Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1921-09-14

/
million dollars year he paid a
surtax of IS per cent. We
thought that this government was
defending his great financial inter-
ests and that he should pay ac-
cordingly, and so we passed that
| bill. There was another great
source of income that had to be
| reached somehow. That was the
profits of corporations If those
corporations had distributed all
their net earnings in dividends it
would not have been necessary to
| tax corporations at ALL. The prof
it's would have gone into the hands
| Of individuals and each individual
would pay his rate of tax, depend
ing upon the amount of his in
come. But those earnings were
not all distributed. Then what
should be done? We couldn't tax
the earnings to the individual
stockholders unless they were dis
tributed, so we had to tax the cor
poratipn. This meant that the
small stakeholder whose only in
come was from his dividends and
earnings of that corporation should
pay precisely the same rate OF tax
as the man who owned larger in
terests and who may have had
large income from other sources
We realized that those corpora
tons would be used by individuals
to cover up their net earnings in
order that they wouldn't have to
pay high surfaces upon their indi'
Vidual incomes, and that they
would not distribute the earnings
of these corporations In dividends,
So we had to tax the corporations,
We put flat tax upon corpora
tons of 10 per cent, and provided
for an excess profits tax, so that
every corporation making a profit
in excess of 8 per cent and not eX-
ceeding 15 per cent should pay a
reasonable tax upon those addi-
tional earnings. Corporations
earning above 15 per cent, not to
exceed 20 per cent. should pay a
little higher rate, and so on up.
Now, my friends, in the bill which
has Just passed the house, that eX-
cess profits tax is eliminated and
the flat rate upon corporations is
increased regardless of the rate of
earnings. 1t is increased from 10
to 16 per cent-a flat tax upon the
earnings of every corporation re-
CARELESS of the rate of it's earnings.
upon it's invested capital. l want
very briefly to call to your atten-
ton the effect of such a measure
as that.
Shifts Tax Burden.
! have prepared here from the
scales of the Internal revenue bu-
reau some data upon the corpora
ton tax. l find in 1918 the only
year for which we have complete
returns. that this was the situa-
tion. There are in the United
States about three hundred and
eighteen thousand corporations
making an income tax return, and
of those three hundred and eigh-
teen thousand corporations, one
hundred and eighty had net in
come in the year 1918 of two bill
lion and five hundred fifty-four
million dollars. They paid flat
income tax of two hundred and
three million dollars and excess
profits tax of eight hundred and
eighty-four million do1iars. AT
the same time ten hundred and
twenty-six corporations had net
income of four billion, two hum
bred and fifty-five million dollars.
They paid the flat income tax Of
three hundred and thirty-three
million dollars. They paid excess
profits tax than was paid by all the
hundred and twenty-five million.
That was three hundred and forty
1A1I Of
profits tax tan was paid by all the
other corporations Of the country
combined--paid by ten hundred
and twenty-six of them. There
We're nine thousand five hundred
and thirty-four corporations, MAX
ing a net income of two hundred
and fifty thousand dollars or more.
They paid excess profits of two bill
lion two hundred and eighteen
million dollars. This was five
times their income tax and was
seven-e ighths of all the excess
profits tax paid by the whole three
hundred and eighteen thousand
corporations. Moreover, from jan
uary /, 1916, to July IL of this
year these corporations have made
a net profit of forty-seven billions
of dollars, and after paying all
their taxes they still retain the
stupendous sum of thirty-eigLt bill
lions of dollars. So these nine
thousand five hundred and thirty
four corporations had a net income
of six billion and six hundred
twenty-one million dollars Their
excess profits tax was two billion,
two hundred and eighteen million,
and left them after paying all of
this excess profits tax a net profit
In that one year of four billion,
four hundred and three million.
The other three hundred ard eight
thousand with net income of one
billion, seven hundred thirty-eight
million paid an excess profits tax
of only two hundred and eighty
seven million dollars, leaving them
after payment of tax, one billion,
four hundred and fifty-one million
of dollars, and the ten hundred
and twenty-six generations with
net income of four billion, TWO
hundred and fifty-threa million
dollars, paid excess profits tax Of
one billion, four hundred AMI fif-
ty-one million dollars, leaving them
after payment of tax net profit
of two billion, eight bundled and
two millions Of dollars. The hill
which has passed the house pro-
poses to remove the EXCESS profits
tax--to absolutely repeal the cx-
cess profits tax, and what does II
substitute for it? We have still
got to have money. Somebody has
to pay It. And so following what
l believe to be the underlying prin-
cipie which actuates tie republic
can party today, they are taking 1t
off those few great profiteering
corporations and putting = on
these other large number of cor
porations which only earn a small
percentage upon their invested
capital.
| Hits Small Firms.
I have here a chart I believe
you can see the two black columns
which are indicated here. Down
this column is the amouNt OF IN
vested capital ranging from q few
thousand dollars up to millions OF
dollars. These were 5 per cent
there. It shows the amount or the
tax paid under the present law ana
| \ tho nr0-