The Abbeville press and banner. [volume] (Abbeville, S.C.) 1869-1924, 1894-08-29
INCOME TAX FEATURES.
PROVISIONS OF THIS PART OF
THE TARIFF BILL.

THE TARlEE BILL.
Two Per Cent. Tax on All Incomes
Exceeding $4,000 - Who Will
Have to Pay and Who Will Be Ex-
empt-Special Exemption for Far
mers-The Corporation Tax.
As explained By the New York Herald, the
income tax addition to the new Tariff bill
provides that from and after January l,
1895, and until January 1, 1900. every citi-
zen OF the United States, whether residing
at home or abroad, and every person not a
citizen residing in the United States, who
has an income In excess OF $4,000 per year,
shall pay a tax Of two per cent. on all his In
come in excess of $4,000. All those who
have incomes OF not more than $4,000 will
escape this taxation, unless part of all the
incomes are derived from investments in the
stocks OF corporations from the dividends OF
which the tax will be deducted before they
are paid. The taxed class will consist Of all
those whose incomes are more than $4,000
with few exceptions, which will be noted.
In some quarters there Is some question as
to what is meant by the $4,000 exemption !;
the idea prevails that man with an income
Of more than $4,000 would be taxed on his
total income. This is not fact. 1t ls only
the excess of $4,000 that will be taxed. For
instance, q man having an income OF $5OOO
will not pay tax upon the whole $4,000, but
only upon the $1,000 in excess OF $4,000. The
only parsons who are exempted from the
payment OF this tax are the officers of States,
counties and municipalities, the salaries
which they receive not being included In es-
timating their incomes for the purpose OF
taxation. The Governor Of the State OF New
York, who receives salary Of $40, 1000 and
who resides In mansion provided by the
State, will not be taxed cent on bis salary,
but the bank cashier or businessman, whose
income Is in excess of $4,000 a year and who
must provide his own home, Will pay TWO
per cent. of all his income moro than S4oOo
Into the Treasury of the United States.
The directions in the bill Tor estimating
individual incomes are very minute, and are
made to cover the incomes from every con-
ceiyable source. except the interest on bonds
OF the United States. the principal and inter
est Of which are by the law Of their issuance
exempt from all Federal taxation. There is
one exemption which relieves the farmer
from including in his income the value OF his
farm products consumed By his family.
In estimating incomes, all personal prop
erty. acquired by gift or Inheritance, is to be
included, as are the profits realized within
the year from sales of real estate, purchased
within two years previous to the close OF the
year for which the income Is estimated. In
estimating incomes, the net expenses OF car
rying on any business or profession are to
be deducted. These expenses are to include
interest, taxes, losses of all kinds, not COM
pensated for by insurance or otherwise. and
bad debts. but no deduction Is to bemade on
account OF permanent improvements or bet
terments made to increase the value OF prop
erty.
As the two per cent. tax levied on the in
comes OF corporations Is to be paid BY the
corporations, In estimating individual In
comes all receipts from such sources are TO
be deducted.
While no one baving an income Of less than
$4,000 will be taxed, the law will compel
every person having an income OF more than
$500 to make return OF his income to the
Collector of Internal Revenue in his district,
and If any person having taxable income
neeleots or refuses to make return for such
income, or makes wilfully fraudulent re-
turn, the Collector OF Internal Revenue for
his district Is to make out a return accord
ing to the best information he can obtain by
the examination of such person, or from any
other evidence, and add fifty per cent. as
penalty to the amount he thinks to be due:
In the bill as 1t passed the House the In
ternal revenue collectors had power to ex'
anime private books and accounts, but that
feature was stricken out In the Senate. The
taxes on incomes are to be payable on or be-
fore July Of each year for the calendar year
preceding, with a penalty Of five per cent.
and interest at the rate of one per cent. per
month upon such tax for failure to pay on
the date prescribed. The provisions in re-
gard to the taxations Of the profits or In
comes of corporations are very lengthy and
complicated. The provisions as to exemp-
tions and as to methods OF making returns
are IS nearly as possible the same as those
relating to the incomes of individuals.
The bill exempts the incomes OF States,
counties, municipalities :, OF organizations
conducted solely tor charitable, religious O,
educational purposes, including fraternal
beneficiary societies operating upon the
lodge system and providing for the payment
OF life. sick, accident and other benefits to
their members of funds and securities held
by trustees for charitable, religious or
educational purposes, or building and loan
associations which make loans to their
stockholders only ;of savings banks and In
stitutions which have no shareholders or
members except depositors, and no capltal
except deposits, which do not receive de-
posits to an aggregate OF more tnan SioVo IN
ONO year ltom tue Saue uopo'Itct, 49, -
not allow an accumulation of deposits by
any one depositor exceeding SIC, 900, ana
which divide ratable to deposits all the net
earnings, and which do not possess surplus
exceeding ten per cent. of their aggregate
deposits.
The bill also exempts the incomes of sav.
jngs banks and institutions composed Of
members who do not participate in the
profits, and which pay interest or dividends
only to their depositors. and also such parts
OF the business of any savings bank or in
stitution that Is conducted on the mutual
plan solely for the benefit of its depositors
on such plan, and which shall keep sepa-
rate account of such business.
The incomes OF purely mutual insurance
companies having no capital stock and no
shareholders are also exempted.