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The income, including $3,687,564.41 seigniorage realized by the Treasury from the Mint Service, totaled $4,262,896.32.

Income and expenses are itemized below:

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Proceeds of proof gold and silver formerly on inventory.
Commission on telephone calls.
Proceeds of sale of old material.
Proceeds of sale of by-products...

155. 93 1, 660, 73

1. 37 727. 27 14, 951. 20

575, 331.91

Seigniorage on subsidiary silver coinage...
Seigniorage on minor coinage-nickel..
Seigniorage on minor coinage-bronze...

$1, 862, 088. 97
1,409, 332. 91

416, 142. 53

3, 687,564.41

Total......

4, 262, 896.32

EXPENSES.

$273, 859. 21
618, 320. 64

Salaries of officers and clerks......
Wages of workmen...
Contingent expenses (including equipment), less amounts to reimburse

wastage and loss on sale of sweeps.
Wastage of operative departments (gold and silver)..
Loss on operative sweeps sold..
Freight on bullion and coin shipments between mints and assay offices..

230, 789.99

2, 758.38 3, 955.02 19,693. 68

1, 149, 376.92

1, 072. 35 6, 481.55

Wastage of operative departments (minor metal)'...
Expense of distributing minor coin".

Total....
Net income of the Government from the Mint Service..

1, 156, 930.82 3, 105, 965.50

4, 262, 896. 32 Deposits, income, expenses, and employees, by institutions. The number and value of deposits, the income (including seigniorage), and the expenses of the fiscal year 1915, and the number of employees on June 30, 1915, at each institution are given below:

Institution.

Number of

Value of gold

and
De Rede- silver deposits.
posits. posits.

Income.

Freight

on Expenses.: bullion

and coin.

Employees, June

30, 1915.

323
118
95
89

Philadelphia....

6,132

164 $8,975, 731.69 $1,978, 212. 61 $462, 452.66 $4, 865. 75 San Francisco.

15, 254 130 73,581,378.66 769, 415. 75 205, 650.76 Denver.

6,496 | 1,271 | 24, 256, 142.00 1,317,014. 53 175, 587.06 New York,

14, 449

673 62,531,527. 42 176, 315.66 190, 815.94 Nex Orleans.

407

506,833.29 1,984. 12 12.837. 86 715. 85 Carson City

634

237,317.68 1, 831. 11 7,588.91 397,98 Boise

870
916. 502,90

6,363, 55
8,191.72

997. 41 Helena.

555

649, 097. 56 2,918.90 8. 491.09 630.16 Deadwood.

107

738, 037.93 1,927.83 6, 796.32 315.00 Seattle.

2,260 28 8,840.215.21 5,956.01 45, 131.08 11,615.51 Salt Lake City.

167
49, 510.02

979. 62 5,210.01 56. 02 Total.

47,331 2,266 181, 282, 324.36 4,262, 922.69 1,128, 756. 44 19,693. 68 "Payable from the seigniorage on minor coinage. Includes freight on bulljon.

5 5 19 3

676

INTERNAL REVENUE.

The receipts from internal-revenue taxes for the fiscal year 1915, as shown by collectors' reports, were as follows: Ordinary collections...

$335, 479, 265.00 Income-tax collections.

80, 201, 758. 86

Total...

415, 681, 023. 86 Net increase over 1914..

35, 672, 129.90 The total ordinary receipts, including the emergency revenue act of October 22, 1914, show a net increase of $26,851,645.78 for the year. The emergency revenue, which under provisions of the act was for fractional parts only of the fiscal year 1915, aggregated $52,069,126.29.

The ordinary receipts for the fiscal year 1915, exclusive of said revenue, as compared with receipts for fiscal year 1914, show decrease in collections from the following principal sources: Distilled spirits...

$16, 924, 163. 47 Tobacco...

2,515, 882. 50 Fermented liquors..

6, 466, 245. 61

Total......

25, 906, 291. 58 The net decrease in this comparison was $25,217,480.51 for the year.

