Variety (March 1926)

VARIETY LEGISLATIVE Wednesday, March 3, 1928 ANALYSIS OF THE NEW TAX LAW By GRAHAM B. NICKOL Washington. March 1, Graham H. Nlchol, a former newspaperman but now head of the In- formation Division of the Bureau of Internal Revenue. Is In direct charge of all Information furnished to the newspapers and the public generally on all tax matters. The following analysis of the Revenue Act of 1928 which became a law on Friday last when the President signed the measure; was written ex- clusively for Variety by Mr. Nlchol. It contains full Instructions for the professional, as an Individual, as well as for amusements In general. Heretofore, taxpayers have been urged to file their Income tax re- turns early. This year the filing of returns was delayed, pending prep- aration of the forms In accordance with the provisions of the Revenue Act of 1926, Just passed by Con- press. The forms are now available. If a taxpayer has not received one by mall, he may obtain a copy at the office of a collector of Internal revenue or branch office. Net Incomes H the net Income for 1925 was not over $5,000 and was derived chiefly from salaries or wages, the taxpayer should use Form 1040A. If the net Income was in excess of $r>,0C0, or. regardless of amount. Waa from a business or profession, the return should be made on Form 10-10. Returns are required of every single person whose net Income for 1025 was $1,500 or more, or whose gross income was $5,000 or more, end from every married couple liv- ing together whose aggregate net Income was $3,. r ,00 or more, or whose aggregate gross Income was $5,000 or more. In the preparation of their in- come tax returns for the year 1925, members of the theatrical profes- sion, in common with other citizens, will find to their advantage numer- ous changes In tax legislation. No- table is the reduction in the tax, normal and surtax. Under the rev- enue act of 1926 the normal tax is 11ft percent on the first $4,000 of net Income In excess of the personal exemption, and credit for depend- ents, 3 percent on the next $4,000, and 5 percent on the- balance. Two. four and six percent were the nor- mal tax rates under the revenue act of 1924, The burtax is graduated upon In- dividual net incomes in excess of $111,000. ranging from one percent on net incomes between $10,000 and $14,000 to 20 percent on net income In excess of $100,000. The personal exemptions are $1,503 for a single person and $3,500 for married persons living together, and heads of families. Divorcees or persons separated by mutual consent are classed as single per- sons. No change in the provision allow- ing a taxpayer, in addition to his personal exemption, a credit of $400 for each person (other than wife or husband) dependent upon him for chief support, if such person is un- der 18 years of age, or incapable of Self-support because mentully or physically detective," includes not only cripples, but persons in ill- health and the aged. It Is not re- quired that such dependent be a relative of the taxpayer, nor a member of the taxpayer's house- hold. Exemptions A "head of a family," who is al- lowed the same exemption granted a married person- -$3,500—is defined as a person "who actually supports one or more persons living in his (or her) household, who are closely connected with him by blood, re- lationship by marriage, or by adop- tion, and whose right to exercise family control and provide for these dependent Individuals is based on some moral or legal Obligation!." Mere support of a relative does not entitle the taxpayer to the status of the head of a family. For example, an uctor, living in New York, and supporting In his home an aged mother and two sis- ters under is years of age. is en- titled to a total exemption of $4,700. If, however, the taxpayer lives 'n one city and the. dependents in an- other, or even though the depend- ents live in the same city and are not members of the taxpayer's Household, he is entitled only, if ■Ingle, In addition to his personal exemption of $1,500, to the $400 credit for each dependent, a total of $2,700. The $400 credit does not apply to the wife or husband of a taxpayer, though one may be total- ly dependent upon the other. The revenue act of 1926 provides that the stunts of a taxpayer rel- ative to the amount of his personal exemption shall be determined by apportionment in accordance with the number of months the taxpayer was single, married or the head of a family. For example, a couple married on Sept 