The public ledger. [volume] (Maysville, Ky.) 1913-1968, 1921-12-10
INFORMATION on
NEW INCOME TAX
LAWS CHANGES
Every Man Who Pays Income Tax
Should Carefully Read and
Inform Himself.

To what extent will the average
taxpayer be benefited by changes in
revenue legislation? What are his ex-
emptions and deductions under the
revenue act of 1921 compared with
the revenue act Of 1918? Hundreds of
such questions are reaching the Blu
reau of Internal Revenue. The pur-
pose of this article Is to answer those
most frequently presented. Later, by
direction of Commissioner of Internal
Revenue, David II. Blair, there will
be prepared for the press a series of
informative articles telling the tax
payer in detail how to make out his
income ia return for 1921
Probably the most important change
affecting the man Of moderate income
is in the exemptions. Under the 1921
act married man with net income
of $4,000 and less is entitled to an ex-
emption Of $4,000. Under the revenue
act of 1918 this exemption was limited
to $4,000. The reveneu act of 1921
also provides for each perso ndepend-
ent upon the taxpayer if such person
IS under eighteen years of age or in
capable of self support because men
tally or physically defective an ex-
emptio nog $500. The exemption un-
der the revenue act of 1918 was 0200
| for each such dependent. Thus, mar
ried man with two dependents whose
net income for 1921 was $4,000 will
| pay this year tax of 1854, compared
with 104 on the same income for 1920.
The exemption of $4,000 applies
also to the head of family whose net
income for 1921 was $4,000 or less, an
increase of $500 compared with the
1918 act. A head OF family, as de-
fined by present Treasury regulations,
is "a person who actually supports
and maintains in one household one
CT more individuals who are closely
connected with him by blood relatin-
ship. relationship by marriage. or by
adoption, or whose right to exercise
family control and provide for these
dependents is based upon some moral
or legal obligation
The normal tax, per cent on the
first $4,000 of net income above the
exemptions and per cent. on the re-
naming net income, remains I'M
changed. This applies to citizens and
residents of the United States. Alien
non-residents are taxed to the full
per cent on income received from
sources within the United States. Nom
resident aliens are allowed only a
single personal exemption of $1,000.
To overcome the disparity in the
disparity in the amount Of normal tax
in the case oof two taxpayers, one of
whom is Just within the lower $4,000
exemption, the other being just with
in the higher $500 exemption the act
provides that the reduction of the per-
sonal exemption from $1,000 to $4,000
shall not operate to increase the tax,
which would be payable If the exemp-
ton were $4,000, by more than the net
income in excess Of $4,000. For exam
pie, a married man or head of a fam
lily has a net income for 1921 of So
O10. Assumong that he has no de-
pendants, his tax, if he were allowed
only the $4,000 exemption, would be
$12050. Under the benefits of the
above provision however, his tax is
$110, 4 per cent. on the amount of his
taxable income of $4,000, or 500, plus
the amount by which his net income
exceeds $4,000.
Many inquiries are received relative
to the surtax rates..
Taxpayers in the preparation Of
their returns should be careful to note
that the surtax rate for the calendar
year 1921 remain unchanged. The sur
tax rates on incomes for 1921 range
from / per cent. on the amount of net
income between $4,000 and $4,000 to