Word: tax-exempt
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...came last week: a bloc of Connecticut State 1½, due in 1967, changed hands at a price that will net the buyer 1%. At such a rate, it is more profitable for people in low tax brackets to buy taxable bonds and pay income taxes on their yields. But by people with really big fortunes and tremendous taxes, long-term tax-exempts are still eagerly sought after, tightly held...
...Government bonds. Whatever the reason, this is a good break for private investors: 1) it makes up for the wartime slack in new municipal financing (towns & cities cannot get materials for new construction); 2) it gives them a crack at topflight bonds which have a good yield and are tax-exempt to boot. Result: private investors have already bought enough municipal bonds to knock the floating supply down to about $50,000,000-a mere drop in the market compared with the potential demand...
...normal profits, and even that 5% can be deducted from any excess-profits levy the corporation may have to pay. (The British also withhold at the source the minimum 50% personal income tax, but this is not a tax on business. Stockholders can deduct the full amount from their individual income-tax payments, can even claim a refund if they are tax-exempt...
...good-but what the figures did not point out was that the booming U.S. is now putting a much smaller percentage of its income into life insurance. Explanation: the almost tax-exempt lower-income groups who are the new rich of the war effort are not accustomed to putting their money into life insurance and are hard to interest...
...Treasury also left the present normal corporate income tax unchanged at 24%. Instead, it would convert the present 6% and 7% surtax into a "war surtax" of maybe 31%, aimed at the most profitable corporations. One reason for not raising the normal rate: some outstanding Federal bonds are tax-exempt as to normal tax, not as to surtax. If the normal tax were increased, these bonds might become unduly attractive in comparison with new (wholly taxable) issues to come...