THE TAXES YOU WILL PAY
Manly, Basil M.
The Taxes You Will Pay Detailed Explanation as to How Provisions of the Revenue Bill Are Applied; Letters, Passenger Tickets, Freight Bills, Telegrams and Sporting Goods to Pay By BASIL M....
...In the first place there Is an additional 4 per cent "corporation tax," which must be paid by every corporation upon the amount of its net income...
...Cigarettes are taxed 8 to 12 cents per hundred...
...Every time you pay a freight bill, eight per cent, will be added ? Every time you send a telegram, or talk over the long distance telephone, the service company will collect a nickel from you for Uncle Sam...
...under the old bill supertaxes started with $20,000, and these supertaxes still stand, but there have been added new supertaxes beginning with $5,000...
...Yon cannot buy any article that has been freighted by rail or water, you cannot ride on a train, send a telegram, visit a theater or ball park, buy a bottle of patent medicine, a baseball bat or any other kind of sporting goods, a tube of tooth paste or any other toilet article, own an automobile, a motorcycle or a motorboat, draw a time draft, buy a bond or share of stock, or send in a proxy for an election, without paying tribute to your Uncle Samuel...
...Actual capital Invested as it stands in the bill has no relation whatever to the amount of slock outstanding, nor does it include bonded indebtedness or borrowed money or property, it must be determined for each business and for each year by adding the following items: Actual cash paid in, the actual cash value of other property paid in to secure shares in the business, and the surplus or undivided profits actually employed in the business...
...D0 YOU KNOW the provisions of the new revenue bill...
...The income tax now reaches down and takes its levy from every married man or woman with an Income over $2,000, and every unmarried man or woman with an income over $1,000, and the war profits tax leaches every corporation with a net income over $3.000, and every partnership and individual operating a business which yields more than $6,000 net income during this year...
...Then there are internal revenue taxes of $1.10 and $2.10 a gallon on distilled spirits, $1.50 a barrel on beer, 5 to 20 cents a gallon on sirups for soft drinks, 1 cent a gallon on grape juice, soft drinks, "near beer," etc...
...Every time you buy jewelry, tobacco, seats or berths in Pullman cars, cameras, chewing gum, perfumes, playing cards, or a score of other things specially named in the revenue bill, you will either pay a direct tax, or pay it indirectly by having the manufacturer, who is charged in I lie first instance, increase the price...
...If you want to know exactly, you will have to do some REAL figuring...
...COMBINED NORMAL AND SUPERTAX RATES UNDER OLD AND NEW BILLS.—Note...
...Average these and see what percentage they are of the actual capital invested in the business during the same three years...
...Letters, Passenger Tickets, Freight Bills, Telegrams and Sporting Goods to Pay By BASIL M. MANLY WITH the passage of the war revenue bill every American, man, woman, and child, becomes a federal taxpayer...
...On all jewelry, autos, motorcycles, piano-players phonographs and records in future 3 per cent of the sale price...
...New life insurance policies pay 8 cents for every hundred dollars of face value or if under $500 40 per cent of first weekly premium, and all other new insurance policies 1 cent for each dollar of the annual premium...
...After 30 days the postal rate on all letters, except drop letters will be 3 cents an ounce and there will be an extra charge of 1 cent for each 25 cents charged on parcel post packages...
...If you have two children under 18 years, you have an exemption of $200 for each, so that you would pay no tax on $2,400...
...Excess profits as now defined bear practically no relation to the amount earned before the war...
...are a composite result of four separate sets of taxes, the "normal" tax rates in the old revenue bill and the new, and the "supertax" rates in the old bill and the new...
...Tax Rate...
...45 per cent More than 33 per cent of capital you pay...
...EXEMPTIONS...
...That is what the conferees from the house and senate have been wrangling over for two weeks, and the more they wrangled, the worse it got...
...25 per cent 20 to 25 per cent of capital you pay...
...on the $1,000 falling in the tax group $4,000-$5,000, you will pay 4 per cent, or $40...
...5 per cent on $1,000 between $5,000 and $6,000, making a total tax of $122...
...By next March all American asylums will be full of people who lost their minds trying to calculate what they owed Uncle Sam under this terrible tax...
...It is unlike any tax ever imposed in any civilized country...
...RETURNS MUST BE MADE under oath on or before March 3, 3 918, by every person with an income exceeding the amounts named above, even if there is no tax due, under penalty of $20...
...Unmarried persons have $1,000 exempt from income tax...
