Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1917-06-20
Tax Discriminate

In order to have an excess profits
tax in accordance with the English
system it Is necessary to extend the
tax to every business. including bust
ness conducted and owned by an in
dividual. The present law imposes the
tax upon businesses conducted and
owned by corporations and partner
ships only The discrimination under
example:
A doing business as an individual
under the name "a"
B doing business as partnership
under the name "B e. CO."
C doing business as corporation
under the name &C Incorporated
Suppose that each is engaged in the
same business has the same amount
Of capital invested. made profit be-
fore the war of 100000 and since the
war profit of s1o00.oOo. What is the
result under the present law? pays
no excess profitE tax, while each of the
others, with the same amount of cap
itaI invested and making the same
profit, pays an excess profits tax Of
per cent Of 100000. or tax amount
ing to $4,000. If the rate were 16 per
cent as proposed in the house bill, b
and G would each pay an excess pro-
Ats tax amounting to $4,000, while A
would pay no excess profits tax at all.
This constitutes discrimination
against business conducted by corpo-
rations and partnerships. Under the
income tax law the net earnings Of A,
B and c are in each case subject to
vol N
additional, the normal and additional
tax being paid by A and B as individ-
uals, while c pays the normal tax as
a corporation and then c as an indi-
vidual after receiving the dividends
pays the additional tax.
Therefore, to impose an excess pro-
fits tax upon corporations and partner
ships only is to have no excess profits
at all. but to have instead a tax upon
the privilege OF doing business as
corporation or partnership, measured
by the amount of profits earned over
and above a certain standard.
The result Of such tax will be the
dissolution Of corporations and part
nerships wherever possible for the
purpose of avoiding the tax No bust
ness subject to the tax will be con-
Quoted by corporation or partnership
If it can be possibly be conducted as
an individual business. Therefore, no
estimate Of the amount such tax will
produce can be relied upon. because no
one knows how many corporations ana
partnerships will DE dissolved tor the
sole purpose Of avoiding the tax. Prac-
tically all corporations and partner
ships probably can be induced to pay
a small penalty for doing business as
a corporation or partnership, but they
can not be induced to pay the price
charged under the proposed excess
profits act If they are in position to
change their method of doing business,
ard probably thousands Of them are In
such position.
It Is true that certain corporations
can not evade this tax by dissolution;
but Is it fair proposition to discrim-
mate against individual competitors at
time when these corporations are ex-
pected to put forth their best efforts
and assist in winning the wal?
The proper and straightforWaro
thing to do Is to impose the tax upon
each and every business under the
same conditions, regardless OF the
character OF the owner of the business,
in order that the tax may be an excess
profits tax IN rsaiity well as IN 4 n