Page Four 



THE I. A. A. RECORD 



April, 1931 



Examples Showing the Operation of the State Income Tax 



: I. Single person with no dependents. Exemptions and tax rates on three different amounts 

 of net income are shown in the following table: 'K'^':/'-''::'':^'.''^'^ 



Net income -..:::::.::.:...........:....: $1,000 > : y $2,000 i:: ; Ei: $10,000 / : : ; :^: 



.Exemption 1,000 W^i:; 1 ,000 vi ^ f ;;■ ' R^ 1,000 ■:-i-:--:Kii 



- Net taxable income None i; ,; " $1,000 C^v $ 9,000 ^■:p:■ v^^^;;/^ 



taxable at :■ ;\-:.;.-- ^r • /■■./■-:«:•■•: -. ^•'■■'■■:m:/-^'^:;^^:-;,.-^-v;:'^'-:-.'./,"/'' '■.-/..; ^^/-■^''■':-:y--''-A''^-^^ 



1 per cent on first $2,000 None ;■ : v ■ t^^^ 10(on $1,000)$ 20 :^ :vS; 



2 per cent on next $3,000 None None / :, ■ '^^ 60 



3 per cent on next $5,000 None • None S^^ - 120(on$4,000) 



Total income tax None - $ Ifl: :• • : $ . 200 ; ':: 



II. Married couple with three children under 18 years or other dependents. Exemptions 

 and tax rates on three different amounts of income are shown in the following table: 



Netincome :.......::..... $3,000 ^ . $5,000 .. $50,000 



Exemptions ($2,000 plus $1,500) $3,500 \ ■ 3,500 3,500 



Net taxable income None $1,500 - . $46,500 ; 



taxable at: — ■ 



1 per cent of first $ 2,000 None $. 15(on$l,500)$ 20 



2 per cent of next $ 3,000 None None 60 



3 per cent of next $ 5,000 None ■ None ': 150 



4 per cent of next $ 5,000 None _____ None __________ 200 .■ '.:■■-■ " .- 



5 per cent of next $10,000 None None 500 ^ 



6 per cent of all over $25,000 None None l,290(on 21,500) 



. Total income tax : None ^ $ 15 ; $ 2,220 



NOTE: The above examples show the virtues of a system of taxation based upon ability to pay taxes. They also show 

 that the proposed income tax bill with its moderate exemptions and tax rates imposes a very light burden upon taxpayers 

 as compared u'ith the oppressive burden now imposed upon owners either of real estate or of any other property taxed 

 on its value. 



property for the University of Illinois 

 Fund (Senate Bill 164), for the State 

 School Fund (165), and for the State 

 Blind Fund (166); by amendments to 

 other acts removing any references to 

 the three funds named above and pro- 

 viding that money appropriated for any 

 of the special purposes named shall be 

 payable out of the General Revenue 

 Fund of the State (Nos. 166, 167, 168, 

 200). 



Amends Code 



Senate Bill No. 170 amends the Civil 

 Administrative Code, creating a De- 

 partment of Income Taxation and the 

 offices of Director and Assistant Di- 

 rector for the administration of the 

 Income Tax Act. 



The necessary delay in the first col- 

 lection of income taxes until 1933 re- 

 ouires that the tax on property for the 

 State General Revenue Fund be con- 

 tinued for the year 1931 payable in the 



year 1932. This is done in Senate Bill 

 No. 169. 



This bill also provides for the possi- 

 bility that receipts from income taxes 

 in 1933, together with revenue from 

 sources other than property, may not be 

 sufficient to pay all appropriations from 

 the General Revenue Fund. For this 

 reason the State Levying Board is given 

 power and is directed to lexy a tax on 

 property also for the year 1932, payable 

 in 1933, sufficient to pay any difference 

 between reasonably expected receipts 

 therein and all appropriations therefrom. 



Produce $30,000,000 



It is believed that receipts from the 

 income tax will make any levy on prop- 

 erty needless, but it is necessary to give 

 the State Levying Board authority to 

 make it in order to' save the state from 

 possible embarrassment. 



It is conservatively estimated that an 



income tax act with the provisions of 

 Senate Bill No. 138 will produce at 

 least $30,000,000 in any year, at least 

 $40,000,000 in prosperous years, and 

 possibly $50,000,000 in a highly pros- 

 perous year. 



The Income Tax Bill .and its com- 

 panion bills cannot interfere in any way 

 . with the amount of money appropri- 

 ated by the state for the University of 

 Illinois, the common schools, or blind 

 relief, all of which are now provided for 

 by special levies on property. Even 

 now no special levies are available for 

 the purposes for which they are col- 

 lected unless they are appropriated 

 therefor by the General Assembly. 



The income tax and its use as pro- 

 posed in the companion bills, with reve- 

 nues from other non-property sources, 

 will probably supply all of the funds 

 now collected from property taxes not 

 (Continued on page 7) 



