THE COLLECTION OF SOCIAL INSURANCE TAXES AND CONTRIBUTIONS BY MEANS OF STAMPS-ADHESIVE AND METER IMPRESSED.

By Frederick Bowes Jr. '30. Mimeographed.

The Social Security Act of 1935 adopted as a general rule the principle that social security should be financed mainly through contributions of workers and employers in the form of taxes on payrolls and wages. One of the most important and difficult problems of the immediate future is therefore that of working out effective administrative machinery for collecting these taxes from thousands of employers and millions of workers.

Initial payments will be made in 1936 or 1937 though the taxes (of 3% each) will not he fully operative until 1949- Collections are to be made by the Bureau of Internal Revenue and the sums paid into the United States Treasury. The Commissioner is made fully responsible for determining the methods of administration, and the times and conditions of payment. He must decide whether the most convenient, economical, and efficient method is to use stamps, coupons, and passbooks or some other device.

Both the nature and magnitude of the administrative task resemble that of collecting the federal income tax. For millions of workers, payments may be required weekly. The system must be adapted to intermittent employment, to shifts in employments, and to use by a local contractor as well as by a large steel factory.

Mr. Frederick Bowes Jr., Dartmouth 1930, has performed a useful service in issuing this "brief and study" setting forth the advantages f using the stamp and passbook system about which he is a qualified as well as interested observer. The advantages claimed for it are: (1) that it would popularize the plan as insurance and thus prevent the demoralizing effects of a dole; (2) it would provide efficient, convenient, and economical administration both for the government and for employers, whether large or small; (3) that it would be safe and understandable to workers; and (4) it is the method which experience has led European countries to adopt for this purpose and was recommended by the President's Committee on Social Security.

It is probably not too much to say that the success or failure of the Social Security Act will depend as much upon finding a successful solution of many complex administrative difficulties as upon any other single factor. The adoption of suitable, simple devices which have proven effective elsewhere should contribute materially toward its success. —LLOYD P. RICE.