Act of 1917. 75 sources by every individual, a citizen or resident of the United States, a tax of two per centum upon such income; and a like tax shall be levied, assessed, collected, and paid annually upon the entire net income received in the preceding calendar year from all sources within the United States by every individual, a nonresident alien, including interest on bonds, notes, or other interest-bearing obligations of residents, corporate or otherwise. SEC. 1.83 That in addition to the normal tax imposed by subdivision (a) of section one of the Act entitled "An Act to in sources by every individual, a preceding calendar year to ev- because it imposed an income tax on the income of a native citizen of the United States, who was a resident of and permanently domiciled in Mexico, and whose income was derived solely from personalty and realty with a fixed situs in Mexico. The power to lay an income tax on a citizen of the United States is not dependent upon the domicile of the citizen or the situs of the property which produces the income. The question of whether the Act of 1921 should be construed to impose an income tax on a native citizen of the United States, who was a resident of and perma nently domiciled in Mexico, and whose income was derived solely from personalty and realty with a fixed situs in Mexico, was not before the court. Cook v. Tait (Col.), (1924) U. S. affirming Id., (D. C., D. Md. 1923) 286 Fed. 409. penses of the proceedings. Jacobson v. Smietanka (Col.), (C. C. A., Seventh Cir. 1920) Fed. 77 (b) The Sixteenth Amendment did not extend the taxing power of Congress to new objects of taxation, but merely removed the necessity for apportioning taxes laid on incomes. Evans v. Gore (Col.), (1920) 253 U. S. 245, affirming Id., (D. C., W. D. Kentucky 1919) 262 Fed. 550. 77 (c) An income tax under the Act of 1918 is not a tax upon any specific sum of money but is a personal tax measured by the sums of money received or possibly accrued to the person taxed during a certain period. Penn. Cement Co. v. Bradley Const. Co., (D. C., S. D. N. Y. 1920) 274 Fed. 1003. 78 Sec. 216, p. 114. 79 The Sixteenth Amendment to the Constitution does not add new objects of taxation; it merely permits the taxation of incomes without apportionment. Brushaber v. U. P. R. R. Co., (1916) 240 U. S. 1; Stanton v. Baltic Mining Co., (1916) 240 U. S. 103; Tyee Realty Co. v. Anderson, (1916) 240 U. S. 115; Peck & Co. Inc. v. Lowe (Col.), (1918) 247 U. S. 165. 73 (b) Although the only question raised by the demurrer to the declaration was whether Congress had the power under the constitution to levy an income tax on the income of a native citizen of the United States, who was a resident of and permanently domiciled in Mexico, and whose income, was derived solely from personalty and realty with a fixed situs in Mexico, the court said, "There is really no room for question that Congress has sought to tax the plaintiff's income, and has used words apt to accomplish that " in the Act of 1921. purpose, rence Cook v. Tait (Col.), (D. C., Md. 1923) 286 Fed. 409. 74 The Act of 1913 did not tax the income of estates, as distinguished from the income of citizens or individuals resident of the country. The definition of "citizen" or individual" in the act did not include estates. Gavit v. Irwin (Col.), (C. C. A., Second Cir. 1923) 295 Fed. 84, affirming Id., (D. C., N. D. N. Y. 1921) 275 Fed. 643. 75 For additional normal tax imposed by the Act of 1917, see Sec. 1, post. 76 The Sixteenth Amendment did not add new ob jects of taxation. It merely removed the necessity for an apportionment of taxes laid on incomes. Eisner (Col.) v. Macomber, (1920)_252 U. S. 189; Brewster v. Walsh (Col.), (D. C., D. Conn. 1920) 268 Fed. 207. 77(a) In bankruptcy proceedings, Federal taxes have priority over the payment of dividends to creditors, but not priority over the administration ex 80 The Act of 1918 imposes an income tax upon a citizen of the United States who resides during the Lawentire taxable year in the Philippine Islands. v. Wardell, (C. C. A., Ninth Cir. 1921) 273 Fed. 405, affirming Id., (D. C., N. D. Cal. 1920) 270 Fed. 682. 81 Income derived from stocks and bonds of corporations organized under the laws of the United States and bonds and mortgages secured on property in the United States, which were owned by a nonresident alien, but actually in the possession of his agent in the United States, under power of attorney to sell, assign, or transfer, and invest and reinvest the proceeds, was taxable as income derived from "property owned in the United States," within the meaning of the Act of 1913. DeGanay v. Lederer (Col.), (1919) 250 U. S. 376, affirming Id., (D. C., E. D. Penn. 1917) 239 Fed. 568. * 82 Sec. 210 of the Act of 1921, as amended by the Act of March 4, 1923, effective Jan. 1, 1922. 