Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-19
LOWER INCOME TAX.
PAYMENTS ARE DUE
Losses of Last Year to Be
Reflected in 1891
Returns.

special Dispatch to The Star. d"
NEW YORK, February ia New
York business man, who. paid an in.
come tax last year of $4,000, in cast
ing up his accounts preparatory to
meeting the tax on his 1880 income,
finds that he owes the Government
$4.5S. The profits from his business
were somewhat less than in the previ-
Gus years. but the difference between
$4,000 and $4.58 is represented mainly
in the losses on securities which he
took in 1880 and which the average
American has been taking to such an
extent that Uncle Sam will find his
income tax revenues greatly reduced
when the final figures for the year are
cast up by the Treasury Department.
The Illustration given above is not
by any means unusual. There are
numerous instances that those whose
business 1t Is to compile income tax
reports for individuals and corpora,
tons have met with, in which the
returns for 1880 are only a small per-
centage Of those for 1929. They have
dw1ndled down from thousands Of doll
lars or hundreds of dollars to a few
dollars or few cents. 1t is doubtful
tne Washington authorities yet
they will have to face this year in
one OF the largest Of all of the Gov
ernment'S sources of revenue.
Many Took Losses.
Every one who could take losses ON
securities, real estate or on other BUSH
ness enterprises did so to the extreme
hafy
tax statements. This was one of the
factors in the demoralized security
markets OF last November and Decem.
Der. 1t has promoted the new and ag-
gress1ve action for a change in the law
regarding capital gains and losses. It
involved a great deal of switching from
one group of securities to another in
oroer that the investor might not lose
his position. When he sold the stock of
food company, for instance, on which
there had been a depreciation and in
order to improve his status as the payer
OF an income tax, he purchased the
shares of another food company with
about the same general status and pos
sibly a little higher rating that the
one disposed of. He did the same if the
situation involved the stock of a copper
company, or that of an iron and steel
concern, railroad or public utility.
There was general searching out in
the final quarter of 1880 Of every kind
OF substitution that could be made
which would bring the highest total of
losses to set up against profits and so
produce the minimum of income taxes
to be paid on March Is.
This year more people will pay the
Government the entire amount of their
1880 income taxes in one lump than
ever before. The man who had to pay
$4,000 last year then took the option Of
quarterly payments. Obviously, he will
send check this year to the collector
of internal revenue in his district for
$458 on March Is and have done with
the business.
Consequently, the first installment
period may look better, so far as it re-
fleets the total income tax payments for
the IL months, than actual conditions
warrant. The extent of the shrinkage
will show up more plainly in June and
in the subsequent quarterly periods OF
September and December.
Expect Low Receipts.
There is no basis on which to esti-
mate the falling off in income tax pay
mentS this year, but income tax experts
agree that the receipts will be the lowest
in many years. They also unheSitatingly
state that at no time since 1921 have
losses been taken equal to those that
Will appear in income tax statements
when they are presented at the Inter
nal Revenue Offices of the country next
month.
There is still considerable selling of
securities and transferring of capital
into other securities with the eye to
making income tax payments In 1882
as easy for the business man and the
professional man as possible. The
amount of this, however, is too slight
to have had any effect on security
prices. There is a certain amount Of
balance to it in the way of repurchasing
of securities by those who took their
losses last year, and not then being i'm
pressed with the outlook held the pro-
ceeds of their sales in cash or in short
term securities until they were better
satisfied that permanent improvement
in stocks had set in. A considerable
amount of replacement of this sort has
been going on in the last few weeks.
Copyright, 1881