Honolulu star-bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1912-2010, 1917-10-27

How the excess war profits tax Of
the new federal war tax law will az.
feet the sugar plantations Of this is
land 10 brought out clearly in a state
nnent containing figures compiled by
6. w. Sutton and issued by the Bishop
Trust Co. The excess war profits tax
will affect individuals as we'll as CORP
orations and in many cases indi.
siduaIs will be much more affected
by the tax than corporations.
The Federal War Tax law in the
form passed and approved October 8,
1917, will affect every one in the
Hawaiian Islands. The following
brief synopsis OF certain phases Of the
law was issued by Mr.. Sutton Of the
Bishop Trust Company yesterday. II
10 as follows: .&.-
INDIVIDUALS
War income Tax-This Is a tax Of
2 per cent OF the met income over
$1,000 I'm the case OF single persons
and over $1,000 in the case of mar
ried. II Is In addition to the normal
tax of per cent on incomes over
$4,000 and $4,000 respectively.
War Surtsx-Thls Is graduated
tax on all income over $4,000 at rates
progressing as the income increases
as appears in the table above. Ii is
In addition to the present surtax,
which applies to incomes over $4,000.
Both the new taxes are to be com
puted and assessed on the same basis
as the present normal tax and surtax.
War Excess Profits Tax-Individ.
uals. whether alone or as members OF
copartnerships engaged in business
or trade, as well as those In profess
sions and occupations, must pay an.
other tax, called the "war excess
profit tax" The title of this tax
would indicate that only excess profits
due to the war were TO be taxed, but
the wording of the law is such that
Il seems clear that the tax generally
speaking has no relation to wal
profits, but applies to all profits over
the arbitrary limit fixed, namely, 9
per cent of the capital invested in
the business, plus $4,000. The rate is
progressive as the profits exceed fixe1
percentages OF the invested CAPT
hl," namely:
Income over the deductions and up
DO an amount equal to 10 per cent of
the invested capital is taxed at 20
per cent.
Income over Is per cent up to 20
per cent is taxed at Is per cent.
Income over 20 per cent mp to %.
per cent is taxed at IS per cent
Income over Is per cent up to 80.
per cent is taxed at As per cent
Income over sS per cent is taxed so
per cent.
MAY EouALlzE TAX
The Treasury Department is au-
thorized TO make adjustments to-
eQualize the tax when The proportions
Of profits 70 invested capital is low
as compared to representative con
Germs in similar business Obviously
without this provision the tax would,
IN many instances, be far greater for
the same profits in the case OF the
individual than for corporation. Be-
cause Of this clause and the absence
80 far OF any declaration of policy or
rulings by the Treasury Department
no concrete case can be worked out.
In the absence of any capital or
where IL Is merely nominal the so
called war excess profits tax" is 4
straight per cent of the net income
over $4,000.
CORPORATIONS
Additional War Income Tax-ln adj
dition to the present tax of per cent
on income an additional tax Of per
cent is to be paid by all corporations.
This tax is to be computed, assessed
and paid on the same basis and In
the same manner as the old per
cent tax, so that reference should be
made to the old law (of September s.,
lgl6) and the regulations for details
as TO education, etc.
Excess Profits Tax-Every corpor.I
alton, partnership, as well as individ-#
ual engaged in business and not ex-3
ompt must pay tax equal TO certain
percentage of its excess profits in
case such profits exceed IA an
amount equal to the same percentage
OF the invested capital for the taxable
year which the average amount OF
the net income during the pre-war
period was OF the invested capital for
the pre-war period, but not less than
z per cent nor more than 8 per cent
of the invested capital, together with
ca $4,000. Where the profit for the,
pre-war year period was low as COM
pared With representative firms in
similar business, the secretary OF the
treasury may use the percentage OF
profit of such representative busi-
ness as the basis in assessing the
tax.
Figuring the Capital
The amount of invested capital is
determined by excluding assets the
income from which is not subject to
federal taxation (other than United
States bondsl as well as borrowed
NOTICE.
Notice is hereby giyeE that in &C.