Evening star., 1920-01-17
EXCESS PROFITS
| ITAXL|KELY TO END
4 AFTER ELECTION
Republican Majority in Con-
qress Intends to With
draw Burden.
ny WILL KENNEDY.

draw Burden.
- BY WILL p. KENNEDY.
Tax on business-know as the ex
cess profits tax-is going to be re
xoked. but probably not until afte
the election.
Ersiness may be assured that th'
republican majority in Congress IN
tends to withdraw this war emersehc!
burden as soon as is eNpedient, bu
notifies as well as national finance:
is entering into the decision as t.
when.
The republican ma jority on the way:
and means committee-charged VIII
inaugurating revenue measures ant
balancing Uncle Sans books-are d1
yided on this question. n careful pol
Of the members indicates that the
excess profits tax will continue during
the present year
The reason given will be that the
billion and odd millions of dollars Il
brings in are needed to pay Uncle
Sans bills. Another reason. not sc
openly admitted. will be that no sub
stitute proposed seems likely to bring
in the revenue without arousing the
resentment of large number OF
voters.
May BE Optimistic.
So. let business be optimistic. ant
IN the meantime the republicans viii
let the democrats shoulder the blame
during the election for the present
excess profits tax. because they be-
lieve that if they increase the levy or
individual incomes they will gel
cussed out, whereas the excess profits
tax is on corporations. ana anyho"
the democrats passed it.
As an earnest of what is coming
Chairman Fordney of the ways ano
means committee during the week in
troduced a bill to repeal the excess
pfofitsstax. Representative Ira c. Cop
ley of Illinois is preparing to lead a
fight for such repeal on the ground that
il is a consumption tax in reality. and
that there is no sense in comouf1agine
the people. He argues that this tax is
directly responsible for the high cost
of living.
Thus the olive branch of hope is
held out for both business and the con-
suming public restive under high prices
The bill has been introduced. Repre-
sentative Copley and others are pre-
pairing to make fight for its passage
the ways and means committee will
consider it during the summer-and take
plenty of time about it until the elec-
tions have been held-that's the prob
able upshot-
Emphasizes Three Reasons.
Three reasons, for the proposed re-
peal are emphasized by Representative
Copley: First, it is ultimately a con-
sumption tax, all the heavier because
imposed indirectly. and has greatly in
creased the cost of living, about S35
per capita : second. it destroys initiative
and opportunity for the young man of
little or no capital third, it allows a big
concern to dump 6s.5 per cent that
Uncle Sam would otherwise levy into
driving small concerns out of compet-
tive business.
The reasons for delaying action for
repeal of the excess profits tax, which
seem to be influencing the majority OF
the ways and means committee and
Congress generally, are pointed out by
Representative W. r. Green of Iowa
the ranking republican member. II an
not in favor of the repeal Of the ex.
cess profits taX," he says, unless some
different proposition than anything SC
far advanced is presented to take its
place. Any one who Knows the condi-
tion of our public fi;.ances understands
that We are liable to lave a bond is
sue In any event. md would be sure to
have it if thefexcess profits tax is re-
pealed without any equivalent being es-
tablished.
The excess profit tax produced las,
year" he POINTS out. about sl.70O.-
100000. exceeding even the income
tax in its returns. 1t does not al.
ways work out equitably. but the
same is true to a greater or less de.
gree of all taxes. 1t has the merit
of being imposed only upon concern.
which are so prosperous that they
are not only making a profit. but
- nigh proht. At least 10 per cent mus
be made before any excess profits ia,
is imposed, and if the pre-war incom,
of 1911. 1912 and 1913 was large
than the 10 per cent the deduction
will be increased.
Rates Greatly Reduced.
"If the concern makes 20 >ber cen
the greatest amount that could b.
taken as the tax would be per cent
If it made 40 per cent the highest ta,
would be 6 per cent. This is. o.
course. ON the rates for the last cal
endar year. which will be paid thi.
year. and are very much reduced from
the previous year.
The rate paid last year might rur
UP to so per cent on the exces.
profits. This year the highest rat.
is 80 per cent. The Treasury esti.
mates that s1.100. 100000 will be col
jected under the present rates | ALI
doubtful if this much will be received
because the profits assessed viii no
be as large as the proceeding year.
TWO plans have been presented a:
substitutes for the excess profits tax
one is TO increase the tax on tn,
lower and intermediate incomes
such tax, in my opinion. would b,
extremely burdensome." Mr. Green,
says. He explains that those re
ceiving small incomes would hav,
just cause of complaint if assessed
in peace times heavier than durin.
our great war.
The other alternative is for q fla
tax on corporate incomes. In dis
cusSing this, Representative Green,
says: TT is estimated that a 90 pc
cent fiat tax would yield about tn,
same amount as the excess profit
tax, but corporations will. in an!
event, be required to pay a fiat Ia,
of 10 per cent on their net incomes
This is 2 per cent less than last year
but il 20 per cent was added to it
= the tax would be not only burden
some in many cases. but inequita bl
and unfair in the extreme.
"Eor example, take two corpora
tions, one with capital of 1000, ,000
which makes 100000 only. and tn
other with capital of 100000. whicl
has struck Oil and makes 5000 0OG
The first has made 20 per cent on it
canital; the second. &c 2-3 per cent
yet unoer the proposed plan eacl
should pay the same tax. This, in m,
opinion. would be very unreasonable
Mofeover. in the case of the first cor
porRtion, the tax would be very bur
densome and in the second much les
than the corporation ought to pay un
der present conditions.
Would Not Lower Living Cost.
In rebuttal of the argument that
reduction of the tax to be paid thi
wear would bring about a reduction il
tho cost of living. Representativ