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THE G E N E R A L C O U N S E L OF THE TREASURY WASHINGTON JAN 2 3 1943 Dear Marriner: Following our discussion this morning I am attaching an analysis of the Ruml plan. You will see from this that the effect of the plan will be to eliminate the impact of increases of taxes for several years past. There is also attaching a copy of a proposed tax program which was handed to me hy Senator Taft. Federal Reserve Board. Attachments. Effect of Ruml plan at selected levels of income Married person - no dependents Taxable year ' : Income tax liability on selected net incomes 1/ ... , * $2,000 : S3,000 ! §5,000 s $10,000 4 $25,000 ! $100,000 : 1938 1939 191*0 191*1 19U2 $ 8 8 31 138 32U $ $ 509 If 19l*2 tax forgiven 1*2 If no 19l*2 tax increase 80 80 110 375 71*6 $1,006,060 1*15 1*15 528 1,305 2,152 $ 2,1*89 2,1*89 3,81*3 6,861* 9,220 1 32,1*69 32,1*69 1*3,1*76 52,701* 61*,060 $ $1,391 I M15 $2l*,905 $225,178 $3,662,226 185 61*5 2,663 15,685 161,118 2,808,226 81* 323 1,020 3,968 22,5U9 213,822 3,51*0,780 If no 19lll-U2 tax increases *• 109 U90 2 ,i*H* 16,507 19$,366 3,510,81*0 If no 191*0-1*2 tax increases — 1*0 1*00 2,075 12,1*1*5 162,31*5 3,395,220 If no 1936-1*2 tax increase — ho l*oo 2,075 12,1*1*5 152,970 2,856,970 $ 1*2 H*0 Tax liability 1938-1)2 Total $162 Treasury Department, Division of Tax Research 1/ Net income, before personal exemption* $ 679,Ohh 679,01*1* 717,581* 732,55U 851*,000 January 21, 19U3 B t o p o s K B TAX X propose the following m m . m to b o enacted a& e&rly i n 1 0 4 3 a s possible: (1) X z u s m s o tho e x e r t i o n s oxt t h e n o t iaoosao t a x to $700.00 i a tJao oaso o£ single parsmia sag £1560,00 in the c&so of iie&ria of faailios. Xnore&ae the surtax f r o m 1 3 ^ id 1 4 $ , a^c incr©&a» tho r & t o s © a a l l incoacs £ r o » S3Q0G u p t o §100,000, dq that heads o f Jkmtliea without w o u i a pay roughly a c c o r d ! t o the following ffc&Iss laooaa fax e4»006 5,000 $800 1.250 6,000 1,600 10,000 15,030 25,000 (2) rook 2,SCO 6,000 12,500 * 80£ wit&bol&is* tax. <m a H incosa over $15*00 a in the oa&o of aiaglo peraoaa aafi $20*00 a i*eck la tho caso o? hoado of f m a i l i o o . (3) Appl/ tbla witliholdlag also t o d l v H e a d s . A d o p t a jaodiXiad tad p l a n % forgitiag t2» tax o n 1 3 4 2 laoono t ^ to a t laaet tfca £i*afc S3000 o f i & c o s e . that amount t o *>« P e n d t tax ovar a t d e a t h , o p i a t e n animal tnatalssa&ts beginning i a 1 9 4 5 . (4) la^oao a 1Q£ buXcg tax, i x g a p t i i i i t&aa jytii Ohla piJSU axesapfclns t m l y f o o d sold i n etor#»« (S) Chaago Urn Vlatoey fwe m that tis® entiro aaouat of tht tax U wfuntlod i n tenia* and ti*» to boeoaoa i n fust » coagailswy ftMfinfff ttiiA. flmfjjjw incupoaslae tho iamtiiffi l a 1944 i&ere&tlttg the n t » i i » & to Tho foregoing plea. Ima the adsaRfcago of gPf&tAy 3i?^Hf£iag tgui tax stpueture* I t Incoae~tfi2*po?«r0 h i M t o kfits books* radu&B traaaii&oualy tha msaliflF of tha msaber of geoplo witk Tfoft tfcX of I k s e balosi the near n w w n t f atm Ixi ae&ftoteg tkroufjli the sole* prosctoe,. govomaent to top th<s %m*mmnt ftoommts requires the o^l^r 1-1/2 million ?etftil«*» iJMltsftS df iiltti SO ailXloa taxpayers. I t elialaatea tlsa d i f f i culty ooHootisg tbo Victory £vm agrioalteal l&l>orar$, houaeWLa se$9Mtiats* Mid wmw1flthwattha&a^ ^ f t t ^ i B g i« laBaasihl®. th&t thore Ink tke ®fua® i ^ f t l l t f m lit t b oftis of t tax* «o that M ti&oo stiwr gmipe m&wmmUw* ffhfr yrflgyqii x l l l tb© to* t&ara nfe&ut $ so tr<©»tidoua
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