rT:«*»fe^ The ^£^-**"y~^ 



Illinois Agricultural Associat 



'^ ^RECORD 



Issued Every Month for 63,000 Thinking Farmer&> 





-i -^ 'j: i 



r. 



Volume 5 



MAY, 1927 



i^umuer 9 



\ 



What^s In The Income Tax Bill 



''pHE large volume of propaganda be- 

 A ing scattered over the state in op- 

 I>osition to the state income tax spon- 

 sored by the Illinois Agricultural As- 

 sociation plainly illustrates the ease 

 v'ith which false bogies and misconcep- 

 tions iriay arise when people do not 

 stick to facts. It is quite possible, if 

 not probable, that the spurious attacks 

 were and are premeditated. Whatever 

 the cause, it is evident that there is 

 a general lack of understanding re- 

 garding the provisions of the measure. 

 The bill provides first for a grad- 

 uated cax on income with exemptions. 

 A siiigle person is allowed $1,000 of 

 exemptions, a married man $2,000, and 

 $500 additional for each child under 18 

 years. After exemptions the rates are 

 one per cent on all taxable net income 

 of $5,000 per year or less, two per cent 

 on the second $5,000, and three per 

 cent on all taxable net income above 

 $10,000. 



Corporations Not Taxed 



Income is not taxed in the hands of 

 corporations or partnerships but in the 

 hands of share holders or 

 partners. This point has 

 been controverted, misrep- 

 resented, or completely 

 ignored repeatedly. In the 

 joint committee hearing of 

 the House and Senate re- 

 cently at Springfield, repre- 

 sentatives of business or- 

 ganizations made the state- 

 ment that the tax would 

 drive industry out of the 

 state. The president of one 

 organization, then, was 

 forced to admit from the 

 platform that he was not 

 aware that corporations 

 were exempt by provisions 

 of the bill. 



All ordii^ary business ex- 

 penses, but not personal ex- 



Few Of The Critics Have Read It 



penses, may be deducted from the gross 

 income in computing net income. 



Any taxes paid on real or personal 

 property in Illinois may be deducted 

 from the tax computed on net income 

 (except improvement taxes as for a 

 drainage district). Persons paying a 

 property tax, especially on real estate, 

 will not be subject to an income tax 

 under this provision unless their com- 

 puted income tax exceeds their prop- 

 erty tax. Thus taxes paid on property 

 are directly deductible from the income 

 tax. This point has been minimized 

 for in this exemption lies the virtue 

 of the tax in taking some of the bur- 

 den off of farm and home owners, and 

 placing it on that large portion of our 

 people who now share no direct respon- 

 sibility of citizenship. 



The proposed income tax has been 

 hailed as an extra tax. The usual 

 argument is that designing politicians 

 will find some way to use the extra 

 funds derived without lowering the 

 taxes on property. This argument is 

 groundless. The income tax is a lieu 

 or a substitute tax. The bill specific- 



I 



Prompt Action Needed 



The proposed state income tax is designed to 

 help equalize the tax burden by largely distribut- 

 ing it among that portion of our citizens who are 

 at the present time escaping their responsibility 

 of citizenship. 



Propaganda by its opponents (chiefly the city 

 press) is founded upon a misinterpretation and 

 misstatement of the provisions of the bill. 



Prompt action in support of this measure by 

 the home and property owners (who are its bene- 

 ficiaries) is imperative to secure its enactment. 

 Immediately communicate your position to your 

 senator and representatives. 



ally states that funds so derived shall 

 be placed in the state school fund to 

 replace in equal amount property taxes 

 levied for this purpose. Approxi- 

 mately one-third of the total state 

 taxes now go into the state distributive 

 school fund. 



While the bill does not entirely cor- 

 rect the broken down taxing system 

 of the state, yet it is a step in the right 

 direction and leads the way toward a 

 general revision of our tax laws so 

 taxes may be levied according to abil- 

 ity to pay. 



Examples of the operation of the 

 measure follow: 



1. Single person, no dependents, net 

 income before exemptions, $2,000. 

 Exemption $1,000. Net taxable 

 income $1,000. Computed income 

 tax $10. 



If he pays no property tax his 

 income tax 'will be $10. 

 If he pays property taxes 

 amounting to $10 or more, he 

 will pay no income tax. 



2. Family with two young children. 

 Net income before exemptions 



$5,000. Exemptions 

 $3,000. Net taxable in- 

 come $2,000. Computed 

 income tax $20. If they 

 pay no property tax, 

 the income tax will be 

 $20. If they pay prop- 

 erty taxes to $20 or 

 more, they will pay no 

 income tax. 



^i-o^i^ ,,«^L..-^«*^ 



3. Husband and wife, no 

 dependents. Net income 

 before exemptions, 

 $17,000. Exemptions 

 $2,000. Net taxable in- 

 come $15,000. 

 Tax on first $6,000 at 

 1% $ 50 



(Continued on page 3.) 



