Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-16
Revenue From Income Tax VIII Deter
mine Federal Action.
By DAVID LAWRENCE


By DAVID LAWRENCE.
Government finances are dependent
for their future on what happens today
throughout the country on the return
of income taxes.
Only two and half million persons
pay Federal income taxes nowadays be-
cause Congress has gradually exempted
incomes below $500 for married per-
sons. This means that the Govern.
ment's income Is derived from q rela-
lively small number Of people out Of the
l2O,O00,000 population. It amounts to
less than per cent Of the people but
they pay the Government approxi-
mately billion dollars while another
Dillon comes from corporations.
Stock Losses Deducted.
Nobody knows, of course, what effect
the economic depression will have had
on the size of individual incomes, but
considerable reduction is expected.
Three-fourths of the taxpayers are in
the group which earn less than $1,000 q
year, so that, unless these people specu-
lated in the markets and lost heavily,
the Government revenues should be
about the same. It Is in the group
above $4,000, and particularly those
whose incomes are hundreds of thou
sands OF dollars year normally that
the largest losses are expected to be
found.
The right to deduct losses In the stock
market Is naturally exercised by the
taxpayer, and during last December it
IS believed that millions of dollars of
losses were taken by selling securities at
the prices then prevailing. Many of
these same taxpayers were able, under
the law, TO buy back the same stock 80
days later, at either the some or even
lower prices.
Corporation Loss Serious.
Losses in business by corporations viii
be the most serious blow to be suffered
by the Government. The shrinkage in
receipts has to some extent been dis
counted by the Treasury and fortunate
ly the Federal Government operates its
books on a fiscal year running from July
l to July /, so that the money to be
taken in beginning tomorrow does not
affect the current fiscal year very much
because an extraordinary large sum was
collected during 1880 from the profits
of 1929.
The revenues from the income tax
returns being filed this week may be
diminished, but the Government will not
really begin the bulk of its appropria-
lions until next July, and there viii be
another series of income tax payments
beginning March, 1882, which may off,
set the diminished receipts Of March,
1881.
In other words, If the calendar year
1881 proves to be q better year for
business than was 1880, the Govern
ment Will get the benefit of it in March
Of next year, so that any Treasury
deficits predicted now may be changed
considerably by the receipts Of March,
1881.
Deficit Is Anticipated.
Treasury officials, however, are very
anxious to know Just what the shrink
age will be this week, for they will have
to determine between now and next
July what economies must be made so
that the next fiscal year win not incur
too big a deficit.
It seems to be q foregone conclusion
that there VIII be q deficit, and soma
estimates have placed it at $500, OOO, 600.
It remains to be seen how accurate are
the guesses of the Treasury experts on
the income tax losses to be recorded this
week.
The machinery for the gathering OF
returns is such that the Treasury will
collect information by telegraph every
day for the next month, and compare
sons can be quickly computed. Thus
1t will be known within 80 days what
the effect of the business depression
has been on Government finances.
Copyright 1919