Imperial Valley press., 1913-10-16
How the Income Tax Works

How the Income Tax Works
New York Times: The estimate
that 425,000 persons must pay the in
come tax does not exempt the rest of
the population from informing them
selves regarding the details of this
most popular tax. The presumption
is against the citizen claiming eXemp-
tion. Those contending that the law
does not apply to them must make
| that fact clear to the officials whose
duty is to maintain the contrary. The
ordeal which corporations have IN
dergone under the application of the
excise tax now confronts multitudes
who have never kept books, or who
have kept them only in their minds,
and are now confronted with the ne
cessity of keeping them in manner
satisfactory to the law under penalty
of fine and Imprisonment.
The law contemplates that every
taxpayer shall receive a tax bill, but
the failure to get one does not eX-
empt the taxpayer. At his own risk
he must report himself, and must
make his statement subject to criti-
cism. The taxpayer must make re-
turn of his gross income, and the
government will make the deductions.
The law requires the presentation by
the government of blank return to
be filled, and the treasury will prepare
regulations for itself which will also
serve for the guidance of those per-
picked by the numberless cases of
actual or supposed doubt in the ap
plication of the law. The government
asks only for the facts. The compu-
tations and the assessment it makes
for itself, leaving the taxpayer who
is caught the same option that the eel
has about being skinned
Doubtless many will slip through
the meshes Of the law, but those hop
ing or planning to do so must remem-
Der that the government has better
sources of information than the state
officials who have levied the personal
property tax. Their means of infor-
nation were directories which dis
closed the residents upon fashionable
streets, rosters of expensive clubs,
jury lists, and pure guesses. The in
come tax law is a more serious mat
ter for tax dodgers. Wages paid must
be reported by those who pay them.
Taxes payable on large classes of in
come deducted at the source" will
simply be taken from corporations on
their own account, and on account Of
those receiving income through them,
such as interest on bonds. The provis-
ion in this case illustrates the man
ner in which the law throws the pre-
sumption against the exemption. The
tax payable in respect of accrued in
terest is deducted irrespective of the
exemption, and in the first instance is
collected even though the owner of the
bond and recipient of the interest is
exempt. In order to secure the return
of such collection the individual tax
payer must make affidavit. Dividends
are deductible by the individual vino
reports them in his gross income, but
not otherwise.
1t must be admitted that the tax
is more burdensome in its manner
than in it's amount. Those who must
pay the largest amount-6 per cent
upon the excess above $500,000-will
feel it least in both respects. Neces-
sarily without regard to the law they
must have books kept for them. The
mere payment of whatever amount
means no such sacrifice to them as
the smaller amounts mean to the lar
ger number of small payers, who must
do the work themselves, and pinch
themselves into the bargain, even
though the tax is only moderate at
the bottom Of the scale. One per cent
upon the excess above $4,000 for bach
elors, or $4,000 for married couples
living together, is little for those
whose income is $4,000, or even $10,-
600. If the option were to pay the
amount Of the tax and escape the nui-
sance many would rejoice. But there
IS no such option. The only means
Of escape is the receipt Of an income
probably below $4,000, and that means
that the ordeal must be undergone
probably by more persons just below
the exemption than by those above t.
The Taxpayer must read the law for
himself, ard must read it Alright 1T
his peril Next New Years is the day
upon which his duty begins. Between
then and March, 1914, first he must
make his return in respect to his in
come from March ] to the end of 1913,
the period TO be calculated as five
siXths Of year After this year the
return will be for the full year. He
will receive notification of the tax
due under his return on June /, and
must pay within the month. If the
taxpayer neglects to make return the
collector may make one for him ut
any time within three years. If the
tax is rot paid there will be added 10
the tax due per cent and l per ceit
monthly. The penalty for refusal o
make return is fine from $50 to
$1,000 The making of a false return
is misdemeanor, punishable by fine
Of $4,000, or years Imprisonment,
or both. Those making returns for
others as the law requires are held
personally liable under the law.
j. you are looking for a house. see
- 1. - o..fNs