Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-05-09
THE INCOME TAX.
1.-THE Proposed Law.
By Frederic J. Haskin.

| The proposed income tax law as drawn
| mainly by Representative cordell Hun
Of Tennessee and adopted by the ways
and means committee as a part of the
Underwood tariff bill largely follows the
English ideas of income taxation. al
| though there are some features or the
English law, such as the differentiation
| between earned and unearned incomes.
| that are omitted from the Underwood
measure. The bill takes cognizance of
the recent Supreme Court decision ex
empting from the corporation tax corpo-
rations which simply hold leases on prop
erty they have rented to other people or
| corporations 1t also prevents corpora
| tons from counting as an operating ex-
pense the taxes they will have to pay on
bonds which contain clauses exempting
| the holders OF the bonds from taxes.
| These two items are important, more
especially the latter because il such
provision were not made Mr.. Carnegies
bonds would escape taxation and thou
sands of other coupon clippers would be
in the same boat. The Supreme Court
decision that a railroad company merely
owning a railroad property which 1t
leases to others is not doing corporate
business has deprived the treasury of
nearly a million dollars Of corporation
tax a year. Still another far-reaching
porations holding stock in other corpora
tons shall pay tax upon tn dividends
from those stocks in. spite OF the fact
that the income Of the corporation paying
the dividend already has been taxed. This
is intended to place a burden of double
taxation upon big holding companies or
trusts.
The bill makes numerous changes from
I@h 10 af -n1o hot
law, for in
Makes Changes stance. per
in Former Tax Law sona' prope'
rated as income: but under the proposed
IA" only the income from such property
is taxed. Likewise profits upon real es-
tate transactions are -eckoned as they
are, and not arbitrarily If a man bought
farm ten years ago for ten thousand
dollars and sells it for twenty thousand
dollars, in fixing his profit the average
OF the ten years will be taken, and his
income tax upon the transaction will be
reckoned ION one thousand dollars
The law exempts $4,000 from taxation
in every income, so that a man pays his
tax only upon that part of his income
that Is In excess of the $4,000 exemption.
rms applies to everybody except the
an income from American property: he
must pay the tax upon every cent of his
income The committee calls the tax of
| per cent the normal rate. and this .ap-
| plies to all incomes above $1,000 Upon
all incomes exceeding $4,000 and not ex-
ceeding $4,000 1t provides an additional
TAX OF l per cent for that part of the
income exceeding $4,000: between $50. 600
and 100000 the additional tax becomes
per cent. and for all income in excess
| of 100000 the additional tax is Z rer
| cent.
The definition Of income is so compre-
nenslVe that one can scarcely imagine
anything escaping under It, In computing
| net incomes deductions from gross in
| come Is made to include the necessary
expenses OF business, but not personal
| living or family expenses. Deduction for
| payable interest is allowed, as are de-
auctions for taxes other than the national
| income taxes, for losses i'm the conduct
OF business. for depreciation and for
| worthless debts.