Catoctin clarion., 1917-10-11
How Much War Tax Will
You Pay?
Four Separate Sets OF Taxes
To Be Calculated.
(By Basil M. Manly. J

Washington, Oct. 4.-With the passage
of the War Revenue Bill, which now
awaits the Presidents signature, every
American, man. woman and child, be-
comes Federal taxpayer.
You cannot buy any article that has
been freighted by rail or water, you can
not ride on a train, send telegram,
visit theatre or ball park, buy bottle
of patent medicine, baseball bat or any
other kind of sporting goods, tube of
tooth paste or any other toilet article,
own an automobile, a motorcycle or a
motorboat, draw time draft, buy a
bond or share of stock, or seld in a
proxy for an election, without paying
tribute to your Uncle Samuel.
Moreover, through the income and eX-
cess profits taxes. not less than 5000, 600
Americans who have never known what
it is to take money out of their pockets
and paw it over directly to Uncle Sam 8
collectors will now have to learn to max e
out their tax returns and master all the
intricacies of calculating gross and net
income, capital invested, depreciation
and exemptions.
The income tax now reaches down and
takes its levy from every married man
or woman with an income of more than
So, 900, and every unmarried man or
woman with an income of more than
81, 900, and the war profits tax reaches
every corporation with net income OF
more than $1,000, and every partnership
and individual operating business which
Yields more than $4,000 net income dur
ing this year.
Every one of these 5000 600 new tax
payers ought to learn as soon as possible
how to figure his taxes so that he can
now plan for the readjustments in his
business and personal affairs which these
relatively heavy Federal taxes will
necessitate.
In order to enable them to make these
calculations without calling in lawyer
or wading through the intrcacies of the
l3O-page revenue BILL the following sim
pie analysis of the war profits and income
taxes has been prepared, with the assist
ance of Washington's leading tax eX-
perts:
The excess profits tax will impress all
who has to make return under it as an
example of barbaric frightfuness. 1t Is
unlike any tax ever imposed in any civil
lied country. BY next March all Amer
lean asylums will be full of people who
lost their minds trying to calculate what
they owed Uncle Sam under this terrible
tax. Lawsuits to determine its applica-
ton will still be going when our great t.
grandchildren are dead and buried.
What Are Excess Profits?
Excess profits as now defined bear no
relation to the amount earned before the
war. If you want a rough idea of the
excess profits OF your business, take the
amount by which its net income for 1911
exceeds per cent on the capital invest
ed. and substract Sc, 900 from this if you
are operating partnership or individual
business, and SO, 900 if you are organized
as corporation. For example, suppose
your capital is $lOO, 1000 and your net in
come is $4,000. Eight per cent. is IS, 600
to whi:h you add So, 600 for corporation
and Sc, 900 for an individual or partner
ship, leaving the excess profits SO, 600 for
corporation and Sc, 900 for an individual
or partnership bushes.
If you want to know exactly, you will
have to do some real figuring Here S
how you 60 about it:
First determine the net income of your
business for each of the years 1911, 1912
and 1918, by substracting from the gross
amount of business done in each of these
years the proper deduction for expenses,
interest, taxes and depreciation, sub
stantially as described for income taxes,
except that you cannot deduct gifts and
charitable dona tions. Average these and
see what percentage they are of the cap
ital invested in the business during the
same three years. If they average less
than per cent. you will be allowed the
full per cent, but if they average more
than per cent. you will be allowed only
9 per cent. Only if they fall between Z
and per cent. do you take the actual
average. For instance, with $l00, 900 of
actual capital, if the average net income
is SO, 200, that would stand as 8.2 per
cent, but if the average was only So, 500
you would be allowed per cent, while
if the average was $4,000 you would be
allowed only 9 per cent. So you will see
that while you have to 60 through this
rigmarole in making your return, for all
practical purposes you might as well take
an average of per cent and let it 60 at
that.
After you have got this pre-war rate
of profit determined, you apply that per-
centage to your present capital, add to it
Sc, 900 for individual or partnership bust
ness and $4,000 for corporation, and
substract the result from your net in
come for the year 1917. This gives you
the amount of your excess profits on
which you will be taxed.