30, r925, would be entitled to an exemption of $3,125; that is, 9-12 of $1,500 for the husband while sin- gle, plus 9-12 of $1,500 for the wife while single, plus 3-12 of $3,500 for the period during which they were married. If on June 30, a taxpayer ceased beinfir the head of a family—the support In one household of a rel- ative or relatives being discon- tinued—he is allowed an exemption of $2.500—one-half of the exemption of $1,500 granted for a single per- son plus one-half of the exemption of $3,500 granted the head of a family. With regard to the $400 credit for a dependent, the taxpay- er's status is determined as of the last day of the taxable year. If during the year, his support of such dependent ceased, ho is not entitled to this credit 25 Percent Off The maximum amount which may servo as a basis for computa- tion of the 25 percent, credit on ac- count of earned income is increased from $10,000 to $20,000. The surtax as well as the normal tax now Is taken Into consideration in comput- ing the earned income credit on amounts between $10,000 and $20,- 000. "Earned Income" Is defined as "wages, salaries, professional fees and other amounts received as com- pensation for personal services ac- tually rendered." All net income up to $5,000 during the year is consid- ered to be earned net Income for the purpose of computing this credit. For example, an actor, married and with no dependents, received from salary for 1925 a net inicome of $4,- 000 and made a net gain of $1,000 in a stock transaction. Without the benefit of this 25 percent credit, his tax would amount to $52.50. His personal exemption is $1,500, which subtracted from $5,000 leaves a tax- able Income of $3,500, on which the tax rate is $1Vj percent. However, he is entitled to consider the entire $5,000 as earned net income. There- fore, he may deduct from $52.50 a credit of 25 percent, of that amount, or $13.13, leaving an actual tax of $39.37. A taxpayer may have received a net Income from salary for 1925 of $40,000, but he can consider only $20,000 as earned net Income for the purpose of computing this cred- it. As an example, a taxpayer, mar- ried and with two dependent chil- dren, received In 1925 a net Income from salary of $40,000. Without the benefit of this deduction, his tax would amount to $3,3G5. However, he may consider $20,000 as "earned (Continued on page 43) France Fot Concerned Oyer Vails Measure Paris, Feb. 20. The proposed restriction of musi- cians, as submitted to Congress by Representative W. N. Vaile of Col- orado, does not appear to worry the French syndicate. Trade union leaders seem to consider reprisal measures, if started, would hurt Americans In Europe more than foreigners In the United States. One prominent official of the musi- cians' union pointed out there is no general barrier against American musicians In France, but It Is true the syndicate is trying to impose a regulation of only 10 per cent, for- eigners In each orchestra playing In France. He was of the opinion, if reciprocal action were taken rela- tive to regulating the entry of for- eign musicians, that the Americans would be the greater losers, partic- ularly as at present American ar- tists in France pay an insignificant tax on earnings, whereas the few French artists performing In Amer- ica have to pay a heavy tax before they can re-embark for " 75c TICKET TAX IN EFFECT MARCH 29-OLD TICKETS GOOD VA. TAX UP AGAIN Richmond. Va., March 2. The recommendation of former Gov. Trinkie that a state admis- sion tax be placed upon all places of amusement, though Ignored by Gov. Byrd In his first address, has reached the House in a bill provid- ing for the tax. It was favorably voted out by the committee, 13 to 3. Exhibitors following this action called a meeting at which the labor unions and many civic organiza- tions were present In an endeavor to counteract the favorable report of the committee. It Is believed here that the bill will ultimately pass but will be modified to apply only to admission up to 75 cents, the amount exempted in the new Federal tax law, and thus avoid double taxation on those seeking amusement In Virginia. RADIO'S SALES NEAR BILLION Hearings on Radio Con- trol Bill in Wash. Washington, March 2. With the resumption Friday of the hearings before the Senate com- mittee on the Dill bill to set up the control of radio under the Depart- ment of Commerce, just what It Is costing that department to function in practically that same capacity under the existing laws was made