The Washington herald., 1921-10-09

ton OF the upon corporations. The tremendous
amount of unsettled Claims and the great inequality
the settlements OF taxpayers which have been made
are a conclusive demonstration that there is some
thing wrong with the law, primarily with the law IL
self and secondariiy with the administration of the
law. Now is the time to raticnaize. simplify and
stabilize the Federal upon the profits OF business
The pending BILL notwithstanding the pretenticns Of
its titie that is bill to simplify the act Of
1918 perpetuates all the complications, incengrniies
and inequalities of the present Law, and promises e.
fecua relief for the intolerabie conditions whsc both
the business OF the country and the government
enduring under the present law and regulations
There two classes OF corporations which may
be considered by Congress proper subjects for
temperate discrimination IN the taxes imposed upon
business. These the corporations that within
the classification of trust and monopoes, and the
porations which may come under the classification OF
proftecrs.
There were in 1913 the last year for which re-
ports available ISo corporations which had annual
earnings in excess OF $5,oooooo. If the interest and
reserves earned by these corporations be added to
their reported taxable income it is fair assumption
that great number, and probably majority of these
corporations have annual earnings in of $4,000
temperate graduation of the tax profits
above $Iooooooo, say per cent additional for the
eleventh million, and up to per addi-
tona for the twentieth million and per cent upon
all profits in excess Of $2ooooooo, would lay maxi
of 20 percentum the higher ranges of the
profits of and monopolies against maximum
of percentum upon the profits OF the general busi
of the country The net income for taxation of
corporations having $5oooooo and Of taxable
profs for 1918 $2,554,26o,ozo. The graduations
of the tax apply profits in of $Iooooooo
would very materially augment the and lay
handicap upon the trusts and monopoiies Of the
country which would be efectual to induce them
to disinegrae into competitive units. than all the de-
crees which have been may be entered under the
antitrust act The additional tax of from to 10
per cent with maximum of per cent on profits
above $aooooooo annually is. taken altogether, a
temperate and could not fairly be called punitive
imposition The large corporations coming within its
operation all OF which have been formed by conbina-
tons of other corporations could of course by separa-
ton into their constituent units. avoid the graduatons
of the tax The tax in its graduated form should
be applied to corporations howsoever large which have
been built up by natural expansion and have been
formed by combinations Nor should the graduations
or additional tax be applied to railroads. banks o.
insurance companies.
II HE most dependable index of inordinate profits r
not the ratio of profits capital stock capital n
pestment the xalue of property, but is the ras
of earnings to outlay in other form of prosAs %
expenditures. II is the returns of meney
laid out for operations which bring back the profits
The items both of outlay and of returns determined
by contract. They in terms Of money By con-
traotual valuation. and there is eienent factor
in the of outlay and neturns, Of expend-
and revenues. which properly consist of arbitrary
other esfimatens. The items certain. and are
peadily available from the reports made by cor
porations 10 the Bureau of In<ernaf Revenre. No
classscatisn interpretation Of these ncpors is zy
able indicating the ratio of earnings outlay. The
outlay and fie n every case, but she
ratio of earnings outlay is gipcn except that
the aggregate of profits and deductions fer certain N
dustrid groups reported fsr sssS S5s6sssss.-
szz Of general DEDUCTIONS and npen thcse dcAscasas
there profits Including income and srsfHs
taxes. paid Of S4.ss4IIoys6 The ratio of earrisss
outlay this very general basis wodd be. abssn