Evening star., 1940-09-30
Excess Profits Lew
Passage Expected
Before Week Ends
Measure Pushed Ahead
At Extraordinary Sunday
Conference Session
BY the Associated Press.

Congress put slooo,o00 900 ex-
cess profits tax bill at the top of its
calendar today after Senate
House conference committee fin
ished redrafting the measure to in
clude a boost in the normal cor
poratlon income tax rate from the
present 209 to "a per cent
The income tax increase would be
in addition to the Is to so per cent
excess profits levy provided in the
bill and, like the later, would apply
to 1910 corporation income. Special
lower income tax rates for corpora
tons earning less than s25 900
would not be affected by the income
tax increase.
Final agreement on the legisla-
tion, which is part of the defense
program. was reached yesterday at
an unusual Sunday session of the
conferees appointed to compose diff
ferences between the Senate and
House, which approved the bill in
different forms.
Action Expected Tomorrow.
Senator Harrison of Mississippi.
conference chairman. announced
that the House would call up the
agreement tomorrow for approval,
with the Senate probably following
suit the next day.
The measure may become law with
President Roosevelt's signature this
week end. The administration is
anxious to make effective immedi-
ately two provisions designed to
speed the defense program.
One of these would permit in
dustries to deduct from their tax
able income the entire cost of new
facilities completed for defense pur-
poses after June 10, 1910. These de-
ductions would be at the rate Of 20
per cent year over a five-year
period.
The other would suspend. during
the indefinite period OF the excess
profits tax, the present 8 and per
cent limitations on profits from war
ships and military aircraft.
Military Insurance Provided.
In addition to these provisions and
the new taxes, the legislation would
create a new system of Government
insurance, purchasable at low rates
by drafties. National Guardsmen
on active duty and other members
of the military and naval establish
ments. Premiums were estimated at
slightly in excess of the 66 cents
per thousand per month paid by
1917-18 soldiers and sailors.
Still another provision would give
pension increases to beneficiaries Of
the Railroad Retirement Act who
saw military or naval service, in
war or national emergency, between
the Spanish-American War and the
present. The cost of this program
was estimated by the Railroad Re-
tirement Board at $50, 1000 900.
The revenue yield of the bills tax
ing provisions was estimated by Co.
lin F. STAN. chief of staff for the
Joint Committee on Internal Reve-
nue. Taxation, at more than $780,
100000 in l941. when payments will
be made on 1910 income and from
S900000,000 to $1,000 100000 for
each subsequent year
Revising here and deleting there.
the conference committee Topped
from the bill 309-page amendment,
offered by Senator Connally, Dem
ocrat, of Texas, and approved by
the Senate, which would have de-
creed new high taxes for wartime.
To have been effective automatically,
with a declaration of war, this
amendment would have increased
the normal individual income tax
to 10 per cent.
The new excess profits tax, first
since the years Immediately follow
ing the World War, would apply
only to corporations. All these
would be allowed a $4,000 exemption
credits" figured by one of two
methods.
Under the average earnings"
lOTmuld, a COTpOfdllOH COulO tdke
as its untaxable credit 95 per cent
of its average earnings over a base
period, 1886 to 1899, inclusive. In
this computation. one deficit year
could be counted as zero.
The second. or invested capital"
method would allow a credit equal to
8 per cent of a corporations cur
rently invested capital, including so
per cent of its borrowed capital.
Corporations with earnings of less
than $25 900 would be permitted to
carry over any unused portion of
their credits for one year.
The rates, applicable to both
methods would be, Is per cent on
excess profits not exceeding $50, 1000,
80 per cent on the next $50, 900, IS
per cent on next $4,000. 40 per cent
on next $150,000, IS per cent on next
$3.50 900 and so per cent on all over
t50o, 900.