Catoctin clarion., 1917-10-11
What Is Capital?


this tax depends absolutely on the defni-
ton of the word capital. That is what
the conferees from the House and Senate
have been wrangling over for two weeks
and the more they wrangled the worse 1t
got.
Actual capital invested as it stands in
the bill has no relation whatever to the
amount of stock outstanding, nor does lt
include bonded indebtedness or borrowed
money or property. 1t must be deter
mined for each business and for each
year by adding the following items: Ac-
tual cash paid in, the actual cash value
of other property paid in to secure shares
in the business, and the surplus or undi-
vided profits actually employed in the
business. Patents, goodwill and fran
chises are to be allowed only the cash
value of the stock or other property eX-
changed for them, in the case of all in
tangibles not to exceed 20 per cent OF the
stock now outstanding.
The Income Tax.
Who must pay? Every unmarried
man. woman or child with net income
from wages, profits, interest, rent or any
other source exceeding $1,000 for the
calendar year 1917, and every married
person with net income exceeding
$1,000.
Returns must be made under oath on
or before March |, 1918, by every per-
son with an income exceeding the amounts
named above, even if there is no tax due,
under penalty of $40 to 81 600 for failure.
How to calculate net income. Net in
come, upon which the tax is levied is
calculated by taking the total amount of
money received by the individual during
the year from all sources and deducting
from that amount the following items:
Necessary expenses actually paid in
carrying on any business or trade, but
not including personal, living or family
expenses;
All interest paid within the year on
indebtedness, except interest on loans
made for the purchase of tax exempt
securities;
All taxes, local, State and Federal,
except income and war profits taxes;
Losses actually sustained during the
year in business or trade or from fires,
storms, theft, etc;
Debts ascertained to be worthless and
actually charged off;
Reasonable allowance for wear and
tear of property employed in business;
Contributions for religious, charitable,
scientific or educational purposes to an
amount not in excess Of Is per cent. Of
the net income without the benefit Of
this paragraph
Exemptions. Unmarried persons have
81 200 exempt from income tax; married
persons have s., 900 exempt and IN addl-
tion 5000 exempt for each dependent
child under Is years of age.
Tax rates. The taxes levied upon in
comes are a composite result Of four
separate set of taxes, the ''normal tax
rates in the old revenue bill and the new,
and the "supertaX" rates in the old bill
and the new. For example, under the
old law there was a normal tax OF : per
cent. on all income of unmarried persons
over So, 600, the new bill adds a new nor
NAL tax of 2 per cent, and lowers the eN
empt;on to $1,000; under the old bill
supertaEos started with $50, 600, and
these supertaXes still stand, bat there
have been added new supertaAes begin
ming with $1,000 The result is very con.
fusing.
In order to bring all the existing rates
into simple form, have combined them
in a single table which shows for each
separate class of income the total tax
rate that will be levied upon it.
If you are married, with no children,
and have an income of $4,000 you will
pay 10 tax on 1900, which is exempt
under the law. On the 81 600 falling in
to the tax group $1,000 $4,000, you will
pay per cent, or $40; on the 81, 600 fall
ing in the tax group $4,000 $1,000 you
will pay per cent, or $40; ON the 81, 900
falling in the tax group S., 900 5000,
you will pay per cent, or $50, making
a total income tax of $50.
If you have two children under l8 years
you have an exemption Of $500 for each,
so that you would pay no tax on $2,400;
per cent on 81, 600 between your 81, 400
exemption and $4,000; per cent. on
81, 600 between $4, 600 and $5, 0oO 5 per
cent. on 81 900 between SIS, 600 and $G, 900,
making a total tax of $l22.