Show Heres Here's How Much War Tax You'll u Have e to Pay Pay How How to Calculate Your Excess Profits and Income 1 1 By fly Basil DasH M. M Manly With the passage e of tho the war revenue rev rev- revenue bill WIL ev every ry American man woman woman wom worn an au and child li becomes comos a federal taxpayer 1 You cannot buy any article that has been freighted by rail or water you cannot rido on a train send a ram visit a theatre or ball park buy a bottle of patent medicine a u. baseball bat or any other oUter kind of sporting goods a a. tube of tooth paste 0 or any other toilet article own an automobile a motorcycle or a motor motor- motorboat motorboat boat draw a time draft buy a a. bona bond bondor or share of stock or send In a proxy for an election without paying tribute to your Uncle Samuel I Moreover through h the Income and excess profits taxes not less than V Americans who have lave never never nev nev- er er known what It is 8 to take money out of their pockets and pay it over V. V directly to Uncle Sams Sam's collectors will i now have to learn to make out their tl tax returns and master all the Intricacies V J melee of gross and net Inome Inome in income In- In ome come capital Invested depreciation a i Tl Tim Tho e Income fax tax now reaches down V and takes Its levy married man or woman with an income over 2000 1000 and the war profits tax reaches corporation with Ith ever every a anet net income over and every L partnership and individual operating a b business which yields more than I net iet Income during year Every Everyone one of these new taxpayers ought to learn as soon a as how to figure their taxes so that they can now plan for tor the readjustments readjustments read read- In their business and pers per's per- per s 's Bonal nal affairs which these relatively h heavy y federal taxes will necessitate In order to enable them to m make ke V these theae thase calculations without calling In Ina V. V a a. lawyer or wading through the In Intricacies In- In trica les of the page revenue V bill the tho following simple analysis of war profits and Income taxes h has s been prepared with the assistance 1 of at Washington's leading tax experts S a a a a aV V V V TIm TILE INCOME IE T TAX l 0 a a a a a a a a a Who Must Pay Every Evey unmarried unmarried ried man woman or child with a net net Income from Crom wages profits Interest rent or any oth other r source exceeding 1000 for the calendar year 1917 and every married person with a net V Income exceeding 2000 V Returns Must 1 bo be 0 Made under oath J V on fl or before March 1 1 1918 by every person with an Income exceeding th the j amounts named above even If It thero there 0 Is no tax due under penalty of 20 O Oto Oto to 1000 for Cor failure How t to to Calculate net act Income Net V income upon which the tax l Is levied is calculated by taking the thi total l amount of mane money received by the the l during the year from alt all sources and deducting from toni that amount the following Items Necessary expenses actually paid iu on any business or trade but not Including personal living or family expenses All All' Interest paid thin the I year on Indebtedness e ex except except ex- ex ept interest on loans made for tor the i. i purchase of at tax exempt securities All taxes local state and federal I. I except jt t income and war profits taxes J Losses actually sustained during the year in business or trade or from fires storms theft etc Reasonable allowance for wear I I and nd tear of at property employed In iu business Contributions for Cor religious charitable scientific or educational purposes to an amount not In excess V V of or J 15 6 per cent of the tho net netS Income without the benefit of this paragraph Exemption V V Unmarried persons have exempt 1000 from tram Income tax married persons have 2000 exempt and In addition exempt for each dependent child under 18 years of of age V V V Tax Kates The taxes tare levied upon Incomes are a composite result of four separate sets of or taxes the norV normal nor normal V mal tax rates In the old revenue V V bill bilt and the new and the s 1 r VV rates in the old bill hilt and the new For eran under the old law there was wasa a normal tax of 2 per cent on all In Income Income income In- In come of unmarried persons over I V the new bill adds a new V normal tax of 2 per cent and lowers the exemption to 1000 under the theold theold theold old bill started with 20 and these thee will stand but hut there have havo been heen added new super super super-I I taxes beginning with The re result re- re sult confusing 4 4 V In Border to bring all the existing f Crates Into hito Ito simple form torm I have com com- them In each separate class of bf f Income the total tax rate that willbe will willbe b be levied upon It The method of using the table can best hest be explained I I by a simple example If It you are arc married with no chil dren and have an Income of you will pay no tax on Oft 2000 which I I I is exempt under tinder the law V On the I 2000 falling alUn Into the tax grou group I j 2000 you rou will pa pay 2 per cent I or 40 on the 1000 falling