Pike County Democrat, Volume 25, Number 46, Petersburg, Pike County, 29 March 1895 — Page 6

THE INCOME TAX. Bollnga Promulg atod by the Inter* nal Revenue Bureau la Relation to the Maklac of Belonaaof Ibcoom end the Collection of the Tex — Of Interest to Thoee with Tsaxeble Incomes. The New York Herald has inter- • viewed the internal revenue collector «©f that district on the rulings of the department for the collection of income taxes. Among them are the following: “Dividends and interest earned and accrued prior to 1894 should not be included in the income tax return for that year, although the same may not have been paid until January 1, 1894. “The law and regulations do not provide for the naming in the returns of corporations, companies or associations from which dividends are received, and, therefore, such designation by taxpayers can not be insisted upon by collectors. 4‘Executors,administrators and trustees should make returns and pay the tax on all taxable incomes of persons for whom they act, and are not authorized by law to assume that their beneficiaries will return and pay the 'tax. • 4‘Stockholders of corporations cap not under the law deduct from their incomes as business expenses or otherwise assessments paid by them to the corporations to make good a deficiency in the capital stock or reserve fund of •aid corporations. “All rents, interest and profits returned as income for the year 1894 must be exclusively confined to the -earnings and business of the year 1894, from January 1 to December 81, both -days inclusive, in said year. No part of the gains or profits earned in the year 1893 or to be earned in the year 1895 shall be included in the return for 1894, without regard to whether the same has been paid or not. 4 “The language of section 27 of the income tax law, as follows, ‘and a like tax shall be levied, collected and paid annually upon the gains, profits and income from all property owned * * * in the United States by people residing -without the United States,’ is not confined in its meaning to real property, '4kut must be held to mean all property of every character from which income is derived.

has an income independent of the trust estate, the trustee in making returns for such beneficiary is authorized by law to make the reduction of $4,000 allowed as . the specific exemption. There is but ope exemption of 94,000 allowed in such cases from all the property of benefeiary, including that held in trust for nim. THE FAMILY A TAXABLE UNIT. % “The husband or father, as the head and legal representative of the household, can be required to make and render a return for himself, wife and minor children in the aggregate. For t he purposes of this law it must be assumed that in all cases he can ascertain the amount of said income, and, excepting cases where such incomes are controled by a legal trustee or other person duly appointed by court, it must be assumed that he has control of the same. In cases where the wife has a separate taxable income and manages henown business separately, she ia required to make return of her income, and the same should be attached to the return of her husband, in order that but one deduction of 94.000 may be made from the aggregate income of all the ■members of the family. All the _ foregoing instructions would be applicable to cases where husband and wife live separately, unless they were divorced or separated by other operation of law. “Losses occurring by the indorsement •of notes or other negotiable paper or -evidences of indebtedness, when such indorsement can be reasonably con.strued as a business transaction, may •be allowed as deduction from income. All losses actually sustained by sale of stocks, bonds, mortgages, etc., where the same was made as a business transaction, must be allowed as losses incurred in trade, if bought and sold in 1894. “Losses sustained in the sale of real estate during the year 1894 must be - confined to real estate purchased subsequently to December 81, 1892. “Expenses for ordinary repairs, not including amounts expended for betterment and permanent improvement of real estate, must be allowed as a deduction. The deduction for repairs, however, must be confined to necessary repairs; that is, such as are needed for the preservation of property. When said ownership is absolute for a term of years, the cost of improvements, betterments or additions to such property - can not be deducted under the proviasions of the law. CERTAIN OIFTS TWICE TAXED. '•The gift of a person to his grandchild or any other person not a member of his family* is not an allowable deduction in the first instance from the income of the person who gave the same; and is, therefore, subject to taxation in his hands. The person who receives it clearly as a gift, and if such gift, with his income above the taxable limit, he is liable to a tax upon all 'the excess above said limit. . “If the father pays tax upon his income and the income of all the members < f bis family the .amount of his ..gift or allowance to a minor child rshould not escape taxation, whether - computed while In the hands of the father or by him in making return for all members of the family. ^ —^ “In cases where lawyers or physicians or other persons refuse to make their returns in compliance with tne Taw and regulations, or render any re- * turns which are false within the meaning of the law and regulations, collectors should make such returns and add the prescribed penalties thereto. □ “No deduction can be allowed for * r»nt paid for a residence where persons Ure in rented houses. The exemption

