Word: surtaxable
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...outstanding feature of the high surtax is their marked tendency to become unproductive. The high rates are defeating their purpose. Statistics of income for the years 1916-1920 prove this in the clearest fashion. There has been a remarkable decline in the larger taxable incomes, while taxable incomes generally have been increasing. The following statistics show this for taxable incomes in excess of $300,000 a year: Number of Returns Year All classes Incomes over...
...while in incomes over $300,000 investment income shrank from $706,945,738 in 1916 to $229,052,039 in 1920. While the number of returns and the total income reported for all classes, has steadily increased from year to year, there has, since the adoption of the higher surtax rates in 1917, been a very marked decrease in the number of returns, the total net income reported, and reported income from dividends and interest-bearing investments for taxpayers reporting net incomes in excess of $300,000. Obviously these figures show not a reduction in the number of individuals...
...tendency to become unproductive of revenue, is not confined to the very highest surtax rates. The tendency is characteristic of all the surtax classes where the rate is high enough to induce evasion of the burden by investment in tax-exempt securities and availing of other methods of avoiding payment of the higher rates. The following table, which, while not official, is compiled from the official Statistics of Income published by the Bureau of Internal Revenue, shows clearly the dwindling of taxable incomes of $100,000 a year or more, and the tax derived from them. *Percent *Percent *Percent...
...apparent from this table that the surtaxes on taxable net incomes in excess of $100,000, while constituting between a quarter and a third of the total taxable net income in 1916 and yielding almost three-fourths of the total income tax paid by persons having taxable net incomes in excess of $3,000 in that year, in 1920 constituted little more than one-twentieth of the total net income and yielded less than one-third of the total tax: and this in spite of an increase, up to 1918, in the rate of surtax imposed...
...wholly tax-exempt securities. Of these about $8,500,000,000 are state, county, and municipal bonds. It is estimated that state and municipal securities are now being issued at the rate of one billion dollars a year. Here is a ready refuge from surtaxes. A taxpayer in the highest surtax class can now invest in a tax-exempt state or municipal bond paying 5 per cent interest and obtain the same net return as from a surtaxable stock paying dividends of 10 per cent. The average commercial bond, which is subject to normal tax as well as surtax, must...