Historical Newspapers of South Carolina

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Page 12 / Clinton Mills Clothmaker / February 1987 Tax Obligations May Change The Tax Reform Act of 1986 is one of the most far-reaching tax laws ever enacted by the Congress. The tax obligations of diffe rent groups of taxpayers may change sub stantially. Companies and wealthy indi viduals will generally pay more. Many people with lower wages will pay lower taxes or even none at all. It is impossible to answer tax questions covering every individual because every one's situation is different but in an attempt to provide general tax information to em ployees, The Clothmaker is featuring this group of questions and answers on the new tax law. Q. How much will I have to pay in taxes? A. There is no easy answer to this ques tion. The following examples are taken from a Prentice-Hall, Inc. publication on the new tax law. •You and your spouse have a combined income of $30,000, have two children and take the standard deduction. In 1986, this would put you in the 22% tax bracket, and you would have to pay $3,548.30 in taxes. Under tax reform, in 1987 you would be in the 15% bracket and pay $2,676. Then in 1988, and thereafter, you would still be in the 15% bracket but because of increases in the personal exemption and the standard deduction, your taxes would drop to $2,580. •You’re a single person making $12,000 a year; you don’t itemize. When you pay your 1986 taxes, you’ll be in the 16% bracket, and your total tax bill will be $1,180.90. In 1987, you’ll move to the 15% bracket and your taxes will be $1,062. In 1988, you’ll pay $1,057.50. •You’re a single parent with one child, making $22,000 and taking the standard deduction. As a head of household, your 1986 tax bracket would be 20% and you'd pay $2,782.70. With the new tax law, in 1987 you’d be in the 15% bracket and have to pay $2,249. In 1988, you’d be in the 15% bracket, and pay $2,055. Q. Why these changes? A. There are three major differences in the new tax law. 1. There will be new and fewer tax brackets. 2. The personal exemption will in crease. 3. The “standard deduction’’ will in crease. Q. How will the tax brackets change? A. Instead of the 15 tax brackets we have now (1986 taxes), by 1988 there wi 11 be on ly two brackets. 1987 is a transition year and will have five brackets. 1986 — 15 tax brackets; 1987 — Five brackets, 11%, 15%, 28%, 35% and 38 l / 2 %; 1988 —Two brackets, 15% and 28%. Q. How about the personal exemption? A. For 1986 you can subtract $1,080 each for yourself, your spouse and your de pendents to arrive at taxable income. In 1987 the personal exemption will be $1,900; in 1988, $1,950; and in 1989, $2,000. Q. How about the “standard deduction?" A. In 1986 if you didn't itemize deduc tions, you were given a standard deduction Cornelson Retires... (Continued from page 1) and vice chairman. During his association with Clinton Mills, the company merged Lydia and Clinton Cotton Mills into the ClintonCorporation; 1 constructed the Bailey Plant; acquired Mid-America Yarn Mills, and entered the circular and warp knit markets; added the Geneva operations; and began an extensive internal modernization program. Cornelson is a past president of the South Carolina Textile Manufacturer’s As sociation and was active in ATMI. equivalent of $3,670 if married or $2,480 if single. The standard deduction was built into the tax tables and tax rate schedules, so you didn't list it separately on your return. In 1987 the standard deduction will be $3,760 if married and filing jointly or $2,540 if single. It will not be built into the tax tables, so you’ll have to subtract your standard deduction from adjusted gross in come to arrive at taxable income. In 1988 you'll be able to take a standard deduction of $5,000 if married and filing jointly or $3,000 if single. Other deductions apply for married and filing separately or head of household. Q. Are there changes in the rules on ite mized deductions? A. State Sales Tax — 1986 itemizers could claim an automatic deduction for state sales taxes. After 1986 state and local sales taxes will not be deductible. State or local Income Property Taxes — State and local income and property taxes remain fully deductible. Mortgage Interest — The interest you pay on your home mortgage is deductible as long as the mortgage amount does not exceed what you paid for the home plus any im provements you've made. Personal Loans or Credit Card Loans — Deductions for interest on personal loans, installment credit or credit card balances will be gradually phased out and then com pletely eliminated after 1990. Medical Expenses — In 1986 you could deduct qualifying medical expenses in ex cess of 5% of your adjusted gross income. In 1987 you will be able to deduct only those medical expenses in excess of 7 1 /2% of your adjusted gross income. Charitable Contributions —Charitable contributions will remain deductible for tax payers who itemize deductions. Child Care Credit — You may continue to claim a tax credit for child and dependent care expenses, just as you have before. Clinton Mills Sales Co. John Cavanagh Named Sales VP John T. Cavanagh has been prom oted to vice-president, sales, of Clin ton Mills Sales Co. He will report to James Raleigh, president. Cavanagh, formerly national re gional manager, succeeds Ronald E. Jason, who died recently. Frankie Harmon examines pine seedlings being set out on idle Clinton Mills property. The project is indicative of the company’s commitment to sound land and water conservation practices. Clinton Mills Turns Idle Land Into Productive Timberlands Clinton Project Engineer Frankie Harmon examines some of the approximately 80,000 pine trees currently being planted on idle land owned by Clinton Mills. “We're returning non-productive areas into productive timberland," noted Harmon. “Approximately 725 improved Piedmont Loblolly pines are being planted per acre,” added Harmon. “We're using a mechanical tree planter equipped with a scalper to remove grass, open the row, drop the tree and replace the soil around the seedlings." In recent years, there has been a renewed emphasis in reforestation projects. Huge de mands for wood products have caused a rapid depletion of forest lands and many landowners are attempting to plant idle lands and replant areas where trees have grown previously. Forest lands provide a natural habitat for wildlife. The company’s woodland commit ments will provide a natural environment for small game as well as future forestry pro ducts. According to Harmon, trees set out in 1987 should be ready for thinning by 1999. BULK RATE U.S. POSTAGE