New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-04-20
ASSve hezz5 mill Ay HC0e an tie
ECHzhsr Of GreT A@ck nos >soo73S and bstlzS

ton leads to inconsistencies and injustice.
With regard TO real estate, tenants arc
directed TO withhold income tax from
their landlords, and mortgageors are di-
rected TO withhold income tax out of the
interest they pay on mortgages. In eacn
case this results in permitting the less
responsible party 10 the transaction to
retain out of the income OF the more re-
sponsible party money some OF winch
may finally become applicable to payment
OF tax and some of which may be re-
turnable TO the person from whom 1t has
been withheld. SO far as the money thus
withheld finally becomes applicable 10
the payment Of tax. the government has
risked its ability to obtain the tax by
leaving it in the hands of the less re-
sponsible party. and Will thereby greatly
increase the difficulty and expense of col
lection. SO far as the amount withheld
becomes returnable to the creditor, ii VIII
result In trouble, expense. and risk 10 the
person TO whom the money really belongs.
Illustration of the difficulties, expressed
in concrete figures, may be made as fol
lows:
Assume tildl All ONUfI OF property has
rent roll Of $4,000. payable by tenants
each of whom pays in excess OF 5000, so
that the tenants would be required 10
withhold the tax on behalf of the owner.
The tenants throughout the calendar year
would naturally withhold the face of the
tax, to wit, l per cent on $4,000 or 800
Assume that the owner is entitled TO the
ntin urbfpb entities
him TO a deduction of $40 from the 500
reserve. and pays out in interest and taxes
$40. 900 a year, which entities him 10 an
other reduction of 500. After the end OF
the wear. when the tenants have reserved
the $500. the owner makes his return and
shows that he Is liable only for $50 OF
tax. TO begin with. he will have 10 make
that return to several of his tenants be-
cause naturally all the amount reserved
is returnable to the owner. To each OF
these tenants he must disclose his entire
business transactions for the year in order
10 make complete return. and then he
must persuade them that as matter OF
law, he is entitled 10 all the deductions
! which he claims and that they should re-
turn all but $50 to the owner and pay the
$50 10 the government In the meantime,
tenants may have gone away or become
irresponsible and the landlord be unable
to recover the amounts withheld or suo-
stantlal parts thereof. The same thing
might happen TO the owner OF mortgages
from whom mortgageors have reserved
amounts for income tax out Of interest.
Your committee believes that either the
entire proposition OF rcserving income ar
the source should he abandoned or at leas'
| should be modified so that landlords and
holders OF mortgages be exempted from
its provisions Your committee suggests
that the collection OF the tax would be
much simpliaed and the interests Of the
government would be better served If, In
stead Of requiring the income to be re-
served at the source, the law required
merely that the source shall apprise the
government Of the amount OF income
which il pays its creditor and then require
the taxable person to make report which
can be checked up with the information
received from the debtors"