New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-11-29

wall Street SLdIlSllCldllo nav W
timated to a nicely just how mucn
each of the large corporations VIII
be called upon to pay under the
"excess profits" section Of the tax
law. The trouble is that no two OF
them agree, and "perplexed read
er" wants to know just which one
Of the numerous calculations IS
most accurate. The answer is that
none of these estimates are of any
value whatever-not even those of
the corporations themselves. One
estimate places the "excess prohts'
tax of the United States Steel Cor
poration at 100000; another
at 100000. Here is a differ
ence of no less than $75,OOO,OCO In
the case of a single corporation, and
the amazing fact is that one is quite
as likely to be the right guess as the
other. 1t all depends on how the
Treasury chooses to interpret the
law.
No one can say just how the sex
cess profits" act is going to be ad-
ministered, or even that it can be
administered at all. The whole
matter is in a state of utter con-
fusion, and the outcome will prob
ably depend partly upon whether
the Board of Excess Profits Ad-
visers can see through the camou-
flage in which Congress enshrouded
its thoughts and find workable
basis for carrying out the act.
Probably it can't. And beyond
that lies the question of whether
the suggestions of an unofficial
body, whose findings may be re-
jected at will of the Secretary of
the. Treasury, will find favor in of
fetal eyes. Probably they will, for
the very simple reason that the gov
eminent doubtless would be glad to
discover a way of administering
what is probably the most incredi-
bly, stupid and vicious piece Of legls-
lation ever enacted by Congress.
But assuming that the suggestions
are adopted, that will not end the
trouble. The board can hardly do
more than lay down general rules
for defining Invested capital" and
general rules will not suffice. The
variations in conditions in different
industries and in the status Of the
numerous concerns in a given in
dustry are so great that it is not
only apparent that literal applica-
ton of the law is impossible, but
that under even the most liberal in
depreciation gross injustices are GER
tain to be worked. One company
might have to pay as much as, or
more than, half of its net earnings
in taxation under one interpreta-
ton of Invested capital" and
another only a quarter under the
same Interpretation. And this
punishment might be visited on the
first company because it had
sound financial policy, while the
other might escape its full share Of
the burden through oVercapitaliza-
ton. It all depends on the notions
of the Treasury and the Internal
Revenue Department, and any rul-
ings they make to iron out inequi-
ties in one case can hardly fail to
impose injustice equally great in
others.
The law as it stands is unwork-
able. The sooner that is recog-
nized and action is taken to secure
new legislation the better it will be.
All that can be expected Of the new
law is confusion and endless litiga-
ton; and not a few persons, includ-
ing some tax experts, are doubtful
if the law would stand were a fight
instituted against it. Probably the
best thing to do would be to adopt
the English law (making such
changes in rates as seem necessary
or desirable), which has stood the
test of three years without serious
protest, though the rates are much
higher than those imposed under the
law now on our statute books. Few
corporations or individuals would
object to the size Of the tax bill if
only the tax were levied with rea-
sonable equity. That seems to be
impossible as things stand at pres
ent.
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