Uncle Ben and Uncle Sam

Of the 10,800,000 people who paid Federal income taxes last year, nearly 700,000 borrowed money to do it. If this ratio (estimated from banking sources by Representative Emanuel Celler's* office) holds good with 1942's 13,000,000 taxpayers, over 1,000,000 loans will be made before March 15. And the ratio may be higher.

This means safe and profitable business for:

>Industrial banks. Last year they made an estimated 460,000 loans for taxes, averaging $300. Interest (or discount) and other charges are equivalent to about 12% per year on unpaid balances.

>Commercial banks. Their personal loan departments made an estimated 114,000 tax loans last year, averaging $200. Most also charge about 12%.

>Personal finance companies. More than 285,000 taxpayers borrowed from them an average of $140 each, at rates equivalent to 24% annually in New Hampshire, and averaging 33% throughout the U.S.

>Credit unions. An estimated 192,000 members borrowed an average of $75 for taxes, at about 12%.

Thus 1,050,000 people borrowed $215,000,000 altogether to pay their taxes last year--more than 350,000 to pay State or local taxes, the rest for Federal income taxes.

These people paid a stiffer price than if they had been unable to borrow at all. If a taxpayer is really broke and files a return without paying, few communities would charge him more than 6% or 8% interest on a real-estate tax delinquency. Most States would charge 6% on an income-tax delinquency. So would the Federal Government.

But, if the delinquency is willful, the Federal Government has a big stick: a $10,000 fine, a year in jail. Anyway, most citizens would rather go to any expense than tangle with a Revenue man.

*House leaders anticipate a renewed drive for a withholding tax, which would save wage earners the trouble of borrowing.

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