failing In the the group you will pa pay 4 I per lOr cent or 40 on the 1000 falling in the tho tax group you I I will pay 5 p per r cent or 50 making a total income tax of ot I I If you have two children under 18 years you ou have an nn exemption of I for each so that you would pay no tax on 2400 2 per cent on 1600 I between your 2400 exemption and 4 per cent on 1000 between and 5 per cent on 1000 between and making a total tax of or Combined nor normal ial and and I rates under old and new bills bUls Note Rates Rates ates shown apply to amount of Income tailing falling within each tax group I and not to the Income as a whole whole I Tax group Tax rate Unmarried Unmarried- V 0 o to V 1000 I 1000 2 4 Married Married- V 1 0 o to 2000 0 V V 4 Married and f I V Unmarried Unmarried- V to 5 V 6 61 I 7 8 3 9 OOOO 12 OOOO 16 1 21 80 26 V 1 29 20 25 41 V 46 50 V 54 5 59 65 V V V 66 and alid OT over V 67 S S S S S a a a S a a EXCESS PROFITS TA TAX TAXa a a S S I a a a a a a aThe The he excess excess profits tax will impress everyone who has to make a return under it as an an example of ot barbaric frightfulness It Is unlike any t tax ever ever imposed in any civilized country By Dy next March all American asylums will be full of people who lost their minds trying to calculate what U they the owed Uncle Sam under this terrible tax Lawsuits to determine Its eaton caton will still be going when our are dead and burled buried Who must pay Every corporation with a net income exceeding and every partnership or Individual with a net Income derived from tram the opera ton of any kind of ot business which exceeds for or the present year is liable to pay a tax on the I amount of ot Its excess pr profits fits This Includes everybody that buys burs or sells anything all kinds of or agents and commission me including commercial commercial commercial commer commer- cial travelers traveler's unless they are on a fixed salary without commissions It also includes all kinds of at professions It hits hits farmers doctors lawyers storekeepers authors real roal estate men contractors and in fact tact everybody every- every l body ody that works who Is not on a fixed wage or salary and has an in income income income in- in come big enough to come within the scope of th the law What are excess profits Excess I profits as now defined bear practically practical practical- ly no relation to the amount earned before the war It If If you yon want a rough Idea of the excess profits o of at your business busi bust ness take the amount by which Ita Its net income for 1917 exceeds exceeds 8 g p percent per percent r cent on the capital Invested and anti subtract subtract subtract sub sub- tract from this If fr you are arc operating operating oper oper- oper-I oper a partners partnership lp or individual bus bus' incas iness and If you are organized as asa a corporation For example sup- sup l lose Ise ose your capital Is and your net Income Is Eight per cent Is to which you add for a corporation and for foran an or partnership le leavIng leaving leav leav- ing lug the excess profits for fora a corporation a and d for tor an individual indi- indi vidual or partnership business If you want to know exactly you will have to do some real figuring I Heres Here's how you go al about out It i First determine the net Income of or your you business for each of the tho ye years rs 19 1911 i 1912 and 1913 by hy subtracting from the gross amount of business done In each of at these years the proper prop prop- prop 1 er deductions for tor expenses interest I taxes and depreciation substantially i as described for Inco Income e taxes except I that you cannot deduct gifts and charitable donations Average these those and see what percentage they are of the actual capital Invested In the L I business during the same three years cars I i lit If it they average less than 7 per cent you will be lie allowed the full ull 7 per percent cent cont but If It they average more than 9 per cent you will be allowed only 9 per ent cent Only It If they tall fall between I 7 and 9 per cent do you take the acI actual actual ac ac- ac- ac average For example with I of at actual capital If It the aw av era go net Income is that would I stand stanl as 82 l per er cent but If It the average average average av av- av- av was only you ou would be allowed 7 per ver cent while If It the average aver- aver average lage age age was you would be allowed al al- allowed allowed lowed only 9 per cent So you will see that while you have to go through all this rigmarole In making your return return return re re- re- re turn for all practical purposes you might as well take an average of 8 per cent and let It go at that After Arter you OU have hare got this prewar rate of profit determined you apply that percentage to your present capital capital capital capi capi- tal add to It for Individual or partnership business and for a corporation and subtract the result from your our net income for tor the year 1917 This gives you the amount of your excess profits on all which you will willbe willbe be taxed For professions and all' all kinds of businesses