PART I. INCOME TAX ON INDIVIDUALS. NORMAL TAX. SEC. 210. That, in lieu of the taxes imposed by subdivision (a) of section 1 of the Revenue Act of 1916 and by section 1 of the Revenue Act of 1917, there shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax at the following rates: (a) For the calendar year 1918, 12 per centum of the amount of the net income in excess of the credits provided in section 216: Provided, That in the case of a citizen or resident of the United States the rate upon the first $4,000 of such excess amount shall be 6 per centum; (b) For each calendar year thereafter, 8 per centum of the amount of the net income in excess of the credits provided in section 216: Provided, That in the case of a citizen or resident of the United States the rate upon the first $4,000 of such excess amount shall be 4 per centum. ARTICLE 1. Income tax on individuals. The statute imposes an income tax on individuals, including a normal tax and a surtax. See section 211 of the statute. The tax is upon net income, as defined n the statute, after deducting from gross income, as defined in the statute, the allowable deductions. See sections 212, 213, 214 and 215. In certain cases credits are allowed against net income and gainst the amount of the tax. See sections 216 and 222. Special provisions of the statute deal with the effect of the tax on nonresilent alien individuals, partnerships and personal service corporaions, estates and trusts, and the stockholders of corporations which unreasonably accumulate their profits. See sections 217, 218, 219 and 220. The tax is payable upon the basis of returns rendered by che persons liable thereto, except that in some instances it is to be paid at the source of the income. See sections 221, 223, 224, 225, 226, 227 and 228. The statute also imposes an income tax at a fixed rate and a war profits and excess profits tax on corporations. See Part II of the regulations. For administrative provisions, and for definiions and general provisions, see Parts III and IV of the regulations. ART. 2. Normal tax.-For the calendar year 1918 the normal income cax on individual citizens or residents of the United States is at the rate of 6 per cent upon the first $4,000 of net income subject to the nornal tax and 12 per cent upon the excess over that amount, and for che calendar year 1919 and subsequent years is at the rate of 4 per cent (19) upon the first $4,000 and 8 per cent upon the excess over that amoun The lower rate on the first $4,000 applies to each separate individua whether married or unmarried, and should not be confused with th joint exemption granted married persons. In the case of nonresider alien individuals the normal tax for 1918 is 12 per cent and for sul sequent years 8 per cent. In order to determine the income to whic the normal tax is applied, the net income, as defined in section 21 of the statute and articles 21-26 of the regulations, is first entitle to the credits and exemptions specified in section 216 of the statut and articles 301-307. ART. 3. Persons liable to tax.-Every citizen of the United State wherever resident, is liable to the tax. It makes no difference tha he may own no assets within the United States and may receive n income from sources within the United States. Every resident alie individual is liable to the tax, even though his income is wholly fro sources outside the United States. Every nonresident alien ind vidual is liable to the tax on his income from sources within th United States. See section 213 (c) of the statute and articles 91–9 Estates and trusts are also subject to the tax. See section 219 c the statute and articles 341-346. ART. 4. Who is a citizen.-Every person born in the United State subject to its jurisdiction, or naturalized in the United States, is citizen. When any naturalized citizen has left the United Stat and resided for two years in the foreign country from which l came, or for five years in any other foreign country, he is presume to have lost his American citizenship; but this presumption does no apply to residence abroad while the United States is at war. A Italian who has come to the United States and filed his declaratio of intention of becoming a citizen, but who has not yet received h final citizenship papers, is an alien. A Swede who, after havin come to the United States and become naturalized here, returned t Sweden and resided there for two years prior to April 6, 1917, presumed to be once more an alien. On the other hand, an individua born in the United States of citizen or resident alien parents, wh has long since moved to a foreign country and established a domicil there, but who has never been naturalized therein or taken an oat of allegiance thereto, is still a citizen of the United States. For th difference between resident alien individuals and nonresident alie individuals see articles 312-315. SURTAX. SEC. 211. (a) That, in lieu of the taxes imposed by subdivision (b) of section 1 of the Revenue Act of 1916 and by section 2 of the Revenue Act of 1917, but in addition to the normal tax imposed by section 210 of this Act, there shall be levied, collected, and paid for each taxable year upon the net income of every individual, a surtax equal to the sum of the following: 1 per centum of the amount by which the net income exceeds $5,000 and does not exceed $6,000; 2 per centum of the amount by which the net income exceeds $6,000 and does not exceed $8,000; 3 per centum of the amount by which the net income exceeds $8,000 and does not exceed $10,000; 4 per centum of the amount by which the net income exceeds $10,000 and does not exceed $12,000; 5 per centum of the amount by which the net income exceeds $12,000 and does not exceed $14,000; 6 per centum of the amount by which the net income exceeds $14,000 and does not exceed $16,000; 7 per centum of the amount by which the net income exceeds $16,000 and does not exceed $18,000; 8 per centum of the amount by which the net income exceeds $18,000 and does not exceed $20,000; 9 per centum of the amount by which the net income exceeds $20,000 and does not exceed $22,000; 10 per centum of the amount by which the net income exceeds $22,000 and does not exceed $24,000; 11 per centum of the amount by which the net income exceeds $24,000 and does not exceed $26,000; 12 per centum of the amount by which the net income exceeds $26,000 and does not exceed $28,000; 13 per centum of the amount by which the net income exceeds $28,000 and does not exceed $30,000; 14 per centum of the amount by which the net income exceeds $30,000 and does not exceed $32,000; 15 per centum of the amount by which the net income exceeds $32,000 and does not exceed $34,000; 16 per centum of the amount by which the net income exceeds $34,000 and does not exceed $36,000; 17 per centum of the amount by which the net income exceeds $36,000 and does not exceed $38,000; 18 per centum of the amount by which the net income exceeds $38,000 and does not exceed $40,000; 19 per centum of the amount by which the net income exceeds $40,000 and does not exceed $42,000; 20 per centum of the amount by which the net income exceeds $42,000 and does not exceed $44,000; 21 per centum of the amount by which the net income exceeds $44,000 and does not exceed $46,000; 22 per centum of the amount by which the net income exceeds $46,000 and does not exceed $48,000; 23 per centum of the amount by which the net income exceeds $48,000 and does not exceed $50,000; 24 per centum of the amount by which the net income exceeds $50,000 and does not exceed $52,000; 25 per centum of the amount by which the net income exceeds $52,000 and does not exceed $54,000; 26 per centum of the amount by which the net income exceeds $54,000 and does not exceed $56,000; 27 per centum of the amount by which the net income exceeds $55,000 and does not exceed $58,000; 28 per centum of the amount by which the net income exceeds $58,000 and does not exceed $60,000; 29 per centum of the amount by which the net income exceeds $60,000 and does not exceed $62,000; 30 per centum of the amount by which the net income exceeds $62,000 and does not exceed $64,000; 31 per centum of the amount by which the net income exceeds $64,000 and does not exceed $66,000; 32 per centum of the amount by which the net income exceeds $66,000 and does not exceed $68,000; 33 per centum of the amount by which the net income exceeds $68,000 and does not exceed $70,000; 34 per centum of the amount by which the net income exceeds $70,000 and does not exceed $72,000; 35 per centum of the amount by which the net incomes exceeds $72,000 and does not exceed $74,000; 36 per centum of the amount by which the net income exceeds $74,000 and does not exceed $76,000; 37 per centum of the amount by which the net income exceeds $76,000 and does not exceed $78,000; 38 per centum of the amount by which the net income exceeds $78,000 and does not exceed $80,000; 39 per centum of the amount by which the net income exceeds $80,000 and does not exceed $82,000; 40 per centum of the amount by which the net income exceeds $82,000 and does not exceed $84,000; 41 per centum of the amount by which the net income exceeds $84,000 and does not exceed $86,000; 42 per centum of the amount by which the net income exceeds $86,000 and does not exceed $88,000; 43 per centum of the amount by which the net income exceeds $88,000 and does not exceed $90,000; 44 per centum of the amount by which the net income exceeds $90,000 and does not exceed $92,000; 45 per centum of the amount by which the net income exceeds $92,000 and does not exceed $94,000; 46 per centum of the amount by which the net income exceeds $94,000 and does not exceed $96,000; 47 per centum of the amount by which the net income exceeds $96,000 and does not exceed $98,000; 48 per centum of the amount by which the net income exceeds $98,000 and does not exceed $100,000; 52 per centum of the amount by which the net income exceeds $100,000 and does not exceed $150,000; 56 per centum of the amount by which the net income exceeds $150,000 and does not exceed $200,000; 60 per centum of the amount by which the net income exceeds $200,000 and does not exceed $300,000; 63 per centum of the amount by which the net income exceeds $300,000 and does not exceed $500,000; 64 per centum of the amount by which the net income exceeds $500,000 and does not exceed $1,000,000; 65 per centum of the amount by which the net income exceeds $1,000,000. (b) In the case of a bona fide sale of mines, oil or gas wells, or any interest therein, where the principal value of the property has been demonstrated by prospecting or exploration and discovery work done by the taxpayer, the portion of the tax imposed by this section attributable to such sale shall not exceed 20 per centum of the selling price of such property or interest. ART. 11. Surtax. In addition to the normal tax a surtax is imposed at the rates specified in the statute upon the net income of every individual, resident or nonresident. See articles 2-4. In determining the taxable net income for the purpose of the surtax, the credits provided by section 216 of the statute in the case of the normal tax are not applicable. ART. 12. Computation of surtax. The following table shows the surtax on net incomes of the specified amounts. In each instance the first figure of net income in the net income column is to be excluded and the second figure included. The percentage given opposite applies to the excess of income over the first figure in the net income column, and the sum in the next column is the tax on the entire difference between the first figure and the second figure in the net income column. The final column gives the total surtax on a net income equal to the second figure in the net income column. |