Every evening, Wilmington daily commercial., 1920-01-28
CHANGES N THE
u. S. TAX Law
1t is More Liberal in Its Provi-
sions Than in Prcccd-
ing Acts.

The man who pays Federal income tax
this year has several reasons for which to
bc thankful First, that his income Tor
1919 WAS sufficient to place 1t within the
taxable list, second, that the normal
rates are lower than for 1918; and, third,
that the current revenue act is more iibcr-
nj in its provisions than preceding acts.
Prior to 1916 distinction WAS made
between only two classes Of taxpayers. A
man was either married or single, and
was taxed accordingly. The act of Sep
tember 8, 1916, extended the exemption
privileges in one respect. Recognition
was taken Of the fnrt that many tinmar
ried persons, in the maintenance OF a
household, assume the same rcsponsihill
ties as a married man. Under the 1910
act the exemptions allowed married per.
son were extended TO include the "hcad OF
n family" A single man, il his net in
come for 1919 WAS $1,000 or more must
file a return, but il he is the sole support OF
relatives by blood, marriage, or adoption,
living in the same house with him, and If
he exercises control of household affairs,
he is granted an exemption of s., 900.
Still another distinction WAS drawn by
the revenue act of 1917. An additional
allowance of 5000 was made for each child
dependent upon its parent, provided such
child was under IS or mentally or physic,
ally defective The exemption applied
only to the father or mother who was
supporting dependent child In his or her
household.
The revenue act of 1918 extended fur
ther the exemption privileges. The addi-
tional 5000 allowance now Applies to each
''person (other than husband or wifc) dc
pendent upon the taxpayer, II such person
is under Is years of age, or incapable OF
self-support" Thus, for example, 1t
man supports his mother, uncle, or aunt
in a sanitarillm, he is entitled TO the S2oO
additional exemption, but II he supports
his children at home and his wIie IN a
sanitarfum he receives no additional ex-
omption for his wife.
ALLOWANCE or DEDUCTIONS.
Under the 1913 act deductions for
losses sustained outside of the taxpayers
regular business were not allowed. The
merchant or professional man who took an
unfortunate flyer in the stock market
was granted no allowance for such loss IN
the making of his income-tax return. The
act of 1916 allowed such losses to the ex-
tent of gains in similar transactions. For
example, the taxpayer who, such not being
his regular business, made 500 IN one
stock transaction and IN another lost
81 900 was required TO report the 800
gain and could deduct only that amount
as a loss. The 1918 act provides for the
deduction of all losses If incurred IN any
transaction entered into for profit, though
not connected with trade or business.
Prior to 1917 deductions for eontrIbu-
tions to corporations organized for reli-
gious, charitable, scientific, or educational
purposes were not allowed. Under the
current act such deductions are alloweG
to an amount not in excess of Is per cent
Of taxpayers net income.
The FORMAL rate of tax for 1919 is four
per cent on the first 81, 600 or net income
and eight per cent on net income above