Evening star. [volume] (Washington, D.C.) 1854-1972, 1942-11-01
S67,2005 a|aryCei|ine
\ Estimate Explained
By Treasury Experts
i Exemptions, Deductions,
! Stote Toxes Computed
To Reoch SIS, 900 Bose

How did the Treasury arrive at its
figure OF 1900 as the top permis-
sible salary that can be paid in
1913? And how will the rule apply
to Mr. x, corporation executive
drawing such a salary?
Assuming that he has no exemp-
tions or other allowable deductions,
a person with a salary of $67 200
under the rates in the 1912 revenue
bill would have to, pay approximately
$4,000 in Federal income and Vic
tory taxes. This would leave his
$25 ,000-the maximum allowable sal
airy under the new ceiling after pay
ment of Federal taxes.
Exemptions, Deductions.
Mr.. x will however, find that he
Is entitled to some reductions for
personal exemptions, taxes paid,
charitable contributions and other
items. 1t is estimated that these
run to approximately 10 per cent
Of the average persons taxable in
come.
After deducting from his gross
income the allowable items, Mr., x
will probably discover that his tax
liability is less than $4,000. This
will mean that he will have remain
ing more than the $25 900 allowable
under the regulations recently is
sued by James F. Byrnes. economic
sterilization director.
If he lives in a State that has an
income tax, he will thus have some
thing left over to pay part of his
State income tax bill, Treasury eX-
perts explain.
Thirty-five States now have in
come taxes The rates vary widely.
If a resident of New York, for ex-
ample. Mr.. x. assuming he has no
income beyond his 1900 salary,
and assuming that he is married
but without dependent children,
would be required to pay about
$500 In some States his pay
ments would be a good deal less.
More than dozen States have
no income taxes. The 1000 sal
airy limitation obviously gives AN
advantage to persons with large
salaries living in those States.
Since Mr.. x, in computing his
Federal tax liability, is permitted
to deduct State and local tax pay
ments, Treasury experts point out
he will indirectly receive substan-
tial relief-about 60 per cent-on
his State income tax For these
deductions reduce CORRESPONDENCE
the amount of his income subject
to Federal taxes.
Under certain conditions Mr.. x
NAV be allowed more than the top
ss7 200 gross salary. The regula-
tions make allowance for pay
ments customarily made to charl-
table. educational and other orga-
nizations." fer life insurance and
for fixed obligations. Where Mr.
x can show that he is unable 10
meet such required payments with
out disposing of assets at sub
stantial financial loss resulting IN
undue hardship" he may be given
an additional allowance which Will
permit him to draw more than the
maximum salary.
Salaries Limit Only.
The $4,000 limit applies only to
cross salaries, whether in the form
of straight salary, bonuses, gifts
commissions, loans, etc. A man
with a salary of $4,000 and an in
come from investments of $4,000
would be subject to Federal taxes
on the basis of an income of $780,
600.
In general, no salary will be per-
mitted in l943 above the gross limit
of SGT 200. If Mr.. x now draws
salary of S150000 he must take steps