Douglas daily dispatch. [volume] (Douglas, Ariz.) 1903-1961, 1927-11-04
SlMPEIFICATION'
OF INCOME TAX.
Law IS AIMED AT.

WASHINGTON, Nov. 3 RP)-Re-a ar
rangement Of the income tax law with
an index to guidesth baffled tax
payers is one of the several widespread
recommendations for simplification Of
the law placed before the joint con-
gressional committee on internal rev.
enue taxation in confidential report
from its advisory committee.
Other outstanding proposals in the
report now under study by the COM
mittee are:
A new method for computing the
credit allowed on account of earned
income
Consolidation of the 81 offices of
collectors of internal revenue with the
SO offices of revenue agents.
Adoption Of a new method for pre-
venting evasion of surtaxes by incor-
poration
Retention of the present rates and
rules governing capital gains and
losses.
Abandonment of practice allowing
consolidated returns by corporations.
! Authorization for release of federal
tax liens. on the giving of a surety
bond in. ans amount not more than
twice that due.
The proposal for revising the present
method, OF computing the earned in
come credit is the nearest approach to
a change in rates in the advisory
committees. report. a
The present law provides for a. tax
credit of rs per cent to the taxpayer
ON that part of his income which is
earned. All Incomes ofs$5, COO and less
are considered earned. The credit may
be taken only on earned income up to
$4,000. The committee said this has
caused considerable confusion. 1t
recommended in lieu of the present
method the following:
I'm computing taxable net income
allow deduction equal to 10 per cent
of the amount of the earned net IN
come, subject to maximum and mini
mum limits equivalent to those fixed
by the present act:''
Under this system, the committee
said no substantial increase in the tax
would be made on any one, while sllghG
decreases would occur generally to the
advantage of the married man with
dependents. It is estimated about $751;
100000 would be saved taxpayers I'M
der this plan instead Of about $2o,-
100000 as. now
Better service would be rendered
taxpayers, it is said, by consolidation
Of the internal revenue bureau tleld
offices with Sone in each collection
district, avoiding the necessity OF visit
ing widely separated offices in connec-
ton with the assessment, COLLECTION
and auditing. of his taxes. About ST.
COO 1000 would be saved the govern
ment
The committee found that enforce
n1ent of the present law levying tax
of SO per cent on the net income OF a
corporation which permits its gains
and profits to- accumulate Tor the puf7 {
nose of preventing the imposition OF
the surtax upon its stockholders IS.
eobscure and difficult OF admlnlsVfa-
tion"
It suggested provision which will
tend to give some incentive 10 cor
porations to make reasonable dlstrlpu.
lions without going to the extent OF
forcing unwise distributions" Inc
principle was stated as follows:
nAllow the corporation a deduction
in computing net income equal TO-
sav. 90 per cent of the excess OF dlVl-
dendss paid over dividends received,
the deduction, in no case to be more
than say, rs per cent Of the corpora
lions taxable net income before sucn
DEDUCTION. In the. computation, no &C
count should be taken OF STOCK CIVIL
dends.' - -
Several reasons were given 1or r.
tanning, despite the big protest against
tt the provision levying a maximum
tax of f21s. per cent on capital gains
and allowing tax reduction on account
81 capital net losses at 127s per cent.
The capital net gains tax produced
$1O9. 912, O83 more in 1925 than was al
lowed for capital net losses, the COM
,nittee said. Also, it said ito eliminate
the tax on capital transactions s.Would
shift the tax burden from those TAX
ING gains to those taking losses.
The proposal to release tax lien on
the giving of "a bond is new sugges--
ton, but the committee, argued that
tif the taxpayer has no other re"
sources from which to pay the tax,
the lien may tend to deter quick col
lection