The income tax receipts from corporations aggregated $39,144,531.71, as compared with $43,127,739.89 collected during the year 1914 under tho corporation excise act of August 5, 1909, and the income-tax act of October 3, 1913.

During the month of July, 1915, $3,506,981.06 was collected from corporations upon assessments made during the fiscal year just closed. This amount, while payable last fiscal year, will of necessity be included in the returns for the fiscal year 1916.

The income tax receipts from individuals aggregated $41,046,162.09, or $12,792,627.24 in excess of the amount collected during the preceding year. It should be noted, however, that the tax from india viduals collected during the fiscal year 1914 was computed under provisions of the act on net incomes accruing for 10 months only of the calendar year 1913.

The total expenditures of the internal revenue for the fiscal year 1915 were $6,804,688.77. This included expenditures from the appropriation “Collecting the income tax," but did not include payments from the appropriation “Refunding internal-revenue collections,” amounting to $82,526.61, as they were in no sense an expense.

The cost of collecting $1 of internal revenue was $0.0164.

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Includes $2,307,301.97

from wines, champagne, liqueurs, cordials, etc., and $138,383.58 from grape brandy used in fortification of sweet wines. (Act of Oct. 22, 1914.) Includes $193,302.08 from sale of internal-revenue stamps affixed to Philippine products (act of Aug. 5, 1909) and $2,486,616.36 from special taxes relating to manufacture and sale of cigars, cigarettes, and tobacco (act of Oct. 22, 1914). * Includes $18,713,679.88 from the additional tax (50 cents per barrel) on fermented liquors (act Oct. 22, 1914).

*Includes $673,847.54 from playing cards; $2,068.77 from opium manufactured for smoking purposes;
$248,405.97 from manufacturers, importers, or distributers of opium, etc. (act of Dec. 17, 1914); $1,960
from Cotton Futures Act, approved Aug. 18, 1914; $400,608.13 from accepted offers in compromise, unas-
sessed penalties, interest, etc.

Includes $10,671,077.22 from corporation excise tax.
Includes $11,065.06, an income tax on railroads in Alaska (act approved July 18, 1914).

Production of spirituous and malt liquors. The production of distilled spirits, exclusive of fruit brandies, was 132,134,152.2 taxable gallons, against 174,611,645 gallons in 1914, a decrease of 42,477,492.8 gallons.

The production of fruit brandies was 8,521,951 taxable gallons, against 7,307,897.2 gallons in 1914, an increase of 1,214,053.8 gallons, During the fiscal year 1915, 635 distilleries of all kinds were operated, a decrease of 108 as compared with the preceding year.

The production of fermented liquors was 59,808,210 barrels, a decrease of 6,381,263 barrels. There were removed from breweries for export free of tax 61,509 barrels, as against 84,028 barrels during the fiscal year 1914.

Income tax.

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The administration of the income tax law for the fiscal year ended June 30, 1915, has been attended with considerable improvement in the amount of tax collected and a better understanding of the provisions of the law.

The income tax from corporations fell off very materially, and this was expected. The curtailment of the operations of American corporations in Mexico and in a large portion of Europe has affected the earnings of many corporations, and this in turn reduced the amount of taxable net income reported by corporations so affected.

The amount assessed for the year ended June 30, 1914, was $45,851,029.31, and the amount assessed for the year ended June 30, 1915, $39,984,000.45. The collections for these years were $43,127,739.89 and $39,144,531.71, respectively.

With respect to individuals, the increase of the tax has been gratifying. The assessment upon individuals for the fiscal year ended June 30, 1914, was $31,344,539.66, and for the fiscal year ended June 30, 1915, $44,719,720.09, an increase of $13,375,180.43, or nearly 40 per cent. This increase has been made regardless of the reduced earnings of corporations, which caused in many cases the reduction of the rate of dividends paid or the passing of dividends, which no doubt had some effect upon the individual tax. The increase may in part be accounted for by the fact that January is one of the heaviest interest-paying periods of the year and that the interest payments for January and February, 1913, were not included in the 1913 returns, but the interest payments for these months in 1914 were included in the returns for the calendar year 1914.