...After you have determined the amount of excess profits, as described above, you are ready to figure the amount of tax you will have to pay...
...This includes everybody that buys or sells anything, all kinds of agents and commission men, Including commercial travelers, unless they are on a fixed salary without commissions...
...The taxes levied upon incomes DO YOU KNOW...
...Sporting goods= and cameras pry 3 per cent, toilet articles, patent medicines and chewing gum pay 2 ber cent of the wholesale price...
...All interest paid within the year on indebtedness, except interest on loans made for the purchase of tax exempt securities...
...Moreover, through the income and excess profits taxes, not less than five million Americana who Lave never known what it is to take money out of their pockets and pay it over directly to Uncle Sam's collectors will now have to learn to make out their tax returns and master all the intricacies of calculating gross and net income, capitai invested, depreciation, and exemptions...
...Tobacco pays 5 cents a pound and cigarette papers 1 cent a hundred...
...All taxes, local, state and federal, except income and war profits taxes...
...Reasonable allowance for wear and tear of property employed in business...
...The result is very confusing...
...Do you know that— Every time you mail a letter or postal card, you will very shortly be called on to pay one cent additional to help pay the expense of the war...
...WHAT IS CAPITAL...
...Patents, good will and franchises are to be allowed only the cash value of the stock or other property exchanged for them, in the case of all intangibles not to exceed 20 per cent of the stock now outstanding...
...So you will see that while you have to go through all this rigmarole in making your return, for all practical purposes you might as well take an average of 8 per cent and let it go at that...
...on the $1,000 falling in the tax group $5,000-$6,O00, you will pay 5 per cent, or $50...
...Then apply the following rates: On th« amount— I/ess than 15 per rent of capital yon pay...
...Tax Group...
...TAX BATES...
...Losses actually sustained during the year In business or trade or from fires, storms, theft, etc...
...After you have got this pre-war rate of profit determined, you apply that percentage to your present capital, add $6,000 to it for individual or partnership business and $3,000 for a corporation, and subtract the result from your net income for the year 1917...
...Debts ascertained to be worthless and actually charged off...
...Cigars are taxed from 25 cents to $7 per 1,000, depending on quality, with a tax of $1 per 1,000 on the five-cent variety...
...It is obvious that this plan cannot apply...
...to $1,000 for failure...
...UNMARRIED— 0 to $1,000 0 $ 1,000 3,000 2 4 3,000 5,000 MARRIED— 0 to $ 2,000 0 $2,000 4,000 2 4,000 5,000 4 MARRIED AND UNMARRIED— $5,000 to 7,500 10,000 12,500 15,000 20,000 40,000 00,000 80,000 100,000 150,000 200,000 250,000 aoo.ooo 500,000 750,000 1,000,000 1,500,000 2,000,000 and over EXCESS PROFITS TAX The excess profits tax will impress everyone who has to make a return under it as an example of barbaric frightfulness...
...Then there are the transportation taxes, 3 per cent on all freight bills, 1 cent on each 20 cents of express bills, 8 per cent on passenger tickets and l0 per cent on Pullman car charges, and 5 cents on each telegraph or telephone message costing over 15 cents...
...35 per cent 25 'o 33 per cent of capital you pay...
...In order to enable them to make these calculations without calling in a lawyer or wading through the intricacies of the 130 page revenue bill, the following simple analysis of the war profits and income taxes has been prepared, with the assistance of Washington's leading tax experts: THE INCOME TAX WHO MUST PAY...
...For example, suppose your capital is $100,000 and your net income is $20,-000...
...WHO MUST PAY...
...HOW TO CALCULATE THE AMOUNT OF EXCESS PROFITS TAX...
...FOR PROFESSIONS and all kinds of businesses and trades in which only a nominal capital Is employed...
...It will be seen that the application of this tax depends absolutely on the definition of the word capital...
...making a total income tax of $130...
...The method of using the table can best be explained by a simple example...
...It also includes all kinds of professions...
...the new bill adds a new normal tax of 2 per cent and lowers the exemption to $1,000...
...So the act provides that they shall pay a flat rate of 8 per cent on the amount by which the net income exceeds $3,000 if they are organized as corporations and $G,000 if they are run by partnerships or individuals...
...If you arc married, with no children, and have an income of 86,000, you will pay no tax on $2,000, which is exempt under the law...
...Only if they fall between 7 and 9 per cent do you take the actual average...
...In order to bring all the existing rates into simple form, I have combined them in a single table which shows for each separate class of income, the total tax rate that will be levied upon it...
