The Detroit times., 1917-10-03

- 2, 600 ana oNfF
Excess Pronts Tax
The excess prohts tax Wi iup
averyone who has 20 mar
nrh.r A a. an example ~ tarpa
. s.t-htSvlness 10 is unlike auF htA
.vsr t,nooset IN any civilized oout re
o., n.xf March all American asN ~ ..is
viii be full 81 people who lcs. .tey
minds trying 20 calculate VIZ ~,
"wsS rfncie sam under this terri =
rawsuits 70 determine its apph-
e.tton will rtin % going when or.
sat-grAndchlidren are DEAD sno
buried.
who must pay Every corpora lon
xifh A net income exceeding e,lvg
ana every partnership or nalv vi 80. 80,
LIN net Income derived from INC
via ~ anv kind Of business
wh,rh erceeds $4,000 for the pressnt
vs.r IA liable 20 pay a tax on tnT
AMOUNT Of It's excess pronts Inle ~
cludes everybody that buys or se
anything. all kinds OF .nnr,.r-
ciai travellers unless they are on
e~sd salary without commissions TX
-. t..a,,s.sas 81! kinds or rrofessio rA.
~ hits farmers. doctors. lawyers
storeksepers. authors rea ss ~s.
man contractors and. IN fact every.
ho6v that works who In not on nxeo
wsSe ~ salary and has an income hig
enough 20 come within the scope OF
the law.
what ar. excess pronts' Excess
erofts as now defined bear practlehiis
* relation 20 the amount earned ~
6ore the war II you want roush
Sss 81 the excess profits Of your BUS
fness. take the amount ~ whleh ~
Get income for 1917 exceeds eignt peF
eent on the capital Invested, and SUI
tract So. 900 from this n YOU are oper-
stinw a partnership or tHdividual ous.
srsss and AZ. 900 III you are organized
-. rornoration. For example. sup
no.e vo,ir capital r. 500. 600 and your
net Income r. yyU-0ur Ffgrr Ut -TF
Il 5000 20 which you add f1eeN ior
a corporation and 5000 tor an inu,-
vfdusl or partnership. leaving the ex-
cess pronts 80. 900 for corporation
ard a.. 600 for an individual or part
nership business,
II YOU want 20 know exactly. you
will have 20 DO some real ngurins
Here's how you so about II
First determine the not ineorne 81
your business for each OF the years
1911. 1919 and 1914. by suotracting
won, fhe gross amount Of business
aone in each Of these years the
rroner deductions for expenses. inter
est taxss and depreciation. supftsn-
tally as described for income taxes
and charitable donations. Average
these and see what percentage they
are ~ the actual capital invested in
the business during the same three
years. ~ they average less than scF-
en- per cent. you viii be alloweo NE
full seven per cent. but " they aver
age more than nine per cent you VIII
be allowed only nine per cent only
AZ they fail between seven and nine
per cent do you take the actual aver.
age. For example. with 100000 OF
actual cspitai IL the average net IN
come Is IS, 900. that would stand at
~ per cent; but N the average was
= UrYfy 500 YOU wortd hr allowed sew
en- per cant. while ~ the average was
$4,000 you would be allowed only
nine per cent. SO you VIII see that
while you have 70 go thru all this
sriRmsrole In making your return. Tor
all practical purposes you might as
we'll take an average ~ eight per
cent and let II go at that
After you have got this pre-war
rate OF profit determined. you apply
that percentage 70 your present CAPT
tai. add $4,000 20 IL for individual or
partnership business and 1000 for a
corporation, and subtract the result
from your net income for the year
1917 This gives you the amount 81
your excess profits on which you viii
be taxed.
For professions and all kinds OF
businesses and trades In which only
q nominal capital Is employed. n 10
obvious that this plan cannot apply.
SO the act provides that they shall
pay nat rate Of eight per cent on
the amount by which the net income
exceeds $4,000 II they are organized
as corporations. and $4,000 II they are
run by partnership OF indiy iduals.
what is capital II VIII be seen
that the application OF this tax de-
ponds absolutely on the definition ~
the word capital. That IL what the
conferees from the house and senate
have been wrangling over for two
weeks and the more thy wrangled
the worse ~ got
Actual capital invested az II stands
In the bill has no relation whatever
10 the amount OF stock outsta nd Ing.
nor does a include bonded indebted
ness or borrowed money or property
II must be determined for each bust
ness and for each year by adding the
following items: Actual cash paid
IN, the actual cash value 81 other
property paid in 20 secure shares M
the business and the surplus or IN
divided profits actually employed In
the business. Patents, good will and
franchises are 70 be allowed only the
cash value Of the stock or other prop
erty exchanged for them. in the case
OF all intangibies not 20 exceed "a
per cent OF the stock now outsta nd
Ing.
How 70 calculate the amount % ~
cess profits tar After you have de-
fermined the amount % excess pro
hts. az described above. you are ready
60 hgure the amount OF tax you viii
have 20 pay. First find out what per
cent these excess profits are o. The
actual capital for the present year
Then apply the following rates
On the amount less than 10 Per cent
% capital you pay 20 per cent " -
20 per cent Of capital you paw 2 per
cent. 20 20 rs per cent ~ capital you
pay 3b per cent Is 20 &c per cent 80
. ,srr you pay pay - per cent NOR.
so per cent
To illustrate. Suppose vour cvesss
PROFITS on 100000 capital are s7.oe1
pr 81 per sent.
on the amount under sisooa you
VIII pay 20 per cent or g. 600 as.
cent. or $3.50: $50. 900 T. SO aSs t 90
VIII pay IS per cent. or sI7so; so e3'
20 fSS 900 you will pay a. per cent. or
$500; more than $4,000 you will pa.
80 per cent, or t2.too; making the 90.
tai tar $4,000.
Other Taxe.
This does not however. begin q
cover the multitude OF taxes inpoSet
Nv the new revenue bill.
In the nrrt place there r. an add
fionai four per cent "corpora
tax" which must be paid BY ever
corporation upon the amount ~ it
net incenne-
Then there are internal revenu
taxes % 81 10 and t7.i0 "a gallon OF
distilled spirits. 81 80 n barrel IN beer
i've 10 20 cents gallon on sirups r.
soft drinksl one cent gallon "a
grape Juice. soft drings. near beer.
stcN
Cigars are tarse from Is cents q
o. per 1000. depending on quality
wltn a tar Of Al ner I 001 on the Ave
cent variety. Cigarettes are tave
sfaht 10 IL cents Dor hundred