The Hawaiian gazette., 1917-10-26
TAX ON LIBERTY
BONDS EXPLAINED.
Robert F. Steyer Tells How New
War Revenue Act Affects In
comes and Federal Securities


The fact that the new four percent
issue of Liberty Loan bonds is sub.
jeet TO certain taxes is not under 4
by many, and even those who eaJw
that some taxes can be levied on them
do not understand which ones or how
much. Robert =. stever. executive
secretary Of the local Liberty Loan
committee, and manager Of the bond
department. Of Bishop & Co., has work
cd out the explanation in terms that
can be understood by the laymen nm
accustomed to finance
Individual incomes acc subject 10
the old income taxes and TO the new
war taxes. The old Tux was two percent
On The normal income, or the income
derived from any sources except Ger.
TAIN corporation holdings, on which
he tax was paid by the corporation.
To this two percent on the normal in
ONE was added q surtax, beginning at
one percent on all income over 100000
ind increasing according 10 the in
resse Of income. Incomes of married
persons under $4,000 and single per.
sons under $4,000 were exempt from all
income tax.
Is Additional Tax
The new war tay * imposed in add.
| tion TO the tax In the foregoing para.
kraph. II does not supcrsede or take
the place Of the old but Is collected in
edition TO II. BY the new war tax
two percent on the normal income is
collected, as well as the two percent
Of the old tax, making four percent on
the normal in all. ,...
| The new surtax begins with one per.
| 'ent on income in excess Of $4,000, and
increases as the income becomes great
ct, The exemption from income tax
under the war tax is cut 20 $4,000 for
married persons and $1,000 for single
| The Liberty bonds Of the first issue,
hearing three and one.half percent i'm
terest, are exempt from all taxes. The
four percent bonds Of the second is
sue are exempt from all taxes when
held in amounts not in excess Of $4,000.
That is, a man may have an income
large enough TO require the payment
/ OF normal and surfaces, but in the
| 1900 income from $4,000 worth of four
percent Liberty bonds, If that were all
i he Liberty bonds he swncd, he would
| not be taxed, Liberty bonds are ex-
| empt from the normal tax in any
1 amount, Liberty bonds held in excess
! Il $4,000 are subject TO both the old
md new snrthx, II the size Of the in,
| ONE Is sufficient.
What is Exempt
Beginning with the small income,
his mems that a single man might
ave an income of 5000, which is ex-
'mpt from income fax In addition,
ne coufd own S5U0U'.Ehsh Of Liberty
ionds, giving him an income OF 5000
\ year on which he would not be taxed,
/ If the man s income were $4,000, he
Guild sim own $4,000 worth Of Liberty
Sonds which rould not be taxed, but
he would have to pay both the old and
new normal taxes Of two percent on his
income IN excess of the exemption, al
though the $500 from the Liberty
bonds would still be exempt.
If another single man had an in.
ZONE of $4,000, he would be subject to
he normal taxes of fur percent, and
20 the one percent surtAx which begins
" $4,000. He also could own $4,000
u Liberty bonds tax free, hut the in.
'OmeS from any Liberty bonds in ex.
'ess, of 10000 worth would be subject
% the graduated surtax.
l.. Tenney Pack Is authority for the
tatement that man who had no other
nvestments could hold 100000 worth
Il Liberty bonds free from income
AK. BY the Liberty bond act, these
lOnds are free from all but surfaces
m income. These snrtaxes do not be.
rim until $4,000 more Of income il
reached. .r,.E. <, g.. ..
| II would take &125 0Oo Of the four