The Birmingham age-herald., 1917-05-13

pay in war taxes. That explains why very rich investors have been going down to the very bottom of their strong boxes after carefully selected railway shares, to sell such securities and place the proceeds in the S1A per cent nontaxable liberty loan.
 Beyond doubt the proposed tax bill will make the man of large means carry the heaviest tax load. Besides the retroactive
 tax from the incomes of the calendar year 1916, the normal federal income tax
 Is to be increased from to 4; then a long series of surtaxes begin at incomes
 of 5000 and increase steadily on up to incomes of $1OO,00O. From there on there
 Is rapid increase. Incomes of $1OO,OOO
 to $15O,00O will pay surtaX of r per
 cent; from $l50O0O to s2OO,0OO, 20 per cent;
 from $2OO.OOO to $25O,OOO, 24 per cent; from s250,0OO to s9OOOOO. ? per cent; from $500, =
 0OQ to $500, GOO, 30 per cent; from $5O0,00O to $1, 900 0O0, 3S per cent. Incomes of sl,- 000000 and above will pay a surtax of 90
 per cent.
 Doubtless there are many people who | think incomes in this country of from $100 GOO up except in very rare cases, exist only in fiction That is a mistake.
 The first, but imperfect official compu taiton of returns under the income tax passed october g. 1913, showed 261S in- dividuals owning up to annual incomes of between s5000O and $75,000 99S having
 from $75000 to s700,000, 7S5 from S1Oo,OO0 to $150000, 3l1 from $150,000 to S20o00O, 94 from ! $25O,000 to O,000; S4 from $S000OO to S4O0,- ! O00, 4 from $400,000 to s5OO,OO0. 91 from 600 to S1,000,000. There were A who had $1 000,0J0 and over a year to spend without dipping into their principal. Since then the number of large private fortunes have not only increased as never before in the history of the country, but by thorough and painstaking investiga- ton the government has discovered
 many millionaires not previously re-
 corded. And it is the men with private
 fortunes of $l,000,00O and up who for the past few weeks have been steadily sell ing out their carefully selected dividend paying investment railway stocks.
 man with $1,o0000O invested In rail-
 road stocks should receive a yearly in come of not less tran $50000. Allowing for all of the war taxes proposed by Congress this week, and the final figures
 are almost certain to be smaller, not
 larger, from the investment viewpoint, pure and simple, that is eliminating the factor of patriotism, the man with an annual income of s5000O received from dividends on railroad stocks had better stick to his railroad stocks. On S1,OO0,O00 receiving an income of $50000 from divi-
 dends on railroad stocks, the total pro- posed war tax which is likely to be
 modified will only foot up $516O, leaving an income of $44,S40, whereas $1000, 900 in vested in 31a per cent tax-exempt gov
 ernment bonds will bring in only $35000. On the other hand any one with an- nual Income of S150.000 down can. do no better from the investment viewpoint than to place spare funds in well select ed railroad stocks. Few realize that many railway shares with long dividend rec ords are now, because of the recent heavy
 liquidation, due to fright over the forth coming, selling below the prices touched in the panic of 1907. Take Pennsylvania: For 1906, the year before the panic, the high price for that stock was 73s4. Since 1907 the price has been as high as 76A , this week it was around 51 Illinois Central sold at 1S41a in 1908, at 116 in 1907 at 1925 since the panic, at 100 this week. New York Central sold at 15614 in 1906 at 89 in 1907, al 147 since the panic, around S5 this week. Many similar cases can be found among the seasoned dividend pay ing railroad shares now offering an in- come return of per cent or better.
 In the annual report just issued by Union Pacific for the fiscal year which has been changed to end December 31, IA per cent was earned against 156 per cent, and 10.9 for the old fiscal year 1915. Pennsylvania year has always ended December 31. That company ean- ed 101a per cent last year, against Sh per cent for 1916 and 6S per cent for 1915. New York Central, another calendar-year company, earned IS per cent for 1916, against III for 1915 and 3.7 for 1915. Ill- nois Central, according to the report is- sued this week, earned 15.4 per cent for 1916, against 10.7 for the fiscal year ended June 30, 1916 and SIS for 1915. Louisville earned 2S1a for the calendar year 1916, against 19.4 for the old fiscal year 1916 and 6.75 for 1915. Southern Pacific earned l26 for the new calendar year, against 10.9 for the 12 months ended June 30 last, and 720 for 1915.
 So much for the past. As to the future the earnings now being published for March and the three months of the fiscal year show that the loses in gross for February were only due to weather con- d1tions and were temporary. As for net, the March statement also show an im- provement over the preceding months. Expenses were still high. But no sensible man doubts that the railroads are to be allowed an increase in freight rates; enough to at least offset the increase in wages. Tn that event there will be no cause for worry over the dividends now