ses and trades in ill which only a nominal capital Is employed It Is obvious oh that this plan ilan cannot apply So tI life e act provides that the they shall pay a flat rate of 8 per cent on all the amount by which the net Income exceeds exceeds ex ex- if they are organized as corporations corpor and Jf It t they ey are run b by partnerships or individuals als What is capital It be seen that the application of or this tax depends depends depends de de- de- de absolutely on the of the word capital That is what the conferees from tram the house and senate have havo been wrangling over for two weeks and the more they wrangled the the worse it got Actual capital invested as It stands In the tiie hill bill has no relation whatever to the amount of stock outstanding nor does It Include bonded Indebtedness Indebted indebted- nd ness or borrowed money or property It must must be 10 determined for each business business busi busl ness ness I and nd for tor each year by adding the th foll following items Actual cash paid in the actual cash value of other V property paid ald in to secure shares In lu Inthe inthe luthe the business and the surplus or undivided undivided undivided vided profits actually employed In the business Patents good will wUl and f franchises franchises fran fran- n. n ar are to be he allowed only the cash value of the stock or other property exchanged for them In the case of all Intangibles not to exceed 20 p pr r cent of the stock now outstanding How to calculate the amount of excess ex tx ceSS cess case profits tax After Arter you have determined de de- ed the amount of excess profIts profIts profits prof- prof Its as described above you are ready to figure the amount of tax you will wilt have to pay First find out what percent per percent percent cent these excess profits are are of the actual l capital to for th the pres present nt year Then Thea apply the following g fl rate teS On the amo amount amount- V V Less than 15 16 per er cent of capital you pay 20 per cent V Fifteen een to 20 20 per cent of capital you pay 25 per cent Twenty to 25 per ce cent t of ot of capital I you pay 35 per cent Twenty Twenty- Twenty five ve to to 33 33 p pr r r c cent rt c you pu f pay 4 5 per percent cent I More than 33 per cent of f capital capita I you ou pay 60 per cent To Illustrate Suppose illustrate Suppose our excess profits on capital are are 37 31 or 37 per cent On the amount amount- V V Under you will pay 20 percent percent per percent cent or V to you will pay 25 per cent or 1250 to you will pay V 35 per cent or 1750 1760 to you will pay 45 per cent or I More than you will wUl pay 60 per cent or 2400 Making the total tax a a a a a S S a a a OTHER TAXES V Va a a a a a a a a a I S This do does s not however l begin to tu cover the multitude o of taxes Imposed by the new revenue bill In Iu the first place there Is an additional add addi 4 per cent corporation ta taxi ta I which must be paid by every corporation corporation corpor corpor- upon the amount of its net In In- In come Then Thea there are Internal reven revenue e taxes of and a gallon n or on distilled spirits 15 a r oar ol pl on or beer 5 to 20 cents cents cents' a gallon on syrups for tor soft drinks 1 cent cent a s gallon on on Juice soft tt drinks near beer grape ral e eto V V Cigars are taxed from tram 25 Cents toI to 7 per 1000 1009 depending o on with a tax of 1 V per 1000 loon on the I cent 5 variety Cl Cigarettes are taxed S 8 to 12 cent centi cents j per er Then there are the transportation taxes 3 per cent on all freight bills 1 cent on each 20 cents of express s bills 8 per cent on p passenger passenger tickets I and 10 per cent cent on Pullman car charges and 5 cents on each telegraph tele telegraph telegraph graph or telephone message costing over 15 cents On all Jewelry autos motorcycles piano plana players phonographs ani and records records records rec rec- In future 3 per cent of or the sale salo price New life Insurance policies pay payS I 8 S cents for every 1000 of face value or f If it under 40 per cent of first weekly premium and all other new Insurance policies 1 cent for each dollar of the annual premium After Arter November 2 the postal rate on all letters except drop letters will wUl willbe willlie be lie 3 cents an ounce and there will wUl be bean bean benn an nn e extra tra charge of at 1 cent for each 25 cents charged on all parcel post pack pac ages Ther Thero are a n new set et of taxes L' on on-es- on es estates tates over 10 per percent percent percent cent on Yachts pay 50 60 cents to 2 per linear foot and motorboats 5 each Sporting goods and cameras pay 3 per cent toilet articles patent I medicines and chewing gum pay ay 2 per cent of the wholesale price I Tickets Tickets of ot admission to all kinds I of amusements pay 1 cent for tor each 10 10 cents of the price Taxes do not ap- ap ily Iy to movies ovles where charge is 5 cents cente or r l less s or to other cent 10 shows And to wind up there are are area a host of stamp Stanl taxes on all alt kinds of or documents documents docu docu- ments the mere enumeration of ot which would occupy a column I |