Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1924-06-03
LAWRENCE GIVES
DEDUCTION PLANS
IN TAX PAYMENTS
Allowances Are Divided So
That Revenue Will
Not Cease Entirely
BY DAVID LAWRENCE
Especial Leased Wire to The Journal.)
(CODyright 1921


Especial Leased Wire to The Journal)
Copyright, 1924.)
WASHINGTON, May S1.-Treas,
ury officials today explained the
method by which taxpayers could
calculate their next payments on
June IS if the conference report
adopted by congress is approved by
President Coolidge, which now is
certain.
Instead Of permitting the taxpay-
er to take a rs per cent reduction
on his 1923 taxes in u lump by
emitting the June installment, the
new plan provides for Il scheme
which will not make Il hole in
treasury receipts at this time.
The method is as follows:
The taxpayer has the option of
paying his taxes in full, and if he
did so on March Is he will receive
a credit of one-fourth. If he pays
his taxes in quarterly installments,
he will be allowed on his June 18th
payment a credit of one-fourth for
that payment and one-fourth for the
payment which he has made in
March. In other words, the one
fourth reduction on 1923 taxes will
be allocated in four equal parts, but
in view of the fact that the March
payment has been passed, the tax
payer will get credit Of two
fourths of his installment in June.
Thus taxpayer who had tax
bill of $1,000 to pay and who paid
$500 on March IS, last, ordinarily
would have had to pay another SsS 0
hn will ipo
permitted to deduct $75Sfor the pay
ment he made in March and SIS for
the credit which he is allowed in
June, or a total deduction of $3.50,
so that he actually will pay only
$3.50 in June
September Deduction Less
When the September 18th pay
mant comes he will deduct only SIS
from his $500 bill, so that the net
payment will be 1925. On Deem
Der Is he will deduct the remaining
$75 so that his bill then also would
be 1925. In this way the govern
ment permits the taxpayer to take
the full one-fourth reduction in four
equal parts and the revenues com
ing into the treasury are not Sc
riously disturbed. The whole thing
may be reduced to formula by
taking one-half of what was raid
in March and subtracting it from
what ordinarily would be paid in
June. In December and September
each only ole-fourth of the March
installment would be deducted.
The treasury department depends
upon an even flow of money into
the treasury from income taxes and
when they fall short, the govern
ment has to borrow and pay inter-
est, which increases the expense
In order to reduce borrowings to
the minimum it was thought best
not to permit the taxpayer to omit
his June installment altogether, but
to let him pay a half of it then and
take two other credits in September
and December.
All the features of the new law will
be retroactive to January [ of this
year. There is some doubt of the
power of the government to levy an
excise tax on gifts which were made
prior to the signing of the new law.
Have Won Test Cases
There have been some test cases
in which officials contended that
they had a right to make a certain
transfer of property because no law
was on the statute books and that
they might not have done so had
they had knowledge of the tax that
would be levied later. The govern
ment in the past has won these test
cases on the ground that an excise
tax may be levied on any transac
ton which has occurred. There is
room for difference of opinion on
this feature of the law, however, it
is not unlikely that varying circum-
stances will lead to litigation and
further testing Of the constitutional
ity of this provision.
AS for the retroactive effect on the
transactions of the taxpayer gen
orally. the government has no doubt
of the constitutionality of the new
provisions for the individuals in
come is supposed to be calculated on
a yearly basis and the revenue OF
1918 which was not signed until
February, 1919, was retroactive 70
January /, 1918, without being upset
in the courts. There are other phases
of the new bill which, as usual. will
be open to attack in the courts
but they cannot be Conjectured in
advance for nearly every revenue
act has something in it which pro
duces a lawsuit
The gift tax provision is probably
the principal one on which legal con
test will be made. The treasury it.
self did not insert these ambiguous
provisions in the bill, but will be
compelled to- defend them when once
the measure becomes law.