83 Additional Normal Tax, imposed by the Act of 1917. 84 Sec. 1 (a) of the Act of 1916, supra. Act of 1924. nonresident alien individual, a resident of a contiguous country, a normal tax equal to the sum of the following: (1) 2 per centum of the amount by which the part of the net income attributable to wages, salaries, professional fees, or other amounts received as compensation for personal services actually performed in the United States, exceeds the credits provided in subdivisions (d) and (e) of section 216; but the amount taxable at such 2 per centum rate shall not exceed $4,000; (2) 4 per centum of the amount by which such part of the net income exceeds the sum of (A) the credits provided in subdivisions (d) and (e) of section 216, plus (B) $4,000; but the amount taxable at such 4 per centum rate shall not exceed $4,000; and (3) 6 per centum of the amount of the net income in excess of the sum of (A) the amount taxed under paragraphs (1) and (2), plus (B) the credits provided in section 216. Act of 1921. of the amount of the net income in excess of the credits provided in section 216, except 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. SEC. 210. (b) 82 In lieu of the tax imposed by subdivision (a) there shall be levied, collected, and paid for the taxable year 1922 and each taxable year thereafter, upon the net income of every nonresident alien individual, a resident of a contiguous country, a normal tax equal to the sum of the following: (1) 4 per centum of the amount of the net income attributable to compensation for labor or personal services performed in the United States in excess of the credits provided in subdivisions (d) and (e) of section 216; but the amount taxable at such 4 per centum rate shall not exceed $4,000; and (2) 8 per centum of the amount of the net income in excess of the sum of (A) the amount taxed under paragraph (1) plus (B) the credits provided in section 216. Act of 1918. 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. Act of 1917. crease the revenue, and for other purposes," approved September eighth, nineteen hundred and sixteen, there shall be levied, assessed, collected and paid a like normal tax of two per centum upon the income of every individual, a citizen or resident of the United States, received in the calendar year nineteen hundred and seventeens and every calendar year thereafter. Act of 1916. Act of 1913. SEC. 1. (b) [1] In addition to the income tax imposed by subdivision (a) of this section (herein referred to as the normal tax) there shall be levied, assessed, collected, and paid upon the total net income of every individual, or, in the case of a non SEC. 1. (b) [1] In addition to A. Subdivision 2. [1] In addithe income tax imposed by sub- tion to the income tax provided division (a) of this section (here- under this section (herein rein referred to as the normal ferred to as the normal income tax) there shall be levied, as- tax) there shall be levied, assessed, collected, and paid upon sessed, and collected upon the the total net income of every net income of every individual86 individual, or, in the case of a an additional income tax 87 ond Cir. 1923) 295 Fed. 84, affirming Id., (D. C., N. D. N. Y. 1921) 275 Fed. 643. 87 The progressive rate features of the Act of 1913 were not wanting in "due process of law." Brushaber v. U. P. R. R. Co., (1916) 240 U. S. 1; Stanton v. Baltic Mining Co., (1916) 240 U. S. 103; Tyee Realty Co. v. Anderson, (1916) 240 U. S. 115. Act of 1924. individual a surtax as follows:90 Upon a net income of $10,000 there shall be no surtax; upon net incomes in excess of $10,000 and not in excess of $14,000, 1 per centum of such excess. $40 upon net incomes of $14,000; and upon net incomes in excess of $14,000 and not in excess of $16,000, 2 per centum in addition of such excess. $80 upon net incomes of $16,000; and upon net incomes in excess of $16,000 and not in excess of $18,000, 3 per centum in addition of such excess. $140 upon net incomes of $18,000; and upon net incomes in excess of $18,000 and not in excess of $20,000, 4 per centum in addition of such excess. $220 upon net incomes of $20,000; and upon net incomes in excess of $20,000 and not in excess of $22,000, 5 per centum in addition of such excess. $320 upon net incomes of $22,000; and upon net incomes in excess of $22,000 and not in excess of $24,000, 6 per centum in addition of such excess. $440 upon net incomes of $24, Act of 