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FEBRUARY IS,
THE MUSIC TRADE REVIEW
1919
THE NECESSITY FOR PATIENCE
(Continued from page 3)
to a high level. This naturally forces the careful manufacturer to buy only according to his actual needs,
fearing that should orders be placed way in advance and for substantial reserve stocks, as is the case in normal
times, he would face a sudden drop in the market and be at a great disadvantage in comparison to his competitor,
who, with a small reserve stock, would be free to take advantage of lower prices and thereby cut under his prices
for the finished product. The piano industry is going ahead steadily and most satisfactorily. The majority of
the manufacturers are rebuilding," not with a view to making a record in the matter of speed, but rather with a
view to erecting a permanent structure that will withstand successfully any sudden and perhaps unlooked-for
reaction.
Overproduction, it must be remembered, has been responsible in the past for the majority of the so-called
evils of the industry, and has meant chiefly low prices and long terms. Keeping the production, even of necessity,
within proper limits and slightly below the demand, if possible, means the maintenance of fair prices, shorter
terms, and a resultant financial stability throughout the entire industry.
The watchword would appear to be that the industry must have patience, make haste slowly, rebuild solidly
and substantially, and preserve the financial strength that was made possible by war conditions. In the end it
will mean better business and more profits, but just now the main requirement is patience.
New Tax Provisions of Special Interest to the Trade
Washington Correspondent of The Review Points Out the Salient Features of
the New Federal Tax Schedule Which Are of Particular Importance to Music
Dealers—Returns Must Be Filed With Local Revenue Offices by March 15
WASHINGTON, D. C, February 12.—Music trade
men who have been so busy watching Section
900 that they have given little heed to the other
sections in the voluminous Revenue Act of 1919-
1920 will be likely to be brought to sudden
realization that there is no time to be lost in
familiarizing themselves with all angles of the
new Federal tax schedule. "Returns" on in-
come and profits are due not later than March
15, a scant month away, and on that same date
each taxpayer is expected to fork over his first
instalment of 25 per cent, of his tax payments
for the calendar year 1918. To be sure, he may
file by March 15 merely approximate figures
and depend on making later a detailed showing
of his business operations for the past year, but
the outstanding fact is that every man in the
music trade is likely to be held to accountability
in one way or another in the near future.
Most general, of course, in application is the
personal or individual income tax. The only
citizen who will be excused on this score is the
single man who made last year less than $1,000
and the married man whose net income fell
below $2,000. To be sure, a married man is al-
lowed, on top of his exemption of $2,000, tax
immunity on $200 for each dependent. In short,
the new schedule is, with respect to flat exemp-
tions, just the same as the one now in force,
that is, the one founded on the Revenue Act of
1917.
There is, however, a sharp upward re-
vision of the income tax rate and just here
there is disclosed a wrong impression, wide-
spread among business men.
It has been announced in the newspapers, with
entire truth be it admitted, that the "normal"
rate of taxation under the new schedule of taxa-
tion for individuals is 12 per cent. It has not
been made clear, however, that this "normal"
rate has no significance for the man whose net
earnings last year were less than $5,000 to $6,000.
For the unmarried man who, after deducting
all allowable expenses, had no more than $5,000
clear income or for the married man who, by
like subtraction, was left with less than $6,000
the individual income rate is but 6 per cent.
Above the deadlines indicated the 12 per cent,
rate becomes effective.
Furthermore, all in-
comes above $5,000 must bear, in addition to the
regular income tax, a surtax that starts at 1 per
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musical name
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cent, and ascends by a sliding scale as income
mounts.
The corporation tax rate is, for the present,
12 per cent., but, as luck would have it, corpora-
tions are not to have the benefit of the same
measure of relief that is promised individuals
after this one year of a "peak" load. Accord-,
ing to the stipulations of the act, the normal
income rate for individuals will be reduced from
12 per cent, to 8 per cent, for the 1919 taxes
that will be due in 1920 and by an equivalent
slash the men making less than $5,000 or $6,000
will be let off with a 4 per cent, levy next year.
For corporations, however, the reduction that is
promised a year hence will be merely from 12
to 10 per cent.
Music trade men in figuring gross and net in-
come will follow the same rules that have been
observed heretofore in bookkeeping in connec-
tion with war taxes. All the ordinary and
necessary expenses of carrying on the business
are counted out and overhead is also supposed
to include an allowance for salary or other com-
pensation for personal services actually ren-
dered. Bad debts, etc., are to be handled as
heretofore.
Inventory may be made on the
basis of either cost or market value and the
accounting practice that is the accepted usage
of the industry will be recognized by the Com-
missioner of Internal Revenue as allowable even
though it differs in detail from procedure in some
other lines of trade.
This latitude in making inventory is specifical-
ly guaranteed in certain provisions that were in-
serted in the Act of 1919-1920 with the object
of making things easy for the business man.
Similarly there is provision for carrying over
net losses from one year to another in this era
of readjustment, which will tend to ease to some
extent the shrinkage of inventories should prices
recede. One clause in the new Act which seems
to have deep significance for music tradesmen
has entirely escaped notice in trade circles. The
new wording gives instructions that reasonable
allowance is to be permitted not only for the
wear and tear of property used in business, but
likewise for "obsolescence," an element that may
be revealed as of significant proportions in the
music trades.
Music tradesmen will doubtless feel, in many
PIANOS
instances, a distinct sense of disappointment
that Congress, after all that has been said on
the injustice or deficiencies of the old law on
this score, has not seen fit to make more ade-
quate provision in the new measure for the rec-
ognition of "intangible property," such as good-
will, patents, trade-marks, etc., etc. It is to be
conceded that there is some relaxation of stric-
tures, but there are many men in the retail and
manufacturing ends of the music industry who
have, by putting earnings into advertising, etc.,
built up good will, the value of which far ex-
ceeds 25 per cent, of the par value of the stock
or shares outstanding.
Officials of the Internal Revenue Bureau tell
The Review that the wording of the paragraph
which imposes a manufacturers or producers'
tax of 5 per cent, on the sale price or lease
price of pianos, organs, piano players, grapho-
phones, phonographs, talking machines, music
boxes and records used in connection with any
musical instrument, piano player, graphophone,
phonograph or talking machine, is so simple
that they do not anticipate that revenue collec-
tors throughout the country will be in any doubt
or difficulty in assessing the tax under this sec-
tion or that it will be necessary to make many
if any new rulings to supplement the rulings
made during the past two years in interpreta-
tion of what constitutes sale price and other
disputed points, as, for example, the exact sig-
nificance of the term "piano players."
INFORMATION CONCERNING POLAND
Bureau Now Prepared to Furnish Statistics Con-
cerning Conditions in That Country
The Commercial and Industrial Bureau of the'
Polish National Department, with offices at Aeo-
lian Hall, New York City, is now in active opera-
tion, and is prepared to furnish data of all kinds
for the information of manufacturers who are
desirous of doing export business with Poland.
The bureau has at the present time a most com-
plete array of statistics relative to trade con-
ditions and business possibilities in Poland, and
American manufacturers will find it to their ad-
vantage to investigate the possibilities of doing
business with that country.
ORGANS
E5TEY PIAND COMPANY • NEW YORK CITY