The sun., 1918-08-25
EARNED INCOME TAX
PUT AT 10 PER CENT.
Unearned Is Fixed at 13 by
the Ways and Means
Committee.
TREASURY PLAN DROPPED
War and Excess Profits Levies
Decided Upon-House to
Get Report Thursday.
specsol pespofch 10 TEE Sun.

Special Despdfch TO TBE Sun.
WASHINGTON, Aug. 24.-Unless the
House itself changes the provisions, the
much fought over war profits and ex-
cess profits taxes in the new revenue
bill have been finally determined by the
Ways and Means Committee. The COM
mittee met to-day after a two day recess
to permit Chairman Kitchin IN. c.. to
draw up the excess profits section OF tho
measure.
The committee also disresarded the
wish OF the Treasury Department to
make the normal income tax on In
dividuals IL per cent. on earned income
and Is per cent. on unearned income.
These rates appear in the last print
Of the bill. Just off the press to-day. at
10 per cent. and IS per cent, respec-
lively. However, that Is another matter
which may be adjusted in the House It.
self.
War Fronts Method.
As the war profits and excess profits
taxes now stand II is provided that the
one yielding the more money to the
Treasury shall be imposed in all cases.
The war profits method" of taxation, as
II Is called in the bill. provides for the
payment OF tax of so per cent. on net
income above the war profits credits.
These credits under ''sub-dlvislon (a)"
are defiped to be:
"G) A specific exemption OF $4,000.
and
"(2) An amount equal to the average
net income Of the corporation for the
pre-war period. plus or minus, as the
case may be. 10 per cent. Of the invested
capital added or withdrawn since the
close Of the pre-war period"
"(b) II the corporation had no net
income for the pre-war period. or II It
was not in existence during the pre-war
period, or II the amount computed under
paragraph (2) of subdivision (a) 10
less than 10 per cent of It's invested
capital for the taxable year. then the
war profits credit shall be the sum Of:
"G) A specific exemption Of $4,000,
and :,
"t2) An amount equal to 10 per cent.
OF the invested capital for the taxable
year."
1t is specifically provided that the
specific exemption OF $4,000 shall not
apply to foreign corporations.
Excess Fronts Taxation.
The excess profits method" of taxa.
ton provides that II the tax is computed
In that way. 1t shall be the sum Of tho
following:
"Thirty-nve per cent. of the amount
Of the net income in excess OF the excess
proits credit and not in excess of IL
per cent OF the invested capital for tho
taxable year.
Fifty per cent. of the amount Of net
income in excess OF Is per cent. and
not in excess Of 20 per cent. Of tho
invested capital for the taxable year.
Seventy per cent. Of the amount OF
the income in excess Of 20 per cent. Of
such capital"
1t is provided further in this section
as follows:
'In any case where the full amount
! OF the credits iss not allowed under
the first bracket above provided by rea-
| son OF the fact rat such credit is in
! excess Of Is per cent. of the invested
! capital the part not so allowed shall
be deducted from the amount in the
next succeeding bracket. and If not
then fully allowed the remaining part
shall be deducted from the amount In
| the last bracket.
THAT the excess profits credit shall
consist of a specific exemption OF $4,000
Plus an amount equal to per cent. of
the invested capital for tie taxable
year"
Foreign corporations are excluded
from the specific exemption.
1t became certain to-day that the House
will not have tho bill 70 consider until
a week from Monday.