Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1918-08-20
TAX THE PROFITEERS
But Congress Must First Be Sure That 1t Is
Mulcting the Guilty

who prepared the report of the Treasury
Department on profteering with delib-
erately lying. There is widespread
feeling, however, that the report does not
tell the whole truth, and that it is there
fore misleading.
No one doubts that there has been
profiteering, but no expert accountant
will admit that it is possible to discover
what business man has been making an
unfair profit and what business man has
been earning merely fair return on his
business merely by computing the per-
centage of profit on the capital invested.
The men who have gone into the busi-
ness of making munitions on a "shoe-
string" and are accused of making large
percentages in profits may or may not
be guilty of profteering. 1t is impossi-
BILE to decide on the evidence so far made
public.
What the country wants to know is
whether the manufacturers of munitions,
the shoe manufacturers, the -four mill
ers, the garment makers and all the rest
have been charging fair price based on
the cost Of production, regardless OF the
capital INFESTED in their business. If the
price is not fair, if an exorbitant per-
centage above the cos. of production has
been charged, then there has been
profteering. But if a manufacturer has
made, say, $75 on every $1,000 worth of
munitions or clothing or shoes or flour
that he has turned out he is guilty of no
offense which would justify any one in
pillorying him as a profteer.
The basis of computation of profits
adopted in the Treasury Department
statement is not wholly trustworthy
without corroborating and amplifying
facts. 1t is up to Congress to get at the
truth in fairness to the business of the
country.
The program seems to be for the
House of Representatives to jam the
Kitchin bill through, with its provisions
for heavy taxes on excess profits and on
war profits, without any inquiry to dis
cover whether those taxes will work in
justice to legitimate business. 1t will be
the duty of the Senate, therefore, to
make such an inquiry into the amount
of the annual overturn in the businesses
to be taxed and into its relation to the
profits earned as will enable it to form
some sort of defensible conclusion as
to the justness of the extremely heavy
taxes proposed in the bill.
The man qUho seeks to get rich out OF
this avar deserves no sympdthy, but 1t Is
useless to shut our eyes to the fact that
many men will make fortunes out Of it.
1t is admitted that after the money has
been made the Government is justified in
taking large part of it by taxes upon it
in order to help pay the cost of the war.
But we should not fall into the error of
assuming that because company with
capital of $1,OoO,000 has made $1,O0O,-
900 profit on $10,000,000 annual busi-
ness it is guilty of crime. American
business men as class are not crimi-
nails. They are as patriotic as American
Congressman.
What the country desires is fair tax
law which will raise the needed revenue
by distributing the burden as widely and
as equitably as possible. The man in
the street knows enough. about what the
economists call the repercussion of taxa
ton to understand that if the shoe
manufacturer, for example, has to pay
tax equivalent to twenty-five cents on
every pair of shoes he produces the tax
will appear in the retail store in the form
of an increase of fifty cents or one dol
lar in the price of pair of shoes. If
any one doubts this all he has to do is
to recall that when the coal operators
had to pay the miners about five cents a
| ton more for mining coal the consumer
was compelled to pay twenty-five cents
more a ton when the coal reached this
city.
At the best, the taxes which Congress
is proposing to levy on the manufactur-
ers of commodities in general use will
be handed on to the consumer doubled if
not trebled. Thus the country will be
compelled to pay the tax two or three
times over at the least, while the national
Treasury gets it only once.
If Congress would levy some form of
a consumption tax, to be added to the
retail price when the article is sold, the
country would have to pay the tax only
once,' and the possibility of such tax
profiteering by the manufacturer and
middleman would be lessened.
But in any event, every business man,
great and small, and the public at large
are entitled to know what justification
there is in the charge made by inference
in the Treasury Department statement
that our industries have been making
excessive profits. When the charge is
i proved then the profteers can be mulcted
of their gains with no injustice done to