Federal Taxes

Complete Digest of the Revenue
Law enacted by the Congress, Fixing the
Rates for 1918

and Subsequent Years

FOREWORD

This book contains a digest of the New Revenue Act which has just been enacted by the Congress. It is not a copy of the law, but a concise summary of it, with all the rates, information, directions, and the original section numbers, for the tax payer's guidance. The taxes shown are in lieu of those in effect heretofore.

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There are numerous important relief provisions in the new law which should be studied and understood before making the tax return for 1918 particularly those providing for "Net loss" deductions, "Personal Service Corporations," "Preceding year losses, Amortization, of cost on war plants, ships, etc.," "Inventory shrinkage," "Depletion allowance" on mines, oil and gas wells and timber, limitation of the tax on small corporations, and a special method of determining the tax where the ordinary method would be unjust. If these relief provisions are understood and availed of they will prevent much inequality of taxation.

The income, corporation and War Excess Profits taxes apply to the entire calendar year of 1918. The "Credits" under these taxes should be thoroughly understood as the first step in computing the taxes.

Title II

THE NORMAL TAX:

INCOME TAX-INDIVIDUALS

(Sec. 210)

In lieu of the normal taxes imposed by the Revenue Acts of 1916 and 1917, the new law fixes the normal rates upon the net income of every individual as follows:

(a) For the calendar year 1918, 12% of the net income in excess of the credits
allowed in Sec. 216; Provided, that in the case of a citizen or resident, the
rate on the first $4,000 of the excess shall be 6%.

(b) For each calendar year after 1918, 8% of the net income in excess of the
credits; Provided, that in the case of a citizen or resident, the rate on
the first $4,000 of the excess shall be 4%.

Explanation: After determining your net income, turn to Section 216 and ascertain your credits. Suppose you are single and a citizen, with a salary of $5,000 for 1918, and that your only credit is a personal exemption of $1,000; the tax would be:

First $1,000, personal exemption credit............

On $1,000 to $5,000 ($4,000 being the excess over the credit, at 6%) is..
If your taxable net income is $7,500, with a $1000 exemption, figure the
first $5,000 as above, and the remainder, $2500, as follows:

No

tax $240

Another Example of the Normal Tax: A married person, citizen, with two dependents under 18 years; wife has no separate income:

The Surtax:

22,000, at 9%, the tax is.

24,000, at 10%, the tax is.
25,000, at 11%, the tax is.

In addition to the normal tax on above income, the surtax is:

On over $5,000 to $ 6,000, at 1%, the tax is.

On over 6,000 to
On over
8,000 to
On over 10,000 to
On over 12,000 to
On over 14,000 to
On over 16,000 to
On over 18,000 to
On over 20,000 to
On over 22,000 to
On over 24,000 to
Total of normal and surtaxes..

8,000, at 2%, the tax is.
10,000, at 3%, the tax is.
12,000, at 4%, the tax is.
14,000, at 5%, the tax is.
16,000, at 6%, the tax is.
18,000, at 7%, the tax is.
20,000, at 8%, the tax is.

$ 10.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

200.00

110.00

$3672.00

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