public. During the fiscal year ending June 30 last this cost totaled ap- proximately $-50,000, while for the coming year this is increased by an additional $100,000. In addition to this another $50,000 is appropriated for the Bureau of Standards to carry on radio research work. During the taking of testimony on the appropriation it was esti- mated that there are now in excess of 6,000,000 receiving sets in actual operation. The chairman of the committee, Martin B. Madden, ex- pressed the belief that the depart- ment's control should extend to these receiving sets but at the same time he made it clear that he wanted It understood the govern- ment could not undertake such a proposition due to the excessive BLOOM'S WORLD'S FAIR Washington, March 2. Congressman sol Bloom (D.) of New York is asking Congress to give the city of New York Its first world's fair. The Congressman yesterday havlni Introduced a bill providing for the celebration o the 2ooth anniversary of the birth of George Washington by holding a permanent International Industrial Exhibition in Washington Marine l'.irk, Brooklyn, in l»32. PICCADILLY HOTEL and THE KIT-CAT CLUB FIRST-CLASS FLOOR ACTS WANTED Amrrlran Representative A. J. CLARKE «ii Mfe*# Hisasrs DM* Sole Amrrlr:in It mttlng JigtM WM. MORRIS lniiO Itrnndwajr New York Up-State Bill to Admit Children Urged at Hearing Albany. N. T.. March 2. Passage of the bill introduced by Assemblyman Charles A. Frlcberg of Buffalo, designed to permit chil- dren between 10 and 18 to attend the theatres unaccompanied by a parent after 2 o'clock In the after- noon, was urged at a public hear- ing by Valentine B. O'Grady of Buffalo, representing the Fpstate Motion Picture Theatre owners, as a means of abolishing existing evils. Mr. O'Grady pointed out that If children were allowed to attend movies it would do away with the evil and practice of gathering around picture theatres, begging nlckles and pennies and then be al- lowed to be taken In by an older person to whom they had appealed and who was a stranger to them. If this bill Is not passed Mr. O'Grady said the existing practice will continue. Mr. O'Grady added that pictures better adapted for children would be screened and better care could be given them when they are seg- regated In the house and under the care of a matron furnished by the theatre owners. The president of the board of ed- ucation of Buffalo, the Judge of the city court and the judge of the chil- dren's court of Buffalo approve of the bill. Mr. O'Grady said. Nathaniel J. Walker, president of the Mohawk and Hudson River Hu- mane society of Albany, led the at- tack against the measure. "This bill Is the entering wedge to break down the law which forbids chil- dren to attend picture shows unless accompanied by their parents or guardians," Mr. Walker said. Sev- eral upstate women's societies op- posed the bill also. The bill pro- vides thut the children shall not re- main in the theatre after 6 p. m. The proposed bill does not apply to New York City. Mr. Tyrer of the department tes- tified, In this connection, that the radio business was expanding rap- idly, both In receiving sets and other apparatus. It having grown from $2,000,000 in 1920 to over $50,- 000.000 in 1925. "and it is estimated that it will be $650,000,000 in 19:6," continued the government expert. As to the broadcasting this same witness stated that on the 89 exist - ant wave lengths there was now assigned an average of six stations to each wave length. In addition to which there is now pending before the department applications for 300 new stations. Still further to "tie up the air" there are scattered throughout the country, it was pointed out, 20,000 transmitting sta- tions with each of these being a potential source of Interference. The department Is requesting funds for the establishment of new offices which are to be located In Dallas, Memphis, Los Angeles, Port- land. Ore.; Pittsburgh, Buffalo, Den- ver, St. Louis, Minneapolis and Omaha. The purpose of these of- fices Is to making the Inspection work more readily handled and to generally keep the broadcasters on their respective wave lengths. Miss. Censoring Vote Jackson, Miss., March 2. With the minority report to be voted upon today ' (Tuesday) the question of censorship of pictures shown In this State Is pausing pro- ducers and exhibitors considerable concern. The Senate committee, after five if Its members voted unfavorably m the proposal, had the question brought to the floor on the report of the two