1921. (2) For the calendar year 1922 88 and each calendar year thereafter, a surtax equal to the sum of the following: Act of 1918. and paid for each taxable year upon the net income of every individual, a surtax9 equal to the sum of the following: 1 per centum of the amount 1 per centum of the amount by which the net income exceeds by which the net income exceeds $6,000 and does not exceed $5,000 and does not exceed $10,000; $6,000; 2 per centum of the amount 2 per centum of the amount by which the net income exceeds by which the net income exceeds $10,000 and does not exceed $6,000 and does not exceed $12,000; $8,000; 3 per centum of the amount by which the net income exceeds $12,000 and does not exceed $14,000; 4 per centum of the amount by which the net income exceeds $14,000 and does not exceed $16,000; 5 per centum of the amount by which the net income exceeds $16,000 and does not exceed $18,000; 6 per centum of the amount by which the net income exceeds $18,000 and does not exceed $20,000; 8 per centum of the amount by which the net income exceeds $20,000 and does not exceed $22,000; 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; 88 The surtax rates for 1921 were as follows; SEC. 211. (a) (1) For the calendar year 1921, 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; 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 $56,000 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; Act of 1917. resident alien, the total net income received from all sources within the United States, an additional income tax (herein referred to as the additional tax) 91 of one per centum per annum upon the amount by which such total net income exceeds $20,000 and does not exceed $40,000, two per centum per annum upon the amount by which such total net income exceeds $40,000 and does not exceed $60,000, three per centum per annum upon the amount by which such total net income exceeds $60,000 and does not exceed $80,000, four per centum per annum upon the amount by which such total net income exceeds $80,000 and does not exceed $100,000, five per centum per annum upon the amount by which such total net income exceeds $100,000 and does not exceed $150,000, six per centum per annum upon the amount by which such total net income exceeds $150,000 and does not exceed $200,000, seven per centum per annum upon the amount by which such total net income exceeds $200,000 Act of 1916. nonresident alien, the total net income received from all sources within the United States, an additional income tax (herein referred to as the additional tax) of one per centum per annum upon the amount by which such total net income exceeds $20,000 and does not exceed $40,000, two per centum per annum upon the amount by which such total net income exceeds $40,000 and does not exceed $60,000, three per centum per annum upon the amount by which such total net income exceeds $60,000 and does not exceed $80,000, four per centum per annum upon the amount by which such total net income exceeds $80,000 and does not exceed $100,000, Act of 1913. (herein referred to as the additional tax) of 1 per centum per annum upon the amount by which the total net income exceeds $20,000 and does not exceed $50,000, and 2 per centum per annum upon the amount by which the total net income exceeds $50,000 and does not exceed $75,000, 3 per centum per annum upon the amount by which the total net income exceeds $75,000 and does not exceed $100,000, 4 per centum per annum upon the amount by which the total net income exceeds $100,000 and does not exceed $250,000, 5 per centum per anuum upon the amount by which the total net income exceeds $250,000 and does not exceed $500,000, and five per centum per annum 6 per centum per annum upon upon the amount by which such the amount by which the total total net income exceeds $100,- net income exceeds $500,000. 000 and does not exceed $150,000, six per centum per annum upon the amount by which such total net income exceeds $150,000 and does not exceed $200,000, 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 income 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 $98.00; 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. 89 A tax of 72% on the net income falling within the last bracket and an average tax of 50% on the entire net income imposed by the Act of 1918, did not deprive the taxpayer of his property without due process of law as guaranteed by the Fifth Amendment. Towne v. McElligott (Act. Col.), (D. C., S. D. N. Y. 1921) 274 Fed. 960. 90 See Title XII, f. n. 72, p. 58, reducing tax pay able in 1924. 91 For additional surtax imposed by Act of 1917, see Sec. 2, post. |