The Yale expositor., 1920-02-05
INCOME TAX IS
MORE LIBERAL
Normal Rates Are Lower Than
In 1918 and Act Is
Fairer


tax this year has several reasons
for which to be thankful. First,
that his income for 1919 was suffi-
cient to place it within the taxable
list; second, that the normal rates
are lower than for 1913; and third
that the current revenue act is
more liberal in it's provisions than
preceding acts.
Prior to 1916 a distinction was
made between only two classes Of
taxpayers. A man was either mar
ried or single, and was taxed ac-
cordingly. The act of September 8,
1916, extended the exemption priv
ileges in one respect. Recognition
was taken of the fact that many
unmarried persons, in the main
tenance of a household, assume the
same responsibilities as a married
man. Under the 1916 act the ex-
emptions allowed a married per-
son were extended to include the
head of family" A single man
if his net income for 1919 was ST.
600 or more must file a return but
if he is the sole support of rela-
atives by blood, marriage or adop-
tion living in the same house with
him, and if he exercises control
of household affairs, he is granted
an exemption of $4,000.
Still another distinction was
drawn by the revenue act of 1917.
An additional allowance of 5000
was made for each child depend
ent upon its parents, provided
such child was under l8 or ment-
ally or physically defective. The
exemption applied only to the
father or mother who was support
ing dependent child in his or her
household.
The revenue act of 1918 extend
ed further the exemption privilg-
edges. The additional $500 allow
ance now applies to each person"
(other than husband or wife) de-
pendent upon the taxpayer, if
such person is under 18 years of
age, or incapable of self-support.
Thus for example, ifsa man sup
ports his mother, uncle or aunt in
a sanitarium. he is entitled to the
5000 additional exemption. but if he
supports his children at home and
his wife in a sanitarium he re-
ceives no additional exemption for
his wife.
Under the 1913 act deducting
all losses sustained outside of the
taxpayers regular business were
not allowed. The merchant or
professional man who took an un-
fortunate flyer in the stock market
was granted no allowance for such
loss in the making of his income
tax return. The act of 1916 allow
ed such loses to the extent of
gains in similar transactions. For
example, the taxpayer who, such
not being his regular business,
made $40 in one stock transaction
and in another lost 1000 was re-
quired to report the 500 gain and
could deduct only that amount as
a loss. The 1918 act provides for
the deduction of all loses "if in
Cured in any transaction entered
into for profit, though not connecJ-
ed with trade or business"
| Prior to 1917 deductions for con-
ltributions to corporations orga!iiz-
ed for religious. charitable, scien-
tific. or educational purposes were
not allowed. Under the current
act such deductions are allowed ia
an amount not in excess of Is per
lcent of taxpayers net income.
The normal rate of tax for 1918
is a per cent on the first $4,000 OF
net income and 8 per cent on net
income above that amount. AS in
1918, the tax may be paid in full
or in four installments, the first OF
which must accompany the filing
of the return on or before March
15, the second on or before June
Is, the third on or before Septem.
Der 10, and the fourth on or before
December Is. Forms for making
returns may now be obtained al
the Offices of collectors of internal
revenue. post Offices and banks. II
the taxpayers net income for 1915
was $4,000 or less he should Asl
for Form 1040-A. If it was more
than $4,000. he should ask fol
Form 1040.
/