The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1917-11-08
Unraveling the Excess Profits Tax; Eff
fort to Explain Understandable Features

profits tax, the law that has so fal
batfled all attempts at satisfactory in,
depreciation, is contained in the cur,
rent issue of the Magazine of Wal
Street. While making no claim t
having solved the problem, Barnard
Powers, the managing editor, has Civ,
en- its salient features in the following
contribution, leaving the more intri.
cate and often conflicting points to bt
passed upon in the last word from
Washington.
Lawyers Disagree.
Asked by The Magazine of Wal
Street to write an analysis of the new
excess profits tax which would be in
telligible to the layman and investor
a corporation lawyer whose name is
nationally known, replied: Il would be
very glad to do so except for one very
cogent reason-I can not" His reply
represents the position of the lega
world in regard to the war revenue
bills, Lawyers frankly admit that
they are Stamped and until the law
has become solidified by rulings of the
secretary of the treasury and court de-
cisions, it is useless to attempt to ap-
ply the yardstick laws to the earnings
of corporations At the present time
probably every corporation attorney
and accountant isA endeavoring to
ira nS11ta into fipI1ras ha ~
the new laws, and where there is Sc
much ambiguity of phrasing as the
statutes exhibit, there is certain to be
variety of conclusions. Eventually
they will all be Strengthened out. There
are bound to be inequalities and in
justices but the answer is that the
bill is war measure drawn up as
rapidly as possible in time of great
stress. The end more than justifies
the means,
From Layman's Viewpoint.
Where distinguished legal lights dis
agree it would indeed be folly for the
layman to interpose an opinion, and
the purpose of this article is not to at
tempt to interpret the excess profits
tax. 1t aims simply to Gull and pre-
sent the essential points in the new
bills so that Mr.. Average Citizen will
ons at Washington are driving at,
without wading through an ocean of
involved legal phraseology. The main
points are clear enough; the confu-
sion has arisen over the Interpretation
of subsidiary points.
The original bill, designated Public
Act No. I'll, and entitled IAN Act to
Increase the Revenue, and for Other
Purposes" approved September g.
1916, and amended March and Octo-
Der of the present year, levied an
annual tax of per cent on the total
net income of all corporations, joint
stock companies, associations, etc, re-
ceived in the preceding calendar year
This tax began with and included
1916, and applies to each year there
after. In addition to this per cen
tax congress added a sort of penalt!
tax in the shape of 10 per cent lev!
on amounts remaining undistribute'
six months after the close of each cal
nedar year and which should not b.
employed or invested in company
business. The idea Of that claus,
seems to be to compel corporations
either to distribute their surplus fund.
or put them to work.
Uncle Sam proved right here, how
ness had not deserted him when h
framed the bill, for we find the inter
esting clause anent this particular tax
"The tax imposed by this subdivision
shall not apply to that portion of un
distributed net income which is
invested in obligations of the Unitet
States issued after September 1, 1917
In short, if you are corporation will
money which you can not use in you
business, and which for various reas
ons you do not wish to distribute t.
your StOChlloluGlS, Simply oole ~ - "'A.
in Liberty bonds and escape the ex
cess profits tax.
The bill, of course, included Ion:
list of exempted corporations, such al
labor or horticultural organizations
fraternal societies, loan associations
etc, etc. The manner in which cor
noration or company NAV determine it
net income is set forth with a reason
able degree of clarity in the bill ant
the deductions allowed include 0) AL
ordinary and necessary expenses; e.
Losses sustained including deprecia'
ton; 60 Interest payments; (G Taxes
paid
Such in outline were the provisions
of the original income tax bill passed
in September, 1915, and later amend
i ed, as they apply to corporations
With these general facts in mind. /
is not a difficult matter for the bust
ness man or investor by CAREFUL!
reading the entire bill to form his owl
opinion as to how its terms may appl!
to his own particular business or Sc
curities. Whether that opinion Woult
prove to be correct. however, can no
Fbe determined with exactitude unit
the law has been clearly defined.
Excess Profits Bill.
In addition to amending the origina
n innnnla hill