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FOUR THE NEVADA TAX RE' T H E 1942 R E V E N U E A C T T h e U n ite d Staes T reasury’s 1942 tax proposals w ere presented to the H ou se W a y s and M ean s Committee on M a rc h 3, 1942. T h e estimated increased revenue o f $7,610,- 000,000 to be raised by these n ew tax levies slightly ex­ceeds the total receipts o f $7,607,211,852 o f the U n ited States G overnm ent fo r the fiscal year 1941. These n ew taxes, plus additional Social Security taxes o f $2,000,000,- 000 not yet presented to Congress, added to the increases im posed last year, are expected to b rin g in an estimated total revenue o f about $27,000,000,000 fo r the fiscal year 1943. B riefly, here is h o w the proposed additional taxes are to be applied : In d ivid u al income tax.............................— .....$3,200,000,000 C orporation taxes............. -.......... ------ ------- ------- 3,060,000,000 Estate and g ift taxes................ -............ -............ 330,000,000 Excise taxes.......................................... -.............. 1,340,000,000 C lo sin g "lo o p h o le s” * ................. -................ -..... 680,000,000 $8,610,000,000 Less allow ance fo r interrelated effects............ 1,000,000,000 N e t total......................... -— -...... ..*iij^^^-$7,610,000,000 P ro b a b le additional Social Security taxes..... $2,000,000,000 *The closing of loopholes involves the elimination of the exemption of inter-est from state and local government obligations ($200,000,000); changes in the percentage depletion regulations ($80,000,000) / making mandatory joint returns by married couples ($300,000,000) / and some other miscellaneous changes ($100,000,000). T h e proposed n ew rates fo r in dividu al income taxes and corporation taxes, as they com pare w ith present rates, are presented in the fo llo w in g tw o tables: I N D I V I D U A L I N C O M E T A X E S F O R T W O G R O U P S N O W A N D A S P R O P O S E D Net Income 900. 1,000. 1, 100. 1, 200. 1,500. 1,600. 2,000 2,400 2,500 2,700 3,000 4.000 5.000 6.000 8,000 10,000 12,500 15.000 20.000 25,000 50,000 75,000 100,000 Married-—T w o Single Person Dependents:: Personal N o Dependents: Exemption $1500. Persotnal Dependent Credit Exemption $750 $400 Each Present Proposed Present Proposed ........ $3 $8 11 24 21 40 31 56 40 72 69 128 ........ 79 147 117 230 $6 $16 ........ 165 345 12 32 29 64 221 470 58 118 i...... 347 735 154 333 483 1,023 271 587 ........ 649 1,333 397 861 i...... 1,031 1,990 717 1,472 i........ 1,493 2,720 1,117 2,143 i ....... 2,178 3,740 1,728 3,089 »........ 2,994 4,888 2,475 4,167 i....... | 4,929 7,437 4,287 6,629 i_____ 7,224 10,418 6,480 9,472 l 20,882 27,715 19,967 26,537 >....... 36,487 48,055 35,479 46,753 t........ 53,214 69,625 52,160 68,261 l........ 345,654 429,610 344,476 428,215 l_____ 733,139 879,610 731,930 878,215 >...... 3,923,124 4,479,610 3,921,884 4,478,215 C O R P O R A T I O N T A X P L A N U N D E R P R E S E N T L A W A N D U N D E R P R O P O S E D P L A N Item Present Excess profits credit: Law Proposal a. Invested capital m ethod: First $5,000,000 o f invested capital 8 % 8 % O v e r $5,000,000 o f invested capital 7 % 7 % b. Incom e m ethod: Portion o f average earnings in base period, 1936-39............................. 9 5 % 9 5 % c. Specific exem ption................................. !$5000 $5000 Excess profits tax rates: A d ju sted excess profits net incom e: First $20,000............................................ 3 5 % 5 0 % $20,000-$50,000................................. 4 0 % 5 5 % 50,000-$100,000................................. 4 5 % 6 0 % $ 100,000-$250,000............................. 5 0 % 6 5 % $250,000-$500,000.... ........................ 5 5 % 7 0 % O v e r $500,000................................... 6 0 % 7 5 % 3. Incom e t a x : a. N o r m a l t a x : ( 1 ) Corporations w ith net income o f not m ore than $25,000: First $5,000............................... 1 5 % 1 5 % $5,000-$20,000........................... 1 7 % 1 7 % $20,000-$25,000......................... 1 9 % 1 9 % ( 2 ) C orporations w ith net income over $25,000: Flat rate........ 2 4 % 2 4 % b. S u rtax: ( 1 ) Corporations w ith net income o f not m ore than $25,000: First $25,000................................. 6 % 1 6 % ( 2 ) Corporations w ith net income over $25,000: First $25,000................................. 6 % 3 1 % O v e r $25,000............................. 7 % 3 1 % ( a ) R elief p rovision : Corporations w ith current year sur­tax net income less than the average surtax net income fo r the base period years, 1936-1939, are allo w ed a tax credit o f 1 0 % o f the difference, but not to exceed 2 0 % o f surtax net income. T h is provision applies only to corporations w ith net income over $25,000. It is significant that this 1942 tax b ill has fe w provisions fo r n ew taxes. It is prim arily designed to d ig deeper into present revenue sources by increasing the rates on o ld form s o f taxes. O f course, the b ill has not been enacted yet. It w ill p robably be several months after m any changes have been m ade in its present proposals before it is finally adopted. Predictions have been m ade that Congress w ill not enact such heavy increases all in one year and that the final tax b ill w ill call fo r increases o f nearer $5,000,- 000,000 than the origin al $7,610,000,000. It appears that a la rg e part o f the taxpayers affected by the n ew act feel that it is unsound in that it has a paradoxical twist ex­pressed in the phrase "to o little and too much.” T o o little in that it hardly provides the revenue w hich w ill be needed fo r a sound financing o f the w a r and in that it does not contain anti-inflationary form s o f taxation. T o o much in that it hits the o ld taxpayers too hard w ithout explorin g the possibility fo r n ew large revenue produ cin g types o f taxes, namely, the sales tax. W i t h the advice o f taxpayers throughout the country, perhaps Congress can eventually w o rk out an equitable revenue produ cin g measure w hich w ill overcome most o f the objections. H o w ev er, w e can be certain that all possible sources o f revenue w ill eventually be draw n into the picture to the point o f confiscation before w e are finished w ith the present planned w a r effort.