver another tax message to Congress in which he will make certain recommendations.

The outstanding one will be for compulsory savings. That means you, little man. Out of your wages, which cannot now cover the high cost of living, you will pay as you go – and you will also be compelled to “save” as you go!

Another pet of Congress to raise money is the sales tax. The President is now blowing cold on a sales tax. He says it will hit the poor too hard. This is undoubtedly true. But the President has been known to brush aside such truths before. Odds are heavy that a sales tax too is just around the corner.

A Tax Plan for Labor

All along the financial burden of the expensive and cruel luxury of war has been loaded on the working people. All along the leaders of labor have followed a compliant policy The result is that the government makes presents to the rich – while concocting new tricks for extracting money from the workers.

Labor Action calls on organized labor to demand a tax policy that will soak the rich.

Here is a tax program for labor to press immediately – or the workers will be squeezed dry by the war while the rich get away with their juicy war profits.

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