...Here's how you go about it: First determine the net income of your business for each of the years 1911, 1912 and 1913, by subtracting from the gross amount of business done in each of these years the proper deductions for expenses, interest, taxes and depreciation, substantially as described for income taxes, except that you cannot deduct gifts and charitable donations...
...Tickets of admission to all kinds of amusements pay 1 cent for each ten cents of the price...
...Rates shown apply to amount of income falling within each tax group and not to the income as a whole...
...Eight per cent is $8,000, to which you add $3,-000 for a corporation and $6,000 for an individual or partnership, leaving the excess profits $9,000 for a corporation and $6,000 for an individual or partnership business...
...On the amount— Under $l5,ono you wi'l pay..................20 per cent, or $3000 $15,000 to $20,0.00 you will pay..............25 per rent, or 1250 $20,000 to $25,000 you will pay..............35 per cent, or 1750 K25.000 to $33.0000 you w 11 pay..............45 per cent, or 3600 More than $33,000 you will pay..............00 per cent, or 24(H) Making the total tax...................................$12,000 * * * OTHER TAXES This does not, however, begin to cover the multitude of taxes imposed by the new revenue bill...
...20 jK*r cent 15 to 20 per cent of capital you pay...
...Yachts pay 50 cents to $2 per linear foot, and motor boats $5 each...
...There are a new set of taxes on estates over $50,-000, reaching 10 per cent on $1,000,000...
...2 per cent on $1,600 between your $2,400 exemption and $4,000...
...This gives you the amount of your excess profits on which you will be taxed...
...And to wind up, there are a host or stamp taxes on all kinds of documents, the mere enumeration of which would occupy an entire column...
...Every time you ride on a railroad passenger train, five per cent, will be added to the present rate to be turned over to the government...
...Every corporation with a net income exceeding $3,000 and every partnership or individual with a net income derived from the operation of any kind of business which exceeds $6,000 for the present year is liable to pay a tax on the amount of its excess profits...
...For example, with $100,000 of actual capital, if the average net income is $8,200, that would stand as 8.2 per cent...
...If you want a rough idea of the excess profits of your business, take the amount by which its net income for 1917 exceeds 8 per cent on the capital invested, and subtract $6,000 from this if you arc operating a partnership or individual business, and $3,000 if you are organized as a corporation...
...Every unmarried man, woman or child with a net income from wages, profits, interest, rent or any other source exceeding $1,000 for the calendar year 1917, and every married person with a net Income exceeding $2,000...
...Taxes do not apply to movies w!.ere charge is 5 cents or less, or to other ten-cent shows...
...First, find out what per cent these excess profits are of the actual capital for the present year...
...but if the average was only $3,500 you would be allowed 7 per cent, while if the average was $50,000 you would be allowed only 9 per cent...
...Everyone of these five million new taxpayers ought to learn as soon as possible how to figure their taxes so that they can now plan for the readjustments in their business and personal affairs which these relatively heavy federal taxes will necessitate...
...HOW TO CALCULATE NET INCOME...
...married persons have $2,-900 exempt and in addition $200 exempt for each dependent child under 18 years of age...
...For example, under the old law there was a normal tax of 2 per cent on all income of unmarried persons over $3,000...
...If they average less than 7 per cent, you will be allowed the full 7 per cent...
...Contributions for religious, charitable, scientific or educational purposes to an amount not in excess of 15 per cent of the net income without the benefit of this paragraph...
...4 per cent on $1,-000 between $4,000 and $5,000...
...Net income, upon which the tax is levied, is calculated by taking the total amount of money received by the individual during the year from all sources and deducting from that amount the following items: Necessary expenses actually paid in carrying on any business or trade, but not including personal, living or family expenses...
...Lawsutts to de termine its application will still be going when our great-grandchildren are dead and buried...
...but if they average more than 9 per cent you will be allowed only 9 per cent...
...WHAT ARE EXCESS PROFITS...
...It hits farmers, doctors, lawyers, storekeepers, authors, real estate men, contractors, and, in fact, everybody that works who is not on a fixed wage or salary and has an income big enough to come within the scope of the law...
...On the $2,000, falling into the tax group $2,000-$4,OOO, you will pay 2 per cent, or $40...
...Every time you send a Parcel Post package, or an express package, you will pay one cent additional for each present charge of 25 cents...
...O0 per cent TO 1IXU8TRATK—Suppose your excess profits on $100,000 capital are $37,000, or 37 per cent...
Vol. 9 • September 1917 • No. 10