The addition to the tax, therefore, was proportionally greater from this source than these two months bear in proportion to the balance

of the year.

The additional efficiency of the clerical force in the office of the Commissioner of Internal Revenue and in the offices of the collectors of internal revenue and the revenue agents' offices, together with a better understanding of the requirements of the law, have also apparently had a beneficial effect on the amount of tax collected. It is believed that much tax still remains to be collected, which can only be collected through the field agencies, and with the increased elliciency of the agency force and the constant improvement in methods being instituted it is believed that the collections from the income tax will be materially increased from year to year.

The Commissioner of Internal Revenue has instituted special measures to insure the employment of only properly qualified persons on this work, and these measures will necessarily require the separation from the service of those not fitted by education, experience, and natural qualifications to perform the task required of investigators.

It is believed that the hearty cooperation of Members of Congress will be given the Commissioner of Internal Revenue in his efforts to secure a highly specialized force on this work, as such action will result not only in the increase of the tax but will insure to the taxpayer, whether corporation or individual, an intelligent consideration of the many mooted questions which arise in the administration of this law.

The amount of additional tax reported by agents and inspectors for the fiscal year ended June 30, 1915, was $3,684,695.71, which is more than twice the total cost of the collection of the income tax. Each additional properly qualified agent practically guarantees the recovery of taxes many times in excess of the cost of his services.

In this connection attention is also called to the fact that the large increase in the investigating force has resulted in an increase in the work of the Bureau of Internal Revenue. The number of reports has increased more than tenfold, and this of course means à tenfold increase in the number of clerks who are in charge of the examination

of these reports and the assessment of the tax in connection therewith, and estimates will be made for additional clerks to take care of this work.

I have heretofore suggested various amendments which would clear up ambiguities in the income tax act and contribute to the more effective administration of the law. It is believed that Congress may with profit give attention to the amendment of the income tax law during its coming session, and I desire to again direct particular attention to the necessity for changing that part of the law which requires each person having a net income of $3,000 or over for the taxable year to make return so as to require each person having a gross income of $3,000 or more for the taxable year to make a return.

The Bureau of Internal Revenue is now able to audit the returns made, but where the individual is the sole judge of the kind and extent of the deductions from gross income which he may claim in the ascertainment of net income, and by being sufficiently liberal with himself reduces his net income below the amount upon which a return of annual net income is based, the bureau is helpless to either correct mistakes or detect frauds except through the expensive and laborious method of sending agents to make investigations. Where the duty is laid by law upon the individual to make a return based upon gross income, the result should be an increase of many thousands of returns, and a considerable addition to the tax. It would take some additional force to examine and audit these additional thousands of returns in the office of the Commissioner of Internal Revenue, but it is believed that the resultant gain in the tax will more than justify the change in the law.

It is also believed that the provision of the law that no return need be made by the individual where his total tax is withheld at the source should be changed to require a personal return from each individual who has an income in excess of $3,000, regardless of the fact that the total amount of tax due may have been withheld at the source. It is believed that considerable tax is lost through this provision of the law, as no statement under oath is required of the person who rests content with the general statement that his tax was collected at the source.

It is further believed that partnerships should make returns of annual net income and should be taxed on the same basis as corporations, and that the individual members of the partnership should be relieved of paying the normal tax on their distributive share of the profits of the partnership in all cases where the partnership has paid the normal tax on its net income.

There have been several instances of persons taking the position that the Commissioner of Internal Revenue has no authority to make examinations through his revenue agents for the purpose of verifying any returns of annual net income or to make examination to ascertain whiether any person is liable to make return where a return has not been made.

The income-tax law should, therefore, be amended so as to confer direct authority upon the Commissioner of Internal Revenue to make the necessary examination to ascertain the correctness of any return of annual net income filed, or to make proper inquiry in cases where

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