Table Showing a Comparison of the Income from Tax Free and Taxable Securities for 1918 Under the Federal Income Tax Law The income from state, municipal and certain federal securities is free from the Federal Income Tax, and this table is included to enable the taxpayer to determine what must be the interest yield or basis of a taxable bond in order that the income therefrom, after the tax has been paid, shall equal the interest of a tax free bond. The top line of the table refers to the yields of tax free securities; the columns below show what must be the interest yield or basis of taxable securities in order that the net yield therefrom, after payment of tax, shall equal the tax free security yield shown at the top of the column. In comparing the relative advantages of taxable and tax free securities the basis of the taxable security used in the comparison is that basis which applies to the top part of a taxpayer's income. This has seemed the only practicable basis on which to make the comparison. For example: Assume an individual has a taxable income of $150,000. The table shows a tax of 64% on the top $50,000 of income. To net 32% on an investment, he must obtain for this top $50,000 of income a rate of 9.73% from taxable securities. This table may be applied also in respect to other forms of income. showing the yield at higher ranges of income on the two following pages. Range of Taxable Income and Rates Applying $2,000 Exemption Allowed It is continued 22,000 21% 3.80 4.43 14% 3.49 4.07 % 8.23 8.76 4.30 4.56 4.69 4.83 4.65 4.94 5.08 5.23 5.29 5.36 4.26 22% 3.85 23% 3.89 4.54 24% 3.94 4.60 28,000.01, 80,000 25% 4.00 4.66 5.33 80,000.01 32,000 26% 4.05 4.49 5.13 5.45 5.61 5.77 5.67 5.84 5.74 5.92 5.82 6.00 4.73 5.40 Table Showing a Comparison of the Income from Tax Free and Taxable Securities for 1918 Under the Federal Income Tax Law The income from state, municipal and certain federal securities is free from the Federal Income Tax, and this table is included to enable the taxpayer to determine what must be the interest yield or basis of a taxable bond in order that the income therefrom, after the tax has been paid, shall equal the interest of a tax free bond. The top line of the table refers to the yields of tax free securities; the columns below show what must be the interest yield or basis of taxable securities in order that the net yield therefrom, after payment of tax, shall equal the tax free security yield shown at the top of the column. In comparing the relative advantages of taxable and tax free securities the basis of the taxable security used in the comparison is that basis which applies to the top part of a taxpayer's income. This has seemed the only practicable basis on which to make the comparison. For example: Assume an individual has a taxable income of $150,000. The table shows a tax of 64% on the top $50,000 of income. To net 32% on an investment, he must obtain for this top $50,000 of income a rate of 9.73% from taxable securities. This table may be applied also in respect to other forms of income. It is continued showing the yield at higher ranges of income on the two following pages. Interest Yield (i e Basis) of Tax Free Securities 45% 43% 43% 5% 5% 5% 5% 5% 5% 6% | Corresponding Return which Taxable Securities must Produce in order to make an Equivalent Return. Table Showing a Comparison of the Income from Tax Free and Taxable Securities (continued) Interest Yield (i. e. Basis) of Tax Free Securities 45% 43% 43% 5% 53% 51% 53% 51% 53% | 6% Corresponding Return which Taxable Securities must Produce in order to make an Equivalent Return 7.70 7.91 8.12 8.33 8.53 8.74 8.68 8.90 9.11 9.21 9.43 9.37 9.07 9.30 9.53 9.25 9.48 10.18 10.64 11.10 9.43 9.66 9.90 10.13 10.37 10.83 11.32 9.62 9.86 10.09 10.33 10.57 11.04 11.52 9.81 10.06 10.29 10.53 10.78 11.26 11.78 9.25 9.50 9.75 10.00 10.25 10.50 10.75 11.00 11.50 12.00 9.45 9.70 9.95 10.20 10.45 10.71 10.96 11.21 11.73 12.25 9.64 9.90 10.15 10.40 10.66 10.92 11.97 12.50 9.84 10.10 10.36 10.62 10.89 11.16 10.05 10.32 10.59 10.87 11.14 11.41 11.68 11.96 10.27 10.55 10.83 11.11 11.38 11.66 11.94 12.22 10.50 10.79 11.07 11.36 11.64 11.93 12.21 12.50 10.76 11.05 11.34 11.63 11.92 12.21 12.50 12.80 11.02 11.32 11.62 11.92 12.21 12.51 12.80 13.10 11.28 11.59 11.89 12.20 12.50 12.80 13.10 13.40 14.02 14.64 11.56 11.87 12.18 12.50 12.81 13.12 13.43 13.75 14.37 15.00 12.85 13.20 13.55 13.90 14.24 14.59 14.93 15.28 15.97 16.67 14.45 14.84 15.23 15.62 16.01 16.41 16.80 17.20 17.97 18.75 16.52 16.97 17.42 17.87 18.31 18.75 19.20 19.65 20.54 21.43 18.50 19.00 19.50 20.00 20.50 21.00 21.50 22.00 23.00 24.00 19.27 19.79 20.31 20.84 21.36 21.88 22.40 22.92 23.96 25.00 20.13 20.68 21.23 21.74 22.28 22.83 23.37 23.90 25.00 26.09 9.71 9.94 11.18 |