The sun. [volume] (New York [N.Y.]) 1833-1916, 1894-02-19
How the Wilson Bill Exempts Some
small Incomes. and Taxes Others.

provisions OF the income tax sections OF the
WILSON BILL we are indebted for several
suggestions which will prove. we think.
Of general interest.
There is no question that the intention Of
the bill Is to exempt individual incomes up
TO $4,000 n year. and also In taxing larger
incomes to tax only that part OF the income
which Is In excess of $4,000. The language
OF the bill Is clear enough in regard to this.
rs we pointed out the other day In our
answer to the gentlemen in New Hampshire
who applied TO THE Sun to decids their
wager involving that question.
Yet, notwithstanding the exemption up
TO $4,000. so loosely drawn Is the bill. so
Enthusiastically inequitable IL the socialism
therein concealed. and 80 inadequate and
incoherent are the Administrative provi-
sions. that the practical effect Of the CLEvE-
LAND-WILsoN income tax would be to tax
some incomes under $4,000, while leaving
others untouched. More than that. Its
practical effect In many cases would be to
tax men who had actually lost money as tho
net result OF their years business. Where
the individual accounts Of the year showed
absolutely loss and an impairment OF
principal, the unfortunate victim OF this
outra geous measure might. nevertheless.
DO taxed under the proposed law precisely
as II he had received an income considerably
In excess OF $4,000
To illustrate the aforementioned possi-
biity: Let US suppose the case OF a widow
with children. whose only source of income
Is the dividends derived from certain bonds
and stocks left by the husband In trust for
the support Of the family. These ylcld.
we will suppose. just $1,000 year Every
cent Of the money Ia needed by the poor
woman for her little ones. Under tho
socialistic theories OF the income takers she
Is the last person who should be taxed. Ac-
cording to the avowed intent Of the WILL
Son bill she Is not subject to the income tax.
Her small income falls far within the limit
OF exemption; and yet. as matter OF fact.
the two per cent. tax would be wrung from
that widows pittance. and she would have
no redress.
II the little income from the trust estate
went first to the widow. and the Internal
Revenue Collector went to her afterward
she would. OF course. have no tax to pay.
But her income. under the proposed sys-
TEN. would reach her with two per cent. al
ready deducted. She would not get $1,000:
she would get only $3.50. For Section GO OF
the WILSON bill provides:
THAT shall b the daty OF every corporation doing
business to keep full regular and accurate books Of
account. &c The taxes impossi by this Act
upon dividends interest. coupons and annuites shall
be levied upon and collected from . such dividends
coupona interest," and annuities Whenever and wher-
ever the same may be payable to alt parties what
soever. including non.rssdsnts whether citizens or
| alienA And every corporation paying any tax
such dividends. coupons interest. or annuities may
deduct and retain from all payments made on aeeoant
n pron oFti Ia n 4 maid"
1t will DO soen at glance that this so
called Tux on corporate investments. rec
commended by Mr.. CLEVELAND in his mes
sage to Congress. Is nothing but an
individual income tax in the last analysis.
1t is not the hated corporation that pays
the $40 in the case supposed the widow
| pays 1t: and the absurdlty and inequity
OF the scheme are all tho more apparent
| when we remember that the bill processes
to exempt individual incomes up to $4,000.
Here is an individual income OF only
81 900 taxed at the full rate. For the widow
there is no recovery OF the $50 withheld
from her for the Government by tho
various corporations on whose books she
| figures. The bill guards the large income
against paying the tax on dividends twice
over. that is to say. first through the cor
porations and then through the individual
stakeholder or bondhoider. 1t does not
guard the income within the $4,000 limit
against the iuequity Of paying once. where
incomes Of the same size otherwise de-
rived pay not one cent.
The second case supposed is quito as
striking. A man owns $4,000 OF railroad
bonds paying six per cent. and yielding
him 5000 OF income. He Is also employed
by a corporation which pays him 5000
salary. He is otherwise engaged in bust
ness enterprises on his own account. He
makes an absolutely honest return to the
Collector. showing his 5000 of income by
interest on his bonds. his 5000 OF income
from his salary. and a gain OF $4,000
that year on his outside business ven
lures What is the mans net in
Gomez Why. $4,000 from all sources:
and he is therefore taxed on that amount.
minus the $4,000 exemption. The next year
the same man makes another absolutely
honest return. showing 5000 from his rail-
road bonds. 5000 from his salary. and
$4,000 loss on his other business for the
year. What is his net income? Why.
$4,000 worse than nothing. He Is 5000
within the exemption set by the law. And
yet. for that year OF misfortune and loss. he
must pay an Income tax precisely as II his
individual income, including the $4,000 eX-
emption. were 5000. instead OF being moth
ing and $4,000 worse than nothing. The
railroad corporations will withhold and turn
over TO the Government the two per cent.
on his 5000 OF interest, according TO the
section already quoted. There is no way
for him to get it back. Tho corporation
employing him will retain and turn over to
the Government two per cent. OF the taxa
bic part OF his salary OF 5000. as provided
for by this clause OF Section 60:
Every corporation which pays 30 SAy employee
salary com psasati0u exceeding SAoOO per aRRum
shall report the same 70 the Deputy Coi!setoT Of his
dsreL and FAy she tAK herein before provided the
Deputy CosetOE OF his district. and such payment
IaEi be charged against tue amount dus sGeh I'm
pl0yss"
Here We have a case. not merely where an
individual income OF less than $4,000 pays
an income tax under the WILSON bill. but
where person without any net income for