of $4,000 is clearly ia'.enied to cover such expenses. “When* husband engaged in. business sustains losses in excess of his income, he can not, for the purpose of evading the income tax, include the separate income of his wife as a part of said losses. When the wife has a separate estate, producing an income above the taxable limit, under her control, she must make a return for the same and of the profits derived therefrom, without regard to the business losses of her husband. NO INTEREST IN TAMILT QUARRELS. “Where a trustee makes return and pays the tax for a wife, making a deduction of $4,000, the husband is not Allowed to make another deduction of $4,000 in making return for himself and family, and should be required to so adjust the returns that one deduction should appear oil the returns of the aggregate income of _ all the members of his family, including that of his wife. The manner in which they may adjust the deduction or amount paid for taxes as between themselves is one in which the government has no interest “Where a trustee distributes a taxable income to beneficiarifes he must make a return for each of said beneficiaries, as the taxable interests appear at the place of his residence,, without regard to the location of the beneficiaries.” From the foregoing opinions it will be seen that every disputed point where the wording has given any occasion for doubt, has been construed favorably to the government Throughout the entire series, for instance, it will be observed that the family is considered as a unit, the incomes of wife and minor children being added to that of the father, and but one deduction of $4,000 allowed from the aggregate sum in estimating the 2 per cent tax. If. the husband in any one year, however, sustains business losses the amount of which would wipe out the tax, the wife’s income must not be included, as otherwise. Her separate estate is allowed one deduction of $4,000, and the tax must be paid on the income above that ampiint.

• ODDITIES OF THE LAW. Again, a wife might have an income from two separate sources, onb in her own name and the other as trustee. But one deduction would be made for this—that of the trusteed portion by the trustee. According to a strict in* terpretation of the opinion rendered no further tdeducation would be allowed the family in this instance. The father would have to pay the tax on the aggregate amount of * his income and that of the free portion of his wife’s estate, and the opinion curtly states: “The manner in which they may adjust the deduction, or amount paid for taxes as between themselves is one in which the government has no interest.” There would appear to be an advantage in reaching one’s majority under the income-tax law, as the rulings appear to relieve one of the burdens of taxation at that period.» Until 31, men or women form a portion of the family unit, and the aggregate income of all is subject to but one deduction in computing the tax. The moment one comes in possession of property the $4,000 deduction is applied to each individual estate, and reducing the base reduces the amount of the tax. Another feature of the law, as interpreted, which will attract attention, is the opinion relative to gift. The donor must pay the tax on his gross income, including the amount of his benefaction. If the income of the persons benefited is thus raised above the limit of taxation,%he, too, is liable for the tax. The opinion as to the assessments of stockholders to make good deficiencies will attract a great deal attention among investors. Under ordinary circumstanced financial men are accustomed to regard such as business losses, in the common acceptance of the term, but the government will permit no deduction for such payments. BEPAIRS AND BETTERMENTS. There is a narrow line between money expended for repairs for buildings and for betterments. The law permits a deduction from the taxable income for one, but not for the other. A man may cause a pane of glass to be put in his old-fashioned window sash, or 10 for that matter, and deduct the expense from the taxable income. If he has a new sash put in with two panes of glass it’s a betterment, and not deductible. -This is possibly an extreme case, but it clearly illustrates the beautiful application of the law. The penalties provided under the law are extreme. For a failure to make the proper tax return, without excuse, the collector “shall add 50 per cent, to such tax.” “In the case of any return of a false or fraudulent list of valuation intentionally, he shall add 100 per cent, to such tax.” This applies with equal force to residents and nonresidents, and the collector can enter premises, examine witnesses and books and accounts or estimate the amount of the income to the best of his knowledge and belie*, and add the snug little amount of * * per cent, to'the tax, or 100 per cent, if the return seems fraudulent. Mr. Grosse exprexsly stated: “The law is on the statute books, and it is my duty to execute it. If there are any non-residents whose houses are properly in my district, and who fail to tile returns. 1 shall estimate them to 1 the best of my knowledge and belief, and add 50 per cent, to the amount of the tax. I have no option in the matter. No one should complain of an ex* amination. if I am compeled to make one, for the proceedings will be secret and confidential, and it is a misdemeanor to publish them." “But are not these investigations of an inquisitorial and star chamber orI ftslcdd “Oh,” replied the collector, “I don’t believe anyone ;will have occasion to complain of the methods pursued. They have to submit to open investigation on most delicate subjects now, and surely they will not object to answer interrogations that are secret and confidential.”