minority members. N. Y. State Modification Law on Censoring Albany. N. Y.. March 2. After a debate indicating opposi- tion that is not likely to prevail, the Davison bill designed to relax the motion picture censorship law to exempt news reels and pictures of current events from Its provi- sions, was advanced to the order of final passage in the Assembly. Assemblyman F. Trubee Davi- son. Republican of Nassau, and Assemblyman Maurice Bloch, Demo- cratic minority leader led the advo- cates of the bill. The opposition was led by Assemblyman John Boyle, Republican of Suffolk, and Assemblyman Walter Gedney, Re- publican of Rockland. The forces of the opposition ap- peared to be slight and there is every indication the hill will pass the Assembly. Its passage there will insure passage In the Senate. The favorable report was taken to Indicate a speedy passage of the bill. Leaders have intimated that this is the first meftsure of modi- fication of the picture censorship Variety Bureau Washington, March i, Following the action taken \ n connection with the Revenue Act of 1924 the Bureau of Internal Reve- nue has ruled that tickets on ad* missions between 51 and 76 cents, which will become obsolete with the effective date of the new law, will be able to use same when sold at the regular price for & limited period. Under the ruling of the Treasury the 30-day period, that must neces- sarily elapse before this section of the revenue act of 1926 becomes ef- fective, has been set for midnight of March 28, 19:6. Thus the repeal of the 10 per cent, tax on admis- sions between 51 and 76 cents is effective at 12.01 a. m., March 2$ 1926. Due to the circulation last year of premature reports by certain ticket manufacturers that the old tickets could not be used, coupled with the fact that theatre owners and managers would be anxious for a ruling on these tickets as soon as possible, Variety's Washington Bureau requested such a ruling re- ceiving same within a period of six hours. Though limiting the period under which these tickets can be used. Commissioner Blair states the of* ficial in charge of the sales tax di- vision 'is inclined to be reasonable" and will undoubtedly follow the same plan of extending the time limit until all supplies are ex- hausted. In all other particulars the regulations of the 1924 act will apply to the new law. The ruling from the Commissioner is as follows: Variety. Washington Bureau, 1629 Columbia Road, N. W., Washington, D. C. Gentlemen: Reference Is made to your letter of February 27. 1926, requesting for publication in Variety Information as to whether or not theatre owners and managers will bo permitted to use until exhausted the supply of tickets now In their possession rep- resenting admission charges Of 7$ cents or less. In reply you are advised that the- atres and other places of amuse- ment to which admission is charged, which have on hand March 29. 1926, a supply of tickets indicating the price of admission as 75 cents or less printed in accordance with the requirements of the revenue act of 1924, may use such tickets for a limited time if Bold for the estab- lished price printed thereon. For example: A ticket marked "established price 04 cents, tax paid 6 cents, total 60 cents," may be sold for 54 cents, but the ticket may not be sold for 60 cents merely because the sum of the established price and the tax due under the 1924 act totals 60 cents. To do so would be a vio- lation of section 500 (d) of the reve- nue act of 1916. The regulations in general in re- spect to admissions under the reve- nue act of 1926 are the same as the regulations In respect to ad- missions under the revenue act of 1924, except for the provision that not taxable. Respectfully, IK H. Blair, Commissioner. law to hold any promise of enact mint and that it may be construed as an opening wedge to eventual dismemberment of the New York legal censorship. It Is almost unprecedented for the Legislature to reverse decisions of the powerful fiscal committees of the Legislature, usually composed of leaders in both Houses. Apollo's Vaudeville Paris, Feb. 20. The Isola brothers have with* drawn from the proposed manage- ment of the Apollo, and Mario Lom- bard will remain sole director. Lombard will present vaudeville here instead of operetta, which at present holds the stage of this new house. Est W WILLIAM MORRIS m » m \ Inc. (Til UORHlh WM. MOB) '§ •» 1660 Broadway, New Y. k THE TILLER SCHOOLS OF DANCING 143 Charms Cross Road LONDON Director, Mrs. John Tiller