The Maui news. [volume] (Wailuku, Maui, H.I.) 1900-current, 1919-01-24
New Federal Income
Tax Will Hit Hard
How Different Incomes Will Be Affect
ed-SalaTied Men viii Pay Three
To -Four Times What They Did
Last Year

SAN FRANCISCO, Cal, Jan. 16-
(By Associated Press.)-In working
out for the first time several concrete
examples as to the extent to which
corporations and individuals will be
called upon to help meet the war eX-
penditures by payment of taxes on
income and profits of the calendar
year 1913 under the terms of the new
revenue law about to be enacted, Col
lector of Internal Revenue Justus S.
Wardell today said that he had not
heretofore fully realized the unpre-
cedented scope of the taxes about to
De collected to bring in the $4,000
O00,0 900 contemplated by the trainers
of the bill.
Total Internal Revenue collections
in 1917, for the entire country, re
ported at the end of the fiscal year,
June so, 1918, amounted to 1904
703, 0 Of which s2,S39,000 came
from income and excess profits and
1856, 619, 900 from a multitude of mis-
cellaneous sources.
Under the terms Of the Senate bill,
the married man or head of a family
has a $4,000 exemption. A single
person has a exemption of $1,000 on
ly. For each dependent child a
married man gets an exemption OF
5000.
The normal tax is go On the first
$4,000 of income above exemption.
For a married man with no children,
the rate is therefore go On any
mount in excess of $4,000 and not
in excess of $4,000. 1t is 1870 in eX-
cess of $4,000.
In the case of a single person
whose exemption is 81 900, the tax on
an income of $4,000 would be $50, as
against $40 under the law OF 1917;
on an income of $4,000 ne pays $120,
as against $40 in 1917 and on an in
come of $4,000 he pays $24O as
against $50 in 1917.
Income up to $4,000 is exempt from
surtax. On income in excess of
$4,000 and not in excess of $4,000, the
rate is 10. The rate then advances
10 for each additional $4,000 up to
100000, so that it runs 2% from
$4,000 to $4,000; $50 from $4,000 to
$4,000, and so on. Above 100000
the advance are irregular but climb
rapidly.
Tabulations made today with a net
income Wardell's Office showed that
a person with a net income of $1,5OO,-
600 will have to give up $1,0SS,030 to
the government while a taxpayer with
net income amounting to $1,000,OOO
will be called upon to relinqulsh
S7O3, 900. The man with an income
of $500, 900 will be liable to a tax of
S923,03O, net incomes of 100000 and
5000, 900 respectively will pay $173,-
O30 and SOL ,030.
Partnerships are not to be taxed"
Collector Wardell said, "but individu-
al partners pay tax on all partner
ship profits according to their shares,
as well as on incomes from other
sources.
"a new classification is made of
Personal Service Corporations. The
stockholders of such are taxed on
their distributive shares of the net
profits in the same manner as part
ners are taxed. Severe penalties are
provided where stockholders permit
profits to accumulate beyond legit-
mate requirements instead of being
divided.
For the normal income tax on
corporations there is proposed a flat
rate of IL percent on the net income
remaining after deducting the a
excess profit tax to be computed on
business with an invested capital,
plus a specific exemption allowed and
the rate was 2 percent, 4 per cent,
or 6 percent.
For the war-excess profits tax
compution there is proposed a
formula which will require extended
explanation to make it clear to the
average reader.