The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1913-06-26
INCOME TAX CHANGES,


more successful in getting changes in
the income tax Of the proposed tariff
revision bill than the Representatives
were, and they are making some de-
slrable amendments to the bill The
committee proposes an amendment pro.
v1dlng for a Joint committee to in.
Vestlgate the revenue laws. with a
view TO simplifying, harmonizine, re-
vlsing. and codifying' them. This is
certainly step in advance, and if
that sort of a Joint committee can be
appointed, it ought to do good and
needed work.
The income tax changes would lower
'ne exemption standard and would
MAKE allowances for dependent wives.
husbands, and children. Other changes
would exempt from taxation that nor.
tlon OF the premiums collected nv the
mutual life and mutual marine ;psur.
ance companies which may be re.
turned to policy-holders in the form Of
dividends. Insurance commands had
rully shown the Justice of this cbange
There is no reason why the same e1.
emptlon should not be extended also
to the sums which may be returned TO
pohcy-holders in any form by any in
surance company
There is further, however, in the
bill as 1t passed the House discrim;
nation as between income derived
from bonds and that derived from
net profits are allowed deductions in
payment of bond interest. rentals. and
charges. In order to avoid double tax
alton. the companies are to deduct
from the taxable total the tax paid
on individual cases in respect of bond
interest, but they are not allowed To
deduct advances on their stock
holders dividends. The bill provides
that in case of bonds guaranteed to be
Tree of income taxes, the deductions
may not be made from the amount
paid to bond~holders in the form of
interest, but the corporation must pay
the tax out of its profits; that is,
out of money that would otherwise 90
to dividends for the stockholders. IT
appears, therefore, that under the
operations Of this bill, in case it is
enacted into law, the stockholders in
any concern would pay out of their
dividends, not only the tax on their
own income, but they would also pay
the taxes on the bondholders income
from interest. Since goodly numbers
OF the corporations guaranteed in
come tax immunity on their bonded
Indebtedness after the proposed income
tax of 1894, a great many bonds are
thus guaranteed. Among these are
those of Mr.. Carnegie, received by him
from the U, S, Steel Corporation. The
interest on bonds Of that corporation
would be subject, under the terms Of
the bill, to an income tax on $50, 1000,
900 The stockholders of the L. s.
Steel Corporation, therefore, would
have to forego this amount from their
own dividends, and pay it on account
Of the bondholders. They would thus
be obliged TO pay the imposed income
tax upon their own stock dividends
and would also pay the amount of in
come tax carried for interest on the
guaranteed bonds of the corporation.
This makes it pretty hard on the stock
holders Of that or any other corpora
ton, whose bonds are thus guaranteed.
OF course we use names simply for
illustrating the idea. not otherwise;
for the result would be the same on
ofb uThnc JrI
are so guaranteed.
The fact is that the income tax pro-
visions of this bill were drawn without
much regard to practical affairs and
to the actual business conditions in:
volved IN the imposition OF the income
charge. A provision to make the
stockholders of any concern, the inter
est IN whose bonded Indebtedness is
guaranteed against any income tax, pay
that income tax, as we'll as their own,
is an injustice that no law should it,
hict
again, suppose that the owner of
stock in q concern, whose bonded in
debtedness is guaranteed against In
come tax, has not all together an in
come above the limits. IN such case
q tax on his income, derived from the
interest on his stock. is paid by the
and his stock is also liable
for the income tax assessed Oh the
interest on bonds Of the company. In
such case, a person is obliged TO pay
an income tax when the law does not
in fact impose such tax upon him, and
also the income tax OF the bondholder
in his company. He may, however,
file with the company statement
within thirty DAYS prior to the date
when the return OF income is due, and
get thereby (proviGed he is able TO
his claim) his interest in
full without the payment Of any income
tax thereon. But even though he gets
this exemption on account Of his own
efock be does not 1et auV eXemOtiou