New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-06-04

fairness under the plan Of taxing at
higher rate all profits in excess Of
the average for period Of several
years prior to the war.
"There ought TO be an excess pro-
fits tax which might we'll be at a
considerably higher rate than the
present s per cent or even the pro-
posed 16 per cent" said Mr.. Kahn,
"but it should only be applicable to
the extent that business profits ex-
coed the profits of, say, a certain
average period before the war, and
thus may justly be held to be attrib-
utable to war conditions.
"An offset which might be fixed
at, say, 10 per cent per annum, ought
to be allowed on all new capital in
vested in business since the begin
ming of the war.
II believe that as between the pro
posed lG per cent profit tax and an
excess profit tax on the British
model, at the rate of, say, twice thtS
figure-to begin with-the general
consensus of opinion would consider
the latter as much the fairer, much
tho less cumbersome TO handle and
collect and much the less hampering
upon business activities.
"Yet statistics seem to show that
such an excess profit tax would
bring in far larger return than the
proposed 16 per cent profit tax.
"From figures which were shown
to me it would appear that a 40 per
cent tax on excess profits over and
above the average earnings for the
last three years would yield for the
present year the amazing total of at
least $500, 100000 lin addition TO the
yield from the corporate income tax
taken at the rate of per cent?.
"These figures are based on the
assumption that the aggregate pro
fits for 1917 will approximately
equal those Of 1916-a not unreason-
able assumption, provided always
that unscientific taxation or other
unwise measures do not destroy
prosperity, inasmuch as the profits
for the first half Of 1917 are likely
to exceed those for the like period Of
1916.
1.-THE three-year average was Sc
lected on the theory that 1914 was
an exceedingly poor business year,
1915 was a year of fair prosperity
and in 1916 the full effect of our
stupendous war business had come
to raise profits to an exceedingly
high level"
The Senate has tentatively adopted
the plan Of basing the tax upon aver
age earnings for a series Of years,
though reports indicate that it will
select a period prior to the war, in
stead of the last three years, as the
basis for calculating the excess. It
proposes, however, to impose much
lower rate than the 40 per cent which
Mr.. Kahn mentions. Probably the
rate will be 16 per cent. If so, the
tax would fall short of yielding
$S0C,OOO,O00, but it may produce
much more than the official esti-
mates.
The extra profits arising out of
higher prices for exports, taxed at
16 per cent, alone would yield a rev.
enue of something like S75,000,000,
and higher prices do not account for
half the increase in exports profits
due to the war. "The Americas" in
a recent article, calculated that be-
tween January /, 1915, and Feb
ruary %, 1917, we sold for about
S1O,OOO,O0O,OO0 American products
which would have brought less than
$8,0O0,0O0,000 at the prices which
prevailed a month before the war.
ave have obtained prices % per
cent higher than our former prices"
"The Americas" goes on. "Of course
we did business before at fair
profit; there is no method Of deter
mining what average profit; perhaps
- or % per cent. But whatever the
gross profit of the former foreign
selling was, war time has added the
50, 900, 100000. We import some of
our manufacturing materials, but
the great bulk Of our exports has
consisted of the output of American
| industry, beginning with the crude
product of the soil and of our mines,
sometimes Of our forests, developed
step by step through the supplement
tary processes Of our industries, to
whatever elaborateness Of manufact-