Evening star., 1940-08-10
Profit Tax Hit
As Bait 10 Aid
Munitions Men
Clark Declares Levy
Hides Amortization
Plan for Industry
By the Associated Press.

By the Associated Press.
Senator Clark, Democrat, of Mis-
souri, charged at a tax hearing today
that a pending excess profits levy
was sugar coating" for a plan to
permit munitions plants" to, deduct
defense expansion costs from their
taxable earnings.
The expansion amortization plan
and tax of Is to 40 per cent on
excess profits have been combined
into a simple piece of legislation on
which Senate and House commit
tees started holding hearings yes
terday.
Senator Clark made his comment
after John L. Sullivan, Assistant
Treasury Secretary, had told the
joint committee that the tax pro-
posed would yield a net increase
OF $4,000 900 in taxes the Govern
ment collects on 1910 corporation
income.
Direct Yