The Maui news. [volume] (Wailuku, Maui, H.I.) 1900-current, 1921-12-20

This article was written in answer
to numerous questions hat have been
asked by the average citizen rela-
tive OF requirements and provisions
of the new income tax law that be
comes operative the first of the year
so far al can be done in a limited
space. Later a series of informative
articles will be issued from time to
time by the bureau of internal reve-
nue..
To what extent will the average tax
payer be benefited by changes in re
venue legislation? What are these
exemptions and deductions under the
revenue act of 1921 compared with
the ven act of 1918? Hundreds
of 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 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 tax return for 1921.
Important Changes Noted
= AoSobAt NAlO bAOol llllDOl AdAN ClldilSG
affecting the man of moderate income
is in the exemptions. Under the 1921
act a married man with a net in
come of $4,000 and less in entitled
to an exemption of $500. Under
the revenue act of 1918 thfs g...Ip-
tion was limited to $4,000. The reve-
nue. act of 1921 also provides IOr each
person dependent upon the taxpayer
if such person is under eighteen years
OF age or incapable of self support
because mentally or physically defect
ive-an exemption of $4OO. The ex-
emption under the revenue act Of
1918 was 5000 for each such depend
ent. Thus, a married man with two
dependents whose net income for
1921 was $4,000 will pay this year a
tax of $6S-compared with $1O4 on
the same income for 1920.
The exemption of $4,000 applies also
to the head of a family whose net
income for 1921 was $4,000 or less, an
increase of $500 compared with the
1918 act. A head of a family, as de
fined by present Treasury regula-
tions, is "a person who actually sup
ports and maintains in II household
one or more individuals who are close
ly connected with him by blood rela-
tionship, relationship by marriage, or
by adoption, or whose right to eXer-
else family control and provide for
these dependents is based upon some
moral or legal obligation"
No Change In Rate
The normal rate of tax, 1 per cent
on the first 81 900 of net income above
the exemptions, and 8 per cent on
the remaining net income, remains
unchanged. This applies to citizens
n residents of the United States.
Alien non-residents are taxed to the
full 8 per cent on income received
from sources within the United Sta
ties. Nonresident aliens are allowed
only a single personal exemption Of
$1,000. To overcome the disparity in
the amount of normal tax in the case
OF two taxpayers, one of whom is Just
within the lower 50, 1000 exemption, the
other being just within the higher
$4,000 exemption the act provides
that the reduction of the personal
exemption from $4,000 to $500 shall
not operate to increase the tax, which
would be payable if the exemption
were $4,000, by more than the net in
come in excess of $4,000. For exam
pie, a married man or head of a fam
lily has a net income for 1921 of 5000.