Evening star., 1940-09-03
Witness Hits Profits
Bill. Says His Tax
Would Rise 72%
Excess Profits Measure
Would Hurt New Small
Firms, Senators Told
BY the Associated Press.

By the Associated Press
j. r. Short, Chicago Cereal Milling
Co. president, testified today that
the excess profits tax bill passed by
the House would increase 1910 taxes
on his corporation ''72 per cent over
the taxes we paid in 1939."
Mr.. Short appeared before the
Senate Finance Committee, and his
testimony was followed by an as
sertion by Senator Vandenberg, Re-
publican, of Michigan that many
small corporations ARE just about
going to be decimated" by the pro-
posed tax.
The House-approved tax measure
was designed to apply to excess
profits resulting from national de-
fense spending. Mr.. Short declared
it would heavily penalize" many
new and small corporations which
did not profit from armament OUT
lays.
The new corporation that Is
growing will be heavily penalized,"
he said.
Advertising Man Testifies.
John Benson of New York, presi.
dent of the American Association
of Advertising Agencies, told the
committee it would be "inequitable"
to base the surplus profits tax on
earnings of the advertising business
for the last four years, when the
average falls far below normal earn
ing power"
AS the committe started hearings,
Senator George, Democrat, of Geor.
gia, one of its members, told re-
porters he did not consider the meas
ure a true excess profits tax bill"
because 1T imposes a tax on all
income whether normal or even sub
normal if the earnings exceed the
limits fixed by the bill"
The bills tax section, to which he
referred, would levy tax of from 20
to so per cent on profits in excess
of the normal" return of a COM
pany during the base years 1885,
1899. All firms would be subject to
the tax, regardless OF whether the
profits resulted from Government
contracts.
Liberalization Of Regulations.
The bill also would hberalize
existing amortization regulations
and suspend existing profit limita-
tions on Government warship and
aircraft contracts-two steps which
defense authorities have declared
essential to get the industries con-
cerned into maximum production.
Senator George criticized the
House tax formula as "a tax on
bigness and on what some Of our
social-minded theorists regard as
excessive earnings, whether those
earnings are abnormal, normal or
subnormal."
Hearings on the complicated leg
islation opened with nearly score
of industrial and other spokesmen
waiting to testify the first day.
Chairman Harrison said repre-
sentatives of the Treasury and the
Defense Commission would be heard
tomorrow and 40 other witnesses
Thursday.
May Be Ready by Monday.
Senator Harrison said the COM
mittee probably would have its ver-
sion of the bill ready for the Senate
by Monday. He termed the amorti-
zation provision and the suspension
of profit limitations the most in.
portant parts of the legislation.
Senator Harrison expressed be.
lief the Treasury Department was
too low" in estimating the revenue
the bill would produce as passed by
the House. His opinion was that
instead of the estimated $500 ,000, 900
for 1910 and s700,000,000 for l94l,
the actual yield would be at least
5000 900 900" in 1941 and about
s40O 900 900 for 1910.
Senator George predicted the
committee would boost the revenue
raising power of the measure even
higher.
Sees Greater Revenue.
THE bill the Finance Committee
will report, it is hoped" he said.
will provide a greater revenue than
the House bill-from the increase
in normal rates plus the excess
profits rates.
ut can be greatly sirnplified If
the Congress will enact a true ex-
cess profits tax and the revenue
can be supplied by the increase in
normal rates"
Senator George added that there
would be mo quarrel" with the
House on the suspension of profit
limitations and the amortization