Evening journal., 1917-10-04
NEW income TAX IS
ADDED TO Old ONE
Former Law Not Repealed
By War Legislation
Just Adopted
Is BASED ON
BOTH EXEMPTIONS

WASHINGTON. Oct. Although
over the application Of the war income
tax provisions of the now revenue bill,
it is evident IRON the flood of inquiries
which have reached members Of the
House and Senate that there Is wide
misapprehension over certain features.
This is, no doubt, due in large meas
ure to the fact that three times within
three months war taxation bills have
been spread before the country. First
came the House bill, which was analyzed
up one side and down the other. Then
came the Senate bill which was much
written about, and, finally, the confer
ence bill has been finally passed, differ
ent In many important particulars from
either of the other two. Meantime
amendments were accepted in the House
and others accepted in the Senate. All
these things bewildered the possible tax
payer.
Now. however, the man OF corporation
assessable upon his or its income, may
calculate, with some degree of certainty
upon the amount Of the income tax
which he or his company will be called
upon to pay. First Of all, let it be
understood that neither the old rates
upon individual incomes OF corporate in
comes have been repealed or in any
sense modified. The new rates are
nothing more or less than an added tax.
In other words, the taxpayer must
determine the tax he will owe the
Government under the old rates, iusU
as though there had been no new law.
, The pr ocesses of arIying at this are
somewhat changed, but the rates tboth
the nornNl and super taxi are unaffect-
ed. After the tax has been figured as
imposed by the old income tax tSep-
tember g, l9l6), the taxpayer must be-
gin figuring all over again uron what
he must pay the Government under the
new taxation scheme.
This figuring should start with the
exemptions. Under the old law a MARI
ried man is exempt in the sum OF
$4,000 and a single man in he sum OF
$4,000 Those sums should be used
In determining the taxable income Of
the individual under the 1916 enact-
inent Tut in the case Of the new
law the married man IS allowed an
exemption of only $4,000 and an un-
married man an exemption OF only
$1,000 year. The new rates, there
fore, are to be based upon the new
exemptions.
All the money which the individual
may make above $4,000 and $4,000
on the one hand and 81 900 and So
600 on the other becomes taxable. In
fact, when the income passes $4,000
Il becomes taxable twice In the first
instance a normal tax OF per cent
Is levied upon Il, however much
above the exemption It may be. One
part Of this is the tax under the old
act which, of course, does not in
volve incomes below $4,000 and S4.-
600 The other part is the normal
TAX under the new measure, which in
wolves all incomes above $1,000 and
$4,000 as the case may be-
II a married man makes $4,000 this
year, for instance. he is taxed 2 per
cent. on the $1,000 above mis- exemp-
zion under the old law. or $50. Also
he is taxed 2 per cent on the $4,000
above his exemption under the new
law. or $50. He therefore pays q
total Of $50 to the Government. all OF
which IS his normal tax. The un-
married mans tax is calculated the
same way, OF course, the only differ
ence being that ne pays on more Of
his income, because he is allowed
smaller exemptions.
But when the income OF the mar
ried man exceeds $4,000 a yeaI
an additional or supertax begins. The
supertax rates in the new law, which
are fixed upon a graduated scale, are
as follows:
One per cent. upon the amount
OF the next income above $4,000,
but not exceeding $500.
Two per cent. upon the amount
OF the net income above $500,
but not exceeding 100000.
Three per cent. upon the
amount Of the net income above
$4,000, but not exceeding Sl2,-
500.
-Four per cent. upon the
amount OF the net income above
$4,000. but not exceeding $l5,-
600.
Five per cent. upon the amount