The Birmingham age-herald., 1919-07-20

shall not pay an income tax. or that if the income tax exceeds the amount or the property tax. he shall only pay by way of income tax the amount of such excess.
 EXCHANGE OF PROPERTY
 The bill provides, among other things that on an exchange of property if the market value of the property received in exchange exceeds the cost or value as oi January l. 1919, of the property given in exchange, he must pay an income tax on the difference. This is taken, word for word, from the federal act MT. Smith trades his house with MT. Jones. He does not receive a penny in his trade and yet If there is a temporary imitation in the market value of real estate where the house was located, MT. Smith may have to pay an income tax on the trade He has given up one deed and received another, but he must dig down into his pocket for cold cash to pay the tax. Mir Green has a small business which he wants to incorporate. Through lonS years of hard work he has built up good will in this business. He incor' porates and has issued to himself cer tain number of shares of stock, and in return gives to the corporation tthat is, to himself) a deed and bill of sale of his business and business property. He has not profited one cent by this transaction, but if by chance the stock which he re eeives is said by some income tax offi- cial to be worth more than the business before incorporation. MT, Green must dig into his pocket for cold cash to pay tax on it.
 Does this suit you? It may not be inn portant today, but if this act is adopted, it will be with us today, and it may be- come very important to you at some fu- ture time If you are incorporated. remember that all this applies to your incorporated business as well as to your self
 John Smith sells his house, which cost him in 1914 s5000. for s10,o00 in Decem- Der, 1919. He must pay an income tax on the $5000 difference, as now pro- vided by this bill. unless he can de- monstrate that the market value of his house on January 1, 1919, was more than s5ooo The difficulty of demon- strating the value of any particular piece of property on any specified date is apparent Experience under the Federal revenue act demonstrates that the revenue officers themselves decide what such a valuation should be, and nothing short of a law suit with the government, and under this bill with the state can protect John Smith if the revenue officers decision is unfair to
  real estate. horses mules, stocks, bonds, or any kind of property. Experience under the Federal revenue act has all ready demonstrated that this has stifled and almost extinguished trading, for the uncertainty of what the revenu9 officers may determine to be a valua- tion as of the date fixed by the revenue act has made many people prefer to hold their property or postpone the de- velopment of it rather than sell or go forward with development and risk the possible consequences of such decision by revenue officers or the outcome of law suits with the government of which they are a part.
 The excess profits tax provided by the bill is in addition to this income tax The rates are per cent and 10 per cent where the rates under the cent and 40 per cent. Under the United States bill this applies only to corpora tions: under this bill, 1t applies to all of you The net rate may vary con- siderably, according to the amount Of money which you may have invested in your business. If you are doctor, an engineer, a lawyer, sales agent, you have practically nothing invested in your business, and this means that the 10 per cent rate will apply in ad- dition to the income tax to practically all of your income If you are farmN er or have a store, a manufacturing establishment, or a mine, the sole meas ure which will determine the propor- tion of your income which the state will take whether you are incorporated or not will be the amount you have in vested in your business.