The Waterbury Democrat. [volume] (Waterbury, Conn.) 1917-1946, 1939-10-26
Federal, State, Local
Taxes Take Profits
Credit Association Members Hear Address at Confer
ence on Taxes and Credit; Ability to Pay Stressed

while their total state and local
tax payments rose from 81, 160, 1000 In
1885 to 81 cot, 900 In 1888.
"The largest single contributing
factor to this increased burden Of
taxation were Social Security taxes
which In the case Of most firms had
increased to such an extent In 1855
that they exceeded the total federal
normal income tax payments Of the
reporting companies. Substantial In.
creases were also shown In state and
local franchises and licenses, sales
tax and gross receipt tax.
Taxes Out Profits Sharply
'While these figures Of total tax
payments strikingly disclose the fl
nancial burden Of taxes on the re-
porting companies, they merely slg-
gest the increased. proportion Of
company profits paid out as taxes.
This development is more clearly
shown In q separate part Of the re-
port which analyses the percentage
Of the cofnpany's profits which are
paid out In all types Of taxes.
That analysis shows sharp in
CREASE, during the last four years, In
the percentage Of profits before tax
es which were paid out both as fed
eral taxes and as state ana local
taxes. The amount of the increases
varied widely.
Typical Of the experience Of
many Of the smaller manufacturers
was q firm which made $s3Oo0 in
profits before taxes In 1915 and paid
out II per cent Of that amount in
federal taxes and IA per cent in
state and local taxes. In 1898 the
firm had profit Of $10,S00 Of which
1t paid out So per cent in federal
taxes and As per cent in state and
local taxes.
Another small manufacturer, In
1885. had profit Of $31 900 of which
1t paid out IA per cent in federal
taxes and 2 per cent In state and To-
cal taxes. In 1888 its profits were
81 500 Of which 80 per cent was
paid out in federal taxes and 10 per
cent in state and local taxes.
"A third manufacturer with a 1895
profit of $4,000 paid out - per cent
In federal taxes and II per cent In
state and local taxes. In 1898 with a
profit Of $4,000 it paid out Is per
cent In federal taxes and II per cent
In state and local taxes"
In the case Of the smaller whole
salerS the situation was even worse,
Mr.. Baldwin pointed out.
Even greater inroads Of taxes in
to. company profits were shown In
an analysis Of 76 firms, a great
many Of which paid out In 1883 as
much as so per cent and more OF
their profits in federal taxes and
from 80 to SO per cent of their pro-
fits in state and local taxes.
Several firms actually paid out
IN 1888, In taxes Of all kinds, con-
stderably more than their profits
for that year.
Social Security Tax Burden
IAN interesting feature OF this
special analysis was the sharp in
crease In the burden Of Social Sc
curity taxes. For example, the small
est manufacturers showed average
profits before taxes OF $l7,3T7 in
1895. Their average federal income
taxes that year were $2,270.
I'm 1888 their average profits were
SIT ,249; their average federal in
come tax $1,716 but their average
Social Security taxes (old are pen.
sion and unemployment taxes) were
N,14S. A similar experience was re-
ported Tor the medium sized and