The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-01-27
BY ROBERT TALLEY
NEA Service Writer

NEA Service Writer
WASHINGTON, Jan. 27.-Busi-
ness men, professional men, farm
ers and corporations face in
creases in federal income taxes in
the new law.
The tax on corporation incomes
is increased from u per cent to
14h per cent in the case of cor
porations fling consolidated re-
turns. The $4,000 exemption for
merly granted small corporations
has been eliminated.
Incomes Of business men, pro-
fessional men and farmers are sub
ject to the same tax increases as
those of Salaried persons or wage
earners and to the same personal
exemptions and credits.
Special Deductions Made
But business men, professional
men, and farmers also are entitled
to certain deductions which reduce
their taxable income.
Typical deductions allowed for a
mercantile business are amounts
paid for rent, light, heat, hire of
clerks and other employees, adver-
Using, stationery, stamps, tele-
phone, delivery and other expenses
incident to the conduct Of the bust
ness.
The expenses of a manufacturing
business include labor supplies,
power, selling costs, administration,
etc.
The farmer may deduct all
amounts paid in production, harv-
esting, and marketing of crops, in
Guiding labor He also can deduct
for repairs to his farm buildings,
but not to his dwelling.
Expenses Are Allowed
A doctor. dentist, lawyer or other
professional man may deduct all
necessary expenses in the pursuit
of his profession. These include his
Office rent, salary of assistants, cost
of supplies and even the expense OF
operation of an automobile used in
making professional calls.
If a physician uses part of his
home for an office, he may deduct,
as a business expense, the rental
value of the rooms so occupied. Also,
he may deduct portion of the
wages paid domestic servants whose
time is partly occupied in caring
for these rooms.
Membership dues in professional
societies may also be taken off.
If business man or professional
man uses the same automobile for
both business and pleasure he
should allocate the operating ex-
pense on the basis of the time used
for each.
Auto Use Cuts Tax
For example, if the total expense
of operation and maintenance, plus
depreciation, in the taxable year
amounted to $500 and the car was
used three -fourthS of the time for
business and the remainder Of the
time for pleasure, he would be al
lowed to deduct from his taxable
income 5000.
Travelling expenses, if incurred IN
the course Of ones business or pro-
fession, are deductible. This in
cludes the amounts spent for food
and lodging and even for tips-but
the law says the tips must be 'rea-
sonable."
For the benefit of automobile
owners, it should be explained that
regardless OF whether the machine
is to be used for business or pleas
ure-the purchase price can not pe
deducted from income.
If used for business. it is a CAPT
tai expenditure; if used for pleasure
it is a personal eXpenditure-and
both deductions are expressly pro-
hibited by 1he law.
Credit on Gas Taxes
However, if used exclusively for
business, all expenses of operation,
plus depreciation, can be deducted
In either case, it is permissible to
deduct sums paid for registration
fees, taxes, etc.
While the federal gasoline tax Of
one cent gallon can not be de-
Quoted by toe consumer, credit may
be obtained for state gasoline taxes
if the state law levies this tax on
the consumer and not on the dealer.
Even President Elect Roosevelt
must pay an income tax on his
SIS .0OO-a-year presidential salary
after he takes office March 4, since
the revenue law passed last sum-
mer taxes the salary of the PreSi-
dent and of federal judges who
take office after its enactment.
Representatives senators and all
federal employers already are pay
ing.
CITY. state and municipal en-
ployes, however, are exempt from
the federal income tax if their
services are rendered in connec-
ton with the exercise of an es-
sential governmental function, as
distinguished from a proprietary
function.
For example, the governor of a
state. the mayor of city, coun-
cilnen, school teachers, firemen
and policemen do not have to pay
income taxes to Uncle Sam; but the
tax must be paid by employees of
municipal water plant. electric light
plant. or street railway. since their
activities are proprietary rather
than governmental in character.
Items of income exempted in
clude proceeds from a life insur-
ance policy paid by reason of death,
inheritances, and state workmen's
compensation.
Next: Prospects of more income
tax increases in 1888.
PRISON RI0TING FEARED
~<4....~I ALLIANCES of Inmates TS