Evening journal., 1916-07-10
POWDER Co. OPPOSES
new REVENUE BILL
DUPONT Corporation Points
Explosives Makers dust
Bear Heaviest Tax
APPLIES TO BUSINESS
OF PRESENT YEAR, TOO

The publicity bureau of E. I. du-
Pont de Nemours and Company mas
issued the following statement:
The administrator new revenue
BILL which seeks to raise s266,0O0,0OO,
chiefly through increased taxes on in
comes. private and corporate, is at
tracing a great amount of attention
here II is realized that the powder
making plants have been singled out
TO be the bearers of the heaviest part
of the burden. Wilmington is inter
ested because Of the effect on the
great DUPONT industry, located here.
The proposed tax on powder is pro-
portionately much greater than that
on any other product or industry The
trainers Of the bill apparently have
not compared the increase in powder
prices with the increase on the other
war supplies.
Before the war pig copper sold
at 15 cents a pound. It's high mark
has been 29N cents--nearly 100 per
cent. increase-and today II is 26
cents, with no assurance of early de-
livery. Sheet copper before the war
was 16 cents. Now It is 371s, and can
hardly be had at that--an advance Of
$50 per cent
Brass, another important war ma
terial, has increased from 13 to 40
cents.
Powder shipped to foreign countries
for war purposes, the kind it Is pro-
posed to tax by this bill, has advanced
in price less than Is per cent, despite
the popular belief that immense prof
its are being made from the war or
ders.
The profits which have given large
dividends to powder company stock
holders are made on the great vol
ume of business. not on inflated prices.
The advance in price is hardly in
keeping with the advance in raw ma
terals. Under the bill this military
powder is TO be taxed at a rate more
than double that of copper and nearly
double the rate imposed on other mu-
nitions.
The bill now before the House pro-
vides that the powder manufacturer
shall pay to the government a tax
which may amount in maximum to go
per cent or more of the profits, leav-
ing to the manufacturer. who has in
vested large capital and has taken
unusual risks in a temporary busi-
ness, 40 per cent or less of the profit
which his enterprise has made.
This action is as drastic as Grear
Britain has found it necessary to tax,
even with world war on her hands. {,
save herself from national disaster.
The bill provides that in the case o
powder manufacturers there shall b.
levied an excise tax of:
Five per centum of the amount o
such lgrossl receipts not in excess o
81 COO, 900; and
Eight per centum of the amount b,
which such lgross) receipts excee'
Sl,OOO,OO0r
A hypothetical case, using round fig
ures, which every manufacturer will re
alize are relatively correct, as to turn
over" and proportionate profits, show
these results:
Investment ................ $4,000, ,OO
Sales lgross receiptsl ..... 100000
Profit 25 per cent on invest
ment ................... 2,0OO,OO
Or ~ l-2 per cent. on sales. 2,500,00
Tax 5 per cent. on 81 100000 5000
Tax s per cent. on sl9,OO0O0O. $4,000
sl.57O.OO
Profit Observation-Disclosures. 81 10000
10 per cent. on investment. 100000
Tax ......... ............... 81 ,5lO,OO
Therefore company gets SlOOO,OOO Q
profit 40 per cent.
Therefore government gets 81 10000
of profit 60. per cent.
The bill makes allowance Of a prof
of 10 per cent. on investment befor
tax is levied; this profit is known to h
too small for the risks of explosiv
manufacture. With 10 per cent. as
maximum, no one could afford to tax
the risks Of the minimum
After an allowance of 10 per cent
all the profits of the manufacturer o
explosives are retained by the govern
ment until a certain percentage o
profits is reached. depending on tn
relation of sales to investment; thu
iif the annual gross sales of cor
poration are double in value tn
manufacturing investment. 26 pc
cent must be earned before the com
pany Is allowed 10 retain more thai
10 per cent; should the gross sale
equal three times the value Of tn
manufacturing plant. "a per cent
must be earned in order to produc
return beyond the 10 percent. allow
ance Of the bill; in other words.
the turnover is double the plan
value the government will receive
per cent. Of the total profits whe
the earnings are 26 per cent. on tn
investment and If the sales are thre
times the value OF the investmen
the government will receive 20 pc
cent, OF the profits IL the investmer
yields "a per cent; meanwhile unde
the conditions above specified th
manufacturer cannot receive an
more than ten per cent on his inves
ment unless the earnings exceed th
percentages noted
Another feature Of the bill whic
Is being criticized is its retroactiy
clause providing that "the first tar
able year shall be the twelve month
ending December 81. 1916"
This means that powder maker
shall have had no opportunity to az
just their prices or expenses to met
the tax. even for the next six month
for contracts are in force based O
former conditions.