El Paso herald. (El Paso, Tex.) 1901-1931, 1913-03-09


M The proposed income tax law
as drawn mainly by represen-
-atiTe COrdeu Hull. of Tennessee. and
ADOPTED by the ways and means com
AHtLee IS a part Of the Underwood
tarl1i BILL largely follows the English
ldeaS OF income taxation. although
lhere are some features of the English
law. such as the differentiation be-
l"een earned and unearned incomes
that are omitted from the Underwood
measure The bill takes cognizance Of
the recent supreme court decision cN-
empUng from the corporation tax cor
pOrauOnS which simply hold leases on
property they have rented TO other DeO-
pie or corporations It also prevents
corporations from counting as an one
rating expense the taxes they will have
10 pay on bonds which contain clauses
eNempting the holders Of the bonds
from taxes.
Dcuble Taxation on Trusts.
4hesc Two Items are important more
especially the latter. because if such 4
provisions were not made Mr.. Carns-
gie's bonds would escape taxation and
thousands of other coupon clippers
would be in the same boat The s1-
preme court decision that a railroad
company merely owning a railroad
property which il leases to Others is
not doing corporate business has de-
pllNed the treasury of nearly s.. 600 600
OF corporation tax a year. Still another
Woes that corporations holding stock
IN other corporations shall paw tax
upon the dividends from those stocks
IN spite Of the fact that the income CT
me corporation paying the dividend al
ready mas been taxed This is intended
TO place burden OF double taxation
upon Dig holding companies or trusts
Inc Dill makes numerous changes
from the income tax law Of 1894 Under
Inat law, FOR instance personal DrOD-
erty inherited was rated as income. bur
under the proposed law only the IN
come from such property is taxed.
likewise profits upon real estate
transactions are reckoned as they ave
and not arbitrarily. II a man bought
farm 10 years ago for $4,000 and
sells II for $4,000. in fixing his profit
the average Of the 10 years will be
taken and his income tax upon the
81, 600.
Law E1empts $4,000 Incomes.
Inc law eNempts $4,000 from taxa
ton IN every income, so that a man
pays his tax only upon that part Of
ms income that IS in excess of the
S4,OOO exemption. This applies 10
everybody except the foreigner who !
lives abroad and enjoys an income .
rom American property; he must pay
me tax upon every cent of his income
The committee calls the tax of one
per cent the normal rate. and this ap-
pines TO all incomes above $4,000 Up
on all incomes exceeding $4,000 and /
not exceeding $4,000 it provides an
additional tax Of one per cent for
that part Of the income exceeding $40
700; between $4,000 and 100000 the
additional tax" becomes per cent.
ana for ali income in excess of $780, 4
JUy the additional tax is per cent
The definition OF income is so com
prehenslve that one can scarcely i'm
aSlne anything escaping under IL. In I
computing net incomes deductions 4
frrar -a-
the necessary expenses Of a business, I
but not personal living or family ex- /
penses- Deduction for payable interest |
Is allowed. as are deductions for taxes /
other than the national income taxes. I
for losses in the conduct of business. I
Tor depreciation. and for worthless /
debts. .
Presidents Salary Exempt.
President Wilson viii get his salary
exempted because the constitution for
bids increasing or diminishing a pres
dents salary during his term OF office
me same is true OF the existing judges
Of the United states courts and for
the same reason, but other government
officials are not exempted. although (
the officials and employees OF state and
local governments are exempt In [
drafting the bill the principle of hold
ng immune from taxation the instru- {
of the state and local gov
7rnments was recognized, including I
oOth officials and securities.
The law cannot be lodged by the Z
head of the family giving a portion of
MS income to his wife and each of his
minor children. for it expressly pro- I
fldes that the income Of husband. wife I
and minor Children, living together, !
shall be reckOned as one income A
wife permanently living apart from her
husband IS entitled TO a separate in
;Ome.
May be Effective This Year.
II the bill becomes law as drafted,
ne people subject TO il viii have to pay
B tax upon their incomes for the cal
sndar year Of 1913. The question has
been raised whether or not a tax that
would be imposed upon income received J
Drlor to the enactment of the law
night not be held unconstitutional as
being retroactive, but the ways and
means committee thinks not
only those persons who enjoy a net
income of $500 are required to make a
'etUrn Of their incomes to the coIIec-
OTIS of the internal revenue. Those
Who are required TO make these re-
-urns must give their gross incomes
helr deductions. and their net incomes,
making itemized statements of each
Double taxation is avoided by a pro-
lSlon that dividends received from
corporations and other artificial per
sons which have paid an income tax
ipon their net earnings are not to be
included in returns Of net income u
s provided further. however. that
where person enjoys an income of
ess than $4,000, and part of it is made
ID OF income from dividends or other
Profits subject to taxation at the
source, he cannot claim exemption for
his latter part OF his income unless he
shall. not less than 50 days before the
'eturn Of his income is due. file with
he person who would otherwise be re-
luired to withhold and pay the tax for
am, an affidavit claiming the benefit |
# such exemption.
Penalties Provided.
The bill provides that returns shall
'e made under oath or affirmation By
he first of March that assessments I
must be made and the taxpayers no
flied by the first of June Of the Z
mount OF their assessments and that
objections shall be made before the |
irst Of July. A penalty of > per cent
nd interest at one per cent a month
s added for taxes not paid within 10
avs Of the tax collectors demand
herefOr.
Any person liable to the additional
AK is required to make q return Of
is entire income. and must pay this
additional tax" upon his corporate in
ONE which has already been taxed
{ the normal rate before reaching his
ands.
While individuals are required TO
make returns to cover the calendar
ear, corporations and other artificial
ersOns may make returns for their
iscal, or bookkeeping year. These
orporation returns must show the