Evening journal., 1918-10-30
INDIVIDUALS To
PAY PROFIT TAX
Bill Amended by Senate to
Meet Charge of
Discrimination
SALARIES ARE
NOT INCLUDED

WASHINGTON. oct. 3O.-The senst,
Finance Committee, which is nnishin.
its work Of redraftlng the ss.OO0.OOOOO
revenue bill, issued statement received
from the tax advisory board OF the
Treasury Department, explaining In,
new excess profits and income tax pro-
visions adopted by the Senate committe.
Friday as substitutes for the provision:
Of the House bin. The statement fol-
lows:
The discussion Of the committee
turned on the fact that under the House
bill there was a very considerable dis
elimination against the corporate form
Of business organization. arising from
the fact that corporations were made
subject TO income and war excess prof
its taxes, while individuals anr partner
ships were subject only 10 income taxes
In order to remove this discrimination
partnerships and individuals engaged
In active business with an invested cap
ital were made subject 10 war excess
profits tax.
individuals. partnerships and cOrpO-
rations engaged in rendering personal
service were exempt from the war eX-
cess profits, but corporations so exempt
VIII be required 20 pay income tax on
the same basis as individuals and part
uers, I. e.. they will be required 10 in
clude In their taxable income full dis
tributive shares OF the net income Of
the corporations for the taxable year.
whether actually distributed or not
In order 10 put the partnership and
individual. so far as possible, upon eX-
actly the same basis, the rate schedule
previously adopted was amended by the
addition Of a fourth bracket applica-
bic only 30 individuals and partnerships.
which adds % the ordinary war excess
profits tax o sum equal 20 70 percenium
Of the amount by which the net income
exceeds the sum NJ az 5000 and d.
the amount OF the tax computed under
the first, second and third brackets The
excess profits tax Of individuals and
partnerships will include this sum-
which is equivalent 10 the income tax
paid by the corporations but the war
profits tax so computed will. in the
case Of the individual and partner. be
credited against his entire income tax
and the individual or partner will pay.
as income tax. only the difference be
tween his income tax and the war eX-
cess profits tax
ITO illustrate. assume a business
with an income Of 100000 and a war
excess profits tax NJ $4,000 in the case
Of a corporation Under the same cir
cumstances the war excess profits Of the
partnership would be $4,000. but this
amount. divided among the various
partners. would be deductable from the
income tax assessed to them.
AS stated above. this puts the part
nership and the individual upon identi-
cally the same basis except for the fact
that the dividends Of the corporation,
II subsequently paid to the big stock
holders. viii he taxable 10 the latter
for the purposes 0f the sur tax.
Salaries. professional fees and earn
ings viii not he subject 10 excess profits
tax under the circumstances and cor
porations whose net income consists of
this form of receipts may elect 10 be
taxed on the same basis AS partner
ships, In which case they are also ex-
empt from war excess profits tax.
THE above plan has been adopted
tentatively by the committee. and is
subject TO revision"