The Republican journal., 1921-12-01
THE EXCESS PROFITS TAX

Those who undertake and carry on our
great business enterprises have a moral
right and should have legal right to
reasonable profits and should also have a
right to set aside surplus to safeguard
emergencies. Nobody has moral right
and nobody should have legal right to rob
the public The enactment of law to COM
pei the payment of heavy tax on excess
profits was in itself a confession that the
people were being robbed flagrantly and
that those who made and sanctioned that
law knew that fact. During the war
when protiteering was most rampant and
unscrupulous, in one year the government
revenue from excess profits taxes was
more than two and one.h half billicn dol
lars, one twelfth the amount of our enor-
nous national debt.
In 1919 there were 2,l94 corporations
whose net earnings for the year were 100
per cent or more. The total invested
capital of these corporations was $780,
900, 600. They paid excess profits and
other taxes to the amount of S93, $50, 600
and the corporations had for their share
of this public plunder, $ s14. Ooo There
were l,734 other corporations whose net
earnings were from rs to 100 per cent.
The invested capital of these corporations
was S2O5, 744.4 Their profits amounted
N round numbers to 1923, 8,000,0t0 Of
this the government took S83, 600, 900 and
the corporations had s45, 900, 900. The
above figures were taken from the Of
ficial tabuations of the revenue depart
ment and are reliable. These tabulations
further inform us that there were 4,911
other corporations whose net earnings
were from so to rs per cent, 4,807 whose
net earnings were from 40 to so per cent,
1850 whose net earnings were from 80 to
40 per cent, and 7,743 whose net earnings
were from Is to 80 per cent.
From the net earnings of the first men
toned group of corporations the govern
ment took 81. 40 per cent and the corpora
tons retained 80 90 per cent. From the
last mentioned group the government
took 81 % per cent and the corporations
retained 48.78 per cent. The average
division of the net earnings of the six
groups mentioned above was about 90
per cent to the government and about 40
per cent to the corpora lions.
Mr, Carter Glass was Secretary of the
Treasury from Dec. 16, 1918, until Feb. 2,
1920, when he was succeeded by MIR.
Houston who served until March 4, 1921.
They were both able me n and if any criti-
clsm of their official adts has been m ade
it has escaped our ndtice. Both these
men are on record aS having officially
SAID that the excess profits act should be
repealed, and Mr. Ma!lon, the pres mt
Secretary, says the same. The presiden-
tiai platforms of both Sur great poiitical
partles IN 1870 contained a demand that
our tax laws should be modified and SIM
plifed. That is what members of Con-
gress, both Republican and Democratic,
profess to have been doing for several
weeks, There have been prolonged dis |
cussions which we regret to say hay e
often been frivolous and sometimes pure
iy and brazenly POLITICAL There seems to
nave been, however, practically unani-
nous opinion that the excess profits tax
law should be repealed.
TIE statistics we havs given show that
the corporations which learned enormous |
excess profits retained a very large sur
plus, but they do not reveal the fact that
more than 10000 corporations having an
invested capital of more than SD 600
900, 600 earned less tha per cent on
their capital and the Government took
away from them one ninth of that in
taxes. There were 81, 300 other corpora-
tions having an invested capital of more |
thai s15, 600, 900, 600 which earned from
20 10 per cent and the government took |
nearly one eighth of that. Here were
more than 10000 corporations having an
invested capital of nearly $50, 600, 900, 900 |
which did not have enough of their annua
left to pay a reasonable dividend
to the investors. There were %, 684 other
having an invested capital |
of more than $4,000, 600, 600 which earned |
from 10 to Is per cent and the govern
ment took more than one fifth of that.
The excess profits tax in effect put a
premium ON profiteering. Those cor
oorations which were the most success.
full plunderers of the public got the larg-
est share of the booty. We fail to see
how our excess profits tax can be justi-
j ed even as war measure. 1t is funda-
wrong because it is inequitable,
as are most schemes of indirect taxation.
It encourages wasteful expenditure for
salaries by corporations having large ex-
less taxes. Many corporations having
stock escape payment of what
n fairness to other corporations they
'hould pay. 1t is difficult and expensive
n its administration and its productivity
is revenue producer has fallen from tle
'eak of $1,000. 0OO, 600 to not more than
me. fifth of that sum.
There are few newspapers in this
A. L