THE REPUBLICAN RECORD. latinr of Their Dapstrlotlc Aetata tha Vlitf41iM Cutrm, There etui he no question of democratic failure and disgrace in the eon* gross* that closed recently. We hare discussed it In general and in detail more than oner and hare pointed oat its causes with frankness. But it would be a mistake to say that the demo* era tic party is alone the subject for blame as represented in that body. In the conspicuousness of democratic refault of duty the sins of the republicans against the public welfare should not be forgotten. There is,a heavy responsibility here as welL The country has been deprived of needed legislation through republican agency in several important instances, and there would have been more of these, as well as positive legislation that promised to be pernicious, had the representatives of that party oftener had their way. The partisan reply to this will be that the republicans were in the minority, and are not, therefore, to be held blamable for anything done, or omitted to be done, in the last congress. This may be plausible, but it will not bear examination. Practically, the minority has the power to prevent legislation in the United States senate, and it is for the use of this power that we are disposed to arraign the republicans. They exercised it constantly and relentlessly. They exercised it for political ends in the second session of the senate; in the third one, at a time when they had the democrats so much at their mercy in the country that there was no need for them to seek further party advantage, they persisted in continuing to play the game of party politics, regardless of the needs of the country. Of the six hundred amendments put upon the tariff bill of last year many were forced in by the minority of the senate, nnder a threat that, if they were not adopted, the bill should be talked into a delay that threatened its death. These amendments, therefore, were republican work, not democratic. Aside from this, owing to the contumacy of certain democratic senators, there was never a democratic majority for practical legislation in the senate, and before the late scission was ended there had ceased to be even a nominal one.

m the late short session the more .direct blame for the failure of legislation that was obviously needed, and which had necessarily no political bearing, in a party sense, must be assigned to the republicans. The two most prominent instances of this were in the defeat of the bill repealing the rebate duty upon alcohol and that removing the differential dirties upon sugar. The alcohol section *bf the tariff law was placed there by a republican senator, with the avowal that it was experimental, and with a pledge not to insist upon it if it should be found to operate to the public injury. That it did so operate was as clearly demonstrated as anything could be, yet the republicans refused to keep their pledge. They were willing that the country should suffer in revenue in order that they might make the democratic party odious, hoping to deceive the people as to the fact that this measure was one that their own party had forced upon the democrats. The differential duties upon sugar were in the same category. They were operating direct injury upon the export trade of the country. The democrats stood ready to repeal them, and did pass a bill to repeal them in the house of representatives. The republicans toot advantage of their power as a minority in the senate to defeat this bill. They thus wrought harm to a portion of the exports of the country, and aided to perpetuate an unfortunate feeling on the part of some of the best customers of American products in Europe. They made this sacrifice of the public interest that they might scoFe another point against the democrats in politics. A similar reproach is the republican one for the party’s action on the Behring sea awards. The judgment was against our country here. Secretary Gresham made a favorable arrangement for the payment of the indemnity which was implied in it. Senator Sherman and other republicans who held the public interests of the country above party politics urged that it should be paid. The republicans prevented such payment. The responsibility is not all theirs here, for many democrats acted with them, but they bear a heavy share of it, and it is probable, if they had not played politics in the matter, the bill would have passed. As it is, our nation is compelled to bear the blame in the eyes of foreign powers of refusing, at least temporarily, to agree to the award of a tribunal which she had part in creating, and, if Senator Sherman is right, she will have in the end to pay a much larger sum than that which Secretary Gresham had succeeded in obtaining as her due. If, therefore, the democratic record in the late congress is very bad—and we are among the last who would undertake to excuse it—the republican record, also, is far from creditable. In the odium that attends the one case, the blame that belongs to the other should not be forgotten. While the democrats were floundering, the republicans come far short of rising to the scale of patriotism. They did much to sacrifice the interests of the people to the promotion of their selfish partisan aims and purposes. This cannot be left out of sight in a candid review ef the transactions of the late congress.—Boston Herald. -——From one point of view it is not to be regretted that republican victories, due to democratic apathy, are so general. What the country needs is a first-class object lesson in republican misgovernment and insincerity, and the more republicans temporarily in office the more general and effective the lesson, and the surer and more certain the reaction. — Albapy Argus. -There is very little to be said in favor of the Fifty-third congress, but as compared with that over which Mr. Thomas B. Beed presided it had virtues too numerous to mention. —Kansas City Times.

I BACK TO FIRST PRINCIPLES. Wkat tk* Dmmvm| Mask O* to Bo Bo* otoroO to Power. That wise remark of Herbert Spencer that “the American aation most go backward before It can go forward” baa many applications. It is aa trne to-day of the democratic party a* it la of the‘nation. Since the war it has been wandering in strange paths foreign to the democracy. Commanded by the people to resume its traditional coarse, it has floundered about, unable to fled and resume its traditional course. It is a fashion among the orthodox to lift up Jackson as the ideal democrat, and it Is treason in the minds of many to even hint that any but Old Hickory, save possibly Jefferson, is the ideal of democracy. If being a democrat consists in hawing a clear new of democratic principles and policies and adhering to them with answerring firmness, then an impartial judgment will award to the much-maligned Martin Van Buren a higher station in the ranks of democracy than even Jackson’s. In none of the state papers of Jackson will one find so clear-cut, exact and accurate a definition of the federal government, and, in fact, of state governments, as in the message of Van Buren to the extra session of congress called by him to devise means to carry the treasury over the panic of *37, which broke upon him before he was fairly warm in the presidential chair. He reminded those who look to the government for relief from the embarrassment caused by the panic that they lost sight of the purpose for which governments are created. Said he: “It was established to give security to ns all in our lawful and honorable pursuits under the lasting safeguard of republican institutions. It waa not intended to confer especial favors upon individuals, or on any classes of them to create systems of agriculture, manufacture or trade, or to engage in them, either separately or in connection with individuals or corporations. * * * All communities are apt to look to governments for too much. We are prone to do so especially at periods of sudden embarrassments and distress. * * * The less government interferes with private pursuits the better for the general prosperity. It is not its object to make men rich, or to repair, by direct grants of money or legislation in favor of particular pursuits, losses not incurred in the public service.” It is to this conception of government thus dlearly defined by Van Buren that the democratic party must go back and begin its forward march* It must declare this emphatically and distinctly. If any industries in this country have grown to be dependent upon government sustenance they must be notified in advance that, if the party is returned to power, its sustaining hand will be totally withdrawn. There must be no nambypambyism of concession and compromise and tenderness, but, going back to its; primal principles of government, it must write them plainly on its standard and go again to the people declaring them, advocating them, and, when again restored to power—as" it always has been and always will be when it is truly democratic—see that no traitor hand tears down the banner, and no traitor counsel is received at the board. This is the path bo victory, and a sure one, even if it be temporarily a severe and rugged one.—St. Paul Globe. OPINIONS OP TMP PRFSft.

-The future of the democratic party is all right. All it has t^do is to watch the indicator and not f^vay. — Albany Argus. ' -Ex-Czar Reed made —. * :5f a vivid reminder of small potatoes when he refused to join in the vote of thanks which the house gave to Speaker Crisp. —Detroit Free Press. —-Mr. Reed will probably perceive that there were a great many persons ready and anxious to contribute to a continuous turmoil in the next congress.—Washington Post. -The campaign between Messrs. Reed and McKinley is picking up a little. The governor has come out boldly and said that he always regarded Speaker Crisp as an impartial presiding officer.—Louisville Courier-Journal. -McKinley will capture most of the delegates from the south to the national republican convention and may get the nomination. The democrats ask nothing softer than another whirl at McKinley.—Nashville American. -Notwithstanding the fact that the republicans of the house proposed and voted almost unanimously for the resolution thanking Speaker Crisp for his fairness ex-Speaker Reed was one of three republicans who refused to vote for it. Hon, Thomas B. always was known to be a big man—physically.—St Louis Republic. -Gov. McKinley lifts up his voice and complains that “the late bond issue of sixty-three million dollars was made in secret—made out of sight of the public.” It seems, then, to have been made in precisely the same way that Gov. McKinley’s views on the silver question were made—if he has any such views.—Louisville Courier-Jour-nal. | ' -The sugar trust is all right, apparently, as it declared a three per cent quarterly dividend the other day. But if the republican senators hadn’t joined in a solid body to prevent the repeal of the differential duty on sugar the condition of the trust wouldn’t have been so satisfactory: The republican party is the great friend of monopoly.—Kansas City Times. -As to the silver question Reed is carrying water on both shoulders. McKinley is for silver or for a gold standard, according to the crowd he is with. Allison says that he would sign any financial bill congress might send him -were he president. Harrison is saying “good lord, good devil” when he can be induced to say anything; and the minor presidential possibilities are skillfully keeping under cover. The whole kit of them are watching the political weather signals and trying to trim their sails to the most favorable winds.—Detroit Free Press.

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