Evening star., 1923-11-12

from the maladjustment fzom which
he now suffers
Would Limit DeduetiOnAs.
~. Limit the deduction Of capital
losses to 12h per cent Of the Apss.
1.-The present revenue law limits the
tax on capital gains to 12k per cent,
but puts no limit on the capital losses.
1t is believed 1t would be soundeh-
taxation policy generally not to rec
ognize either capital gain or capital
loss for purposes Of income tax. This
is the policy adopted in practically
all other countries having income tax
laws, but it has not been the policy
in the United States. In all probabili-
ty, more revenue has been lost to
the government by permitting the
deduction of capital losses than has
been realized by including capital
gains as income. So long, however.
and capital losses for income tax pur-
poses, gain and loss should be placed
upon the same basis. and the provi-
aion Of the 1921 act taxing capital
ten ded to capital losses, SO that the
amount by which the tax may be re-
duced by the capital loss will not
exceed 12k per cent of the loss.
1T is estimated that this will in
crease the revenues by about s25,ooo,-
600.
"5. LIMIT the deductions from gross
Income tyr interest paid during the
year and Nor losses not Of a business
character ~ the amount the sum Of
these items' exceeds tax-exempt in
come of the taxpayer.
THE 1921 net provides that inter-
est on indebtedness to acquire or car
ry tax-exempt .NAcuTitles is not deduct
ible. This provfalon is ineffective, be-
cause a taxpapex may purchase tax
exempt securities for cash and bor-
row money for other purposes. 1t is
felt also that so long as taxpayer
has income which is not reached for
to deduct his non-xpusiness losses
from the income which is taxable,
but should be restricteAt in the first
Instance to deductfEn of these
losses from his non-tax;1ble income.
Increase $35,OOtA0O0.
The estimated increase Of revenue
from this source Is $35.ooo.Ooo.
&c. Tax community property income
to the spouse having control OF the
income.
husband is a joint income of tine nus
band and wife, and each. therefNe, Is
permitted to file a return for one
half of the income. This gives an an
fair advantage TO the n,,,as ci1izens at ty1s oa
other states of this country, and thAs
amendment seeks to restore the
TT is estimated that 1t will in
crease revenues by $s.000.8oo.
$50 much for the income tax recon-
which should become
effective January l. 1924. In order
that you may have before you a clear
view of the effect of these recon-
mendations as. applied to income in
the various brackets, I am attaching
a table, prepared by the government
actuary, showing the estimated re-
suits of the proposed changes in the
calendar year 1925, on the basis or
the taxable year 1924.
The schedule shows loss OF reve-
nue of about 1000, 900 in the brackets
under $4,000. and a further loss or
revenue Of about S52,000.o0O in the
next bracket of $4,000 to $4,000. In
short, abou. 10 per cent of the redac.
ton would be in the brackets OF Slo.oeo
or less, and less than per cent would
fall in the brackets over 100000.
Table shows Changes.
ITO show the effect Of the proposed
changes on the income OF typicai
salaried taxpayer. married and having
two children. / call your attention to
the following comparative ngures: