TaÌˆgliche Omaha tribuÌˆne. [volume] (Omaha, Nebr.) 1912-1926, 1917-10-18
AN UNSOENTIFIC
PROFITS TAX.
UNJUST DISCRIMINATION IN
FAVOR or Inefficient COR
PORATIONS Is CHARGED.

In view Of the fact that the
principle of e.eess profit taxes
has been retained in the war tax
bill as adopted by both houses
of Congress the following art
iele Of The New York Evening
Nail, although written before
The bill received its final sane
ton, is OF special interest:
The excess profit tax, in its
present form, is SO unjust that
The business interests OF the
country are properly protesting
against it. They are not object
ing to the high rate Of the levy
upon excess profits, but upon
the manner id which that levy
is made. Some people seem to
think we have a war profits tax
pending in Congress, We have
nothing Of the sort. We have an
excess profit taxa taxon all 10y
profits in excess Of an arbitrary
standard set down in the law,
8 or s or 10 per cent. on the
capital of the corporation or
partnership.
There are two concerns in
New York state, each capltaiiz-
al at 100000. Before the war
one of them, corporation a, was
ineffciently managed. 1t earn
cd 2 per cent. on its capital, or
$1,000. Corporation A expects
10 earn $4,000 more iii 1917;
that IS $4,000 in all. Under the
excess profits bill as reported
by the Senate, this corporation
viii pay a tax on IFS l9lz earn-
ings above 8 per cent, that is,
above 5000. III will thus pay
4 tax on $4,000 excess pro-
fits
CORPORATION 3. Likewise ca
pitalized at $4,000, was eft
cientIy operated before the
tear IT annually earned 40 per
| cent. on its capital. or $4,000
1T likewise will report an in
rease Of $4,000 in its earnings
for 1912. In 1917 it viii carr
| 10000. Under the Senate bill
corporation B will pay tax or
all its 1917 earnings in exces:
81 $1,000, 10 per cent, on til
capital 90 per cent. is the max.
imum reduction to be allowed
So corporation 3 viii pay q tag
ON 1917 excess profits Of sou,
900.
There is no justice in thi.
process Of penalizing corpora
tons that were efficient befor,
the war, and substituting thos,
that were Inefficient. Each 0
these corporations had wal pro
fits Of $4,000. Each Of then
ought to be taxed on $4,000
That IS, we ought to have
war profits tax based on III
simple differences in earning
between 1917 and the pre-wa
period. What the Senate ha
proposed IS a tax on all profit
in excess of an arbitrary stand
ard which is falsely assumed t
be applicable TO all the corfora
tons Of the country.
The United States Treasur
Department can furnish Cor
gress with an unerring statemer
Of the war profits made b
American corporations. Thos
war profits are simply the di
ference between the net carr
! ings reported by the corpora
tons paying corporation neon
taxes in 1911-l3, and the carr
! ings reported by these san
! CORPORATIONS TO the income ia
. collectors in 1917. When "
have this certain, just measuf
I Of wal profits, why turn to Il
creation Of an uncertain, unjus
arbitrary standard Of "exces.
. profits, many Of which are NJ
2 war profits at all?
The English Government tax.
war profits and leyies upon the
! a rate Of 80 per cent. Ameri'
3 proposes to tax excess prof
and finds that such a tax W
bring hardship in SO many cas-
that the Senate said it was II
safe to levy a higher averaf
n rate than 31H per cent. Let
turn to the British method
I, .cpfy:u0 fLe tag anlv to tho