Evening star., 1934-01-26
The Income Taxes.

The promised revision Of the income
tax Laws is soon to take definite form
In bill reported from the House Ways
and Means Committee. Already this
committee has taken action on the
greater part of the proposed bill, which
is now designed to increase the yield Of
the income tax law by 5000. 1000 900 an
nually. This increase in the income
tax payments is expected to come from
plugging up the "holes" in the present
law by which income now escapes tax
alton. bv readjustment of the tax rates
and by heavier levies on income derived
from other than labor and business
enterprises. The bill will be laid before
the House some time next week and
speedy action on 1t requested.
The committee proposes to re-enact
into law q part Of the exemption for
earned incomes which was carried in
the law prior to the act Of 1882 allow
ing ten per cent deduction from the
tax on net income up to $4,000. 1t
further proposes to increase the income
taxes on individual incomes derived
from dividends. Both of these amend
ments are intended to give the salaried
man and the business man better
break" in the matter Of income tax
payments.
The committee has accepted the
recommendations of its subcommittee
which made a study Of the income tax
law over a period Of many months so
far as the readjustment Of the rates
Is concerned. The normal income tax
rate will remain at four per cent on the
first $4,000 net income. After that
there will be levied graduated surtaxes
four per cent on net. income of more
than $4,000 and running up to fifty
nine per cent on all net income above
100000. Under the present law the
normal income tax rate jumps to eight
per cent above the first $4,000 Of in
come.
The practical effect Of the proposed
changes in the income tax rates, nor
NAL tax and surtax, will be to bring
the taxes on persons with incomes
ranging from $4,000 to $4,000 . little
lower and to raise the tax payments
for those with higher incomes.
Whether the new tax rates on in
ooy,ae to ay,y1iod fn thu ircopoo
derived in the calendar year 1888 on
which taxes must be paid during the
present year is to be determined by
the committee, perhaps today. The
present personal exemptions for indi-
viduals, 81 900 for single persons, $4,000
for married persons and $400 for each
dependent, are retained in the redraft
Of the law. On the other hand, joint
returns by husband and wife are made
compulsory, and the former practice
Of separate returns by man and wife
by which less taxes have been paid is
made impossible.
The proposed changes in the law to
prevent the escape Of income from tax
alton which should properly be sub
ject to taxation will be approved gen.
orally. The public has been aroused
by the revelations Of tax avoidance by
very wealthy men and women. Whether
the new law will actually result in an
increase in revenue of 5000, 600, 600 re-
mains to be seen. Those are merely
estimates. The income tax law. as a
revenue raiser, has been q sad failure
during the period of depression. Less
than one and one-half per cent Of the
total population pay income taxes. And
with the shrinking Of incomes the fall
ing off in the tax receipts has been
very great Again and again it has
been recommended that some other
form of taxation be adopted that would
work to better advantage as revenue
raiser and which would be fair. The
proposed manufacturers sales tax has
been advanced as q sure-fire revenue
raiser and as . form Of taxation that
would be fair, for It would fall heaviest
on those who spend the most money.
Doubtless efforts will be made again
to have this form Of taxation written
into law. The income tax has proved
somewhat of lemon" out of which
less and less juice has been squeezed.