The Washington herald., 1913-04-08
TAX ON INCOMES
CARRIED in BILL
Measure Provides l Per Cent
Rate on Annual Earnings
Exceeding $4,000.
TWO PER CENT ON $40, 900
Statements Are Under Oath-Collec-
items Made BY Internal Revenue
Bureau-Details Provided.
TWO PER CENT ON $40, 900

The income tax provision of the tariff
bill, which Is designated to make up
the loss of revenue from customs
sources, provides for a tax on all net
incomes of more than $4,000. The rate
to be assessed on all incomes over 81
600 rs i per cent. This is designated "a
normal tax" Added to this, however.
are certain surtaxes on a. graduated
scale.
All incomes between $4,000 and $50
900 are to be taxed 1 per cent in addi-
ton to the first normal tax of / per
cent. All incomes from $4,000 to $780,
Oc0 are subject to surtax of per
cent and all incomes of more than
100000 will have to bear surtax Of
The case of a man with net income of
$4,000 year will illustrate. First the
normal tax of per cent will be imposed
on the entire net income of $4,000, less
the $4,000 exempted. At l per cent this
will amount to $1,000 In addition there
is a surtax of l per cent on that part of
the income from $4,000 to $4,000. or $50, 900.
This adds $500 more. On the portion of
the income from $4,000 to 500, 600 a sur
tax of per cent is imposed. adding 81, 060
more. On the $4,000 in excess of $780,
600 a surtax of per cent or $500 would
be levied. This would make. the total tax
on the $4,000 the sum of four separate
items, or $3.50.
Firms and corporations are subject
only to a fiat tax Of per cent, which is
the rate Of the present corporation tax
law. That law is repealed by the bill in
PRODUCED yesterday.
The tax is to be collected by the In
ternal Revenue Bureau. Every person
with an income of $500 will be
obliged to disclose: under oath, the
sources Of his income and the items
which he deducts to obtain the net re-
suit. The incomes of individuals will
be collectible at the sources. In all
cases where the income Is the result
of a yearly arrangement and amounts
to more than $4,000, in such cases the
individual will be obliged to make an
affidavit and file it with the person
who is required by the law to withhold
or pay the tax for him. This affidavit
will have to set forth the sources of
his annual profits and income and the
deductions asked for. In the event or
failure to file such an affidavit, the
man whose income is taxed will for
felt the right to enjoy exemption from
the $4,000 minimum income provision.
Foreigners Are Reached.
The tax will reach at the source all
incomes derived from mortgages. bonds.
and the like The tax will apply to ali
persons resident in the United States.
whether they are citizens or not, and also
to foreigners who have business interests
in this country
The aggregate income Of all the men,
bers of any family composed of one or
both parents and one or more minor chill
dren is to enjoy only the single exemption
of $4,000. This will be different, however.
in cases where the husband and wife are
living apart from each other.
In computing thu net income, all taxes
and losses during the year and worthless
debts may be deducted, also the neces-
sary expenses for carrying on business,
and a reasonable allowance for wear and
tear on property. Under the terms of
the bill, statements under oath in re-
gard to the net income of individuals
must be returned to the Internal Revenue
Commissioner by March l, 1914. Heavy
penalties are attached for failure to make
the return OF for false affidavits. The
revenue collectors are empowered to
make inquiries In regard to the sources
of the individuals income.
One important feature of the bill pro-
vides for a tax on holding companies.
Such companies are exempt under the
present corporation tax law. All bonds,
which have been guaranteed, is a matter
of State or Federal, statute. State Office
holders and the officenolders in politi-
cal subdivisions of State will be eX-
empt from the tax. Sc far as their sal
aries are concerned. So, also, will the
President of the United States, members
of the Supreme Court and Federal Ju
dietary. Constitutional questions are in
voIved in the decision to exempt State
Persons subject only to the normal tax
Of one per cent will not be obliged to
make returns of the income derived from
the dividends .on the capital stock of COR
porations, which are also taxable under
the law