The log cabin Democrat., 1921-12-06
FEATURES OF NEW
 INCOME TAX LAW
HESS ON SMALL INCOMES
New Federal Act Increases Exemp- tiOns of Taxpayers whose Incomes
 are Less Than S5,0OO Per Year.

The United States bureau of in- ternal revenue has furnished the Log Cabin Democrat with the following story which answers many queries as to the requirements and provis- ions of the new federal income tax law. AS the statements below are official and authoritative they should be closely read by all who are re- quired to make income tax returns to the government.
 To what extent will the average taxpayer be benefited by changes in revenue legislation? What are his exemptions and deductions under the revenue act of 1921 compared with t6e revenue act of 1918? Hundreds Vf such questions are reaching the bureau 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 H. Blair, there will be prepared for the press series of informative articles telling the tax payer in detail how to make out his income tax 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 $5,000 and less is eu- titled to an exemption of S2,5GG. Under the revenue act of 1918 this exemption was limited to S2,000. The revenue act of 1921 also provides for each person dependent upon the tax payer if such person is under lS years of age or incapable of self support be- cause mentally or physically defective an exemption of $400. The ex- emption under the revenue act of 1918 was $200 for each such depend dependents whose net income for 1921 was $5,0O0 will pay this year a tax of $68, compared with $104 on the same income for 1920.
 The exemption of $2,500 applies also to the head of a family whose net income for 1921 was S5,000 or less, an increase of $500 compared with the 1918 act. A head of family, as defined by present treasury regula tions, is "a person who actually SUD- ports and maintains in one household one or more individuals who are closely connected with him by blood relationship, relationship by mar riage, 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 rate of tax, 4 per cent on the first $4,00O of net income above the exemptions, and per cent on the remaining net income, remains unchanged. This applies to citizens and residents of the United States. To overcome the disparity in the amount of normal tax in the case of two taxpayers, one of whom is just within the lower $2,000 exemption, the other being just within the higher $2,500 exemption the act provides that the reduction of the personal eX- emption from $2,500 to $2,000 shall not operate to increase the tax, which would be payable if the exemp- tion were $2,500, by more than the net income in excess of $5,000. For example, married man or head of family has net income for 1921 of $5,010. Assuming that he has no dependents, his tax, if he were allow ed only the S2,000 exemption, would be $120.40. Under the benefits of the above provision however, his tax is $110, per cent on the amount of his taxable income of $2,500, or $100, plus the amount by which his net income exceeds $5,000.
 Many inquiries are received relative to the surtaX rates.
 Taxpayers in the preparation of their returns should be careful to note that the surtax rates for the cal endar year 1921 remain unchanged The surtax rates on incomes for 1921 range from 1 per cent on the amount of net income between S5,000 and $6,OOO to 65 per cent on the amount
 of net income in excess of $1,000, ,000
 For the calendar year 1922 and each calendar year thereafter, the surtax ranges from 1 per cent on the amount of net income between S6,000 and S6,OO0 and S10,000 to 50 per cent by which the amount of net income eX- ceeds $200,000.
 Returns are required of every sin
 gle person whose net income toi
 1921 was $1 ,000 or over, every mar
 ried person not living with husbanc
 or wife whose net income was Si,oo,
 and every married person living witf
 husband or wife whose net income