Evening star., 1941-07-15


ated On each $4,000 of income above
that. For example, under the pres
ent law a single person earning
5000 pays A cents, under the pro-
posed law he will pay 1894. A per-
son earning $4,000 now pays $44
under the proposed law he will pay
s110. On an income of $1,000 he
now pays $17160, under the pro-
posed law S437; $4,000 he pays
$686.4O, under proposed law ST.
1880; S1,000,000 he pays S7l8,404
under proposed law S737,340
Comparison of Rates.
A married person with no de-
pendents earning 50 500 under pres
sent law pays S11, under proposed
law $3.50; $4,000 he pays S110, under
proposed law S308; $4,000 he pays
S528. under proposed law S1.166, and
s10O0,000 he pays S7l7,58360 under
proposed law S736,51960.
II must be borne in mind that
all State income taxes are in addl-
ton to these amounts. This will
give you some idea as to the in
creased amounts you will be called
upon to pay, and, while the bill will
likely not become law before Sep
tember /, it will be retroactive to
January |, 1941, and due on March
Is, next year.
The levy of corporation taxes is
necessarily much more complicated
than individual income taxes. The
record shows that during the last
war there were about $4,000 Million
aires made. 1t is hoped that during
this emergency, when it is neces-
sary for all of us to make Sacrl-
fees, there will be no repetition of
that fact. With this in mind, rather
steep excess profits taxes are pro-
posed.
The principle of the present law
is retained which gives corporations
the option of computing their earn
ings for excess profits taxes upon
the average earnings basis or upon
the invested capital basis, which,
ever is the more advantageous.
However, there has been a reversal
of the method of computing the
excess profits net income. Under
the present law the normal tax is
allowed as a credit in computing
excess profits net income, whereas,
under the proposed measure the
excess profits tax is allowed as a
credit in computing the normal tax.
The proposed measure reduces the
invested capital credit from a
straight 8 per cent to 8 per cent on
the first $5,000,000. and 7 per cent
on the excess thereof. The rates
are increased. The rate for less
than $4,000 will be IS per cent and
ranging to so per cent of amounts
over $5OO,0O0.
The normal tax on corporations,
like individuals, has not been in
creased. but it is proposed to levy
a per cent surtaX on corporate
net incomes Of S25,000 or less, and
6 per cent on net incomes in excess
of $4,000. The reason for levying
the surtax instead of increasing the
normal tax applies both to indivi-
Guals and corporations. There are
billions of Government bonds which
are either totally or partially ex-
empt from the payment of normal
tax, but, in accordance with this
provision, are not exempt from
surtaxes. BY levying the surtax the
income from such bonds will be
reached.
1t is also proposed to increase the
capital stock from S1.10 to sl.25 per
$1,000. and to give special treat
ment to new capital.
Excise Tax Suggestions.
With respect to excise taxes, 1t
b suggested that such tax be
levied upon distilled spirits in the
sum Of ST per gallon. In the case
Of wines. nqueurs and cordials. the
tax is based upon the alcoholic
content.
The present rate on automobiles
Is 31a per cent, and that rate is
proposed to be doubled. This also
applies to trucks and trailers. 1t
Is suggested that the rate on tires
and tubes be doubled. The tax on
mechanical refrigerators is in
creased from 512 to 10 per cent,
which includes air conditioning
equipment. The latter is not now
taxed. The rate on radios is in
Creased from 51a to 10 per cent, and
there has been added to the list,
automobile radios.
{ou, ooo fhoro Uoc fQY
of 2 cents per 1000 on matches. 1t
was repealed in 1898, and it is sug-
gested that that tax be renewed.
1t Is suggested that the tax on
toilet preparations be materially in
creased.
Until 1888 there was a manu-
facturers' excise tax on jeWelry. 1t
was repealed at that time and it is
now recommended that 10 per cent
retail tax be imposed. The same is
true of furs, and it is now recon-
mended that a 10 per cent tax be i'm
posed upon their retail price.
Other items include monographs
and phonograph records and sport
ing goods, as we'll as trunks, musical
instruments, electrical appliances.
business machines, optical equip
ment, rubber products, metal signs,
commercial washing machines and
cutlery. A tax on soft drinks, candy
and chewing gum is also re-enacted.
The excise tax will produce more
than S540,000,000
A tax on admissions to places OF
amusement will also be increased by
reducing the exemption from 10
cents to 9 cents. Service men in
uniform will not be required to pay
this tax.
The discussion of the items in the
proposal has necessarily been brief.
It has been to some extent technical,
but tax bills are technical and there
is no other way to discuss them.
An analysis of our present and pro-
posed expenditures, together with a
realization of what we are going to
be required to pay in taxes, must
certainly convince us that absolute
economy, not only in our private
affairs, but in non-essential gov
ernmental affairs must be rlgldly
practiced. And that all non-essen-
i L. n