The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1908-07-03


53O), constituting our present income
tax laws has held that under those
statutes no deductions from income
are allowable for estimated deprecia-
ton of machinery or other property !
and that the only deductions allowable |
i'm that or related matters are for
moneys actually paid during the year
preceding the date of assessment Tor |
requirements of property worn out or
destroyed The controversy as to the
respective merits of these two methods
of deduction the one perhaps general
ly called "the estimated depreciation
method" and the other "the replace
ment method is not new one. The
modern tendency, it would seem, is
towards the substitution of the re-
placement method for the other. 1t
would seem further that in practical
results extending over long period OF
time there is no very great difference
between the two methods. If this is
so, it is certainly very strong reason
in favor of adhering to the method
now prescribed by law against the
adoption of a substitute. The present
! law has the great advantage Cnat 1t
mas been already, to some extent, con-
strued by the Courts. New acts re-
quire new constructions and a further
period of uncertainty as to what they
mean. Again, while theoretically and
as a matter of bookkeeping in the Of
fees of well conducted corporations,
the estimated depreciation method is
an attractive one and seems to be bas-
ed on sound reason, still in practical
operation if it were to be made to ap-
ply in favor of all taxpayers it would
seem to result in a very great diminu-
ton of the revenue from tne income
tax and to render the income tax act
practically unavailing as a source of
revenue. Buildings in which any Civ
en- business is being conducted deterio-
rate in value as do sugar mills or 9th
err machinery, and it would become
necessary to allow for such deteriora-
, ton. If the substituted method were
to be made to apply to limited class
of cases only, as, for example, the
! sugar producers, the remaining tax
, payers not thus favored would have
good ground for complaint of unfair
ness.
The present system, in this respect
is perhaps not perfect No method Of
taxation yet devised is perfect, but the
imperfections of the present system
i, appear to be not much, if any, greatel
l than would be those of the estimated
= depreciation method. On the whole
= the Commission recommends that NJ
= amendment be made upon this point
INCOME TAX, EXEMPTION RE
= PARTNERSHIPS.
$ The income tax law exempts from
taxation in cases Of individuals thu
, first one thousand dollars of annua
p income. 1t has been suggested by SOM
= of the assessors and others familia
= with the details of tax office business
p that this provision be modified so a
= to allow partnerships but one total eX
: emption of one thousand dollars in
: stead of an exemption of one Thousand
q dollars to each member of the part
+ nership, the reason urged being tina
: there are many partnerships eacl
q composed of many partners many o
whom own but a small amount o
Q property, say, one hundred dollars
v and yet are entitled to an exemption
% of one thousand dollars each, and tina
q the result is the loss to the Territor
- of taxes which would be otherwise col
;, lectable. The Commission does no
: see it's way clear to recommend thi
. amendment. A partnership is not or
!. dinarily regarded for legal purposes a
" a separate entity, as is corporation
:, 1t is merely a somewhat loose com
II binatiOn of two or more individual
- for the purpose of conducting business
The income tax laws do not regar
partnerships as separate entities and
not seek to tax them as such. The
., contemplate that the tax shall ia.
- simply upon individuals and upon cor
" porations. So also the present law
y allow the $1,000 exemption to eac
ie member of a partnership out of tina
le members interest in the partnershi
: income and do not allow the total {
Is the exemptions of all the members I
le be deducted from the total income {
5, the partnership. The exemption
a. therefore, is no greater in the case
% persons who are partners than it is
eI the case of those who are not partner
Is If financial ability is to be adhered
lie as the true and fair standard of meal
u urement for the adjustment of taxes {
he between members of the communit
t. the exemption allowed to individual
H. who are not members of a partnersh
w should, likewise, be allowed to tho.
II. who are members of a partnershi
j. None of the latter class of individual
are any the more able financially |
OF reason of their ownership of an inte
Oh est in the partnership than they won
he be if they owned the same amount
ng property outside of a partnership.
ed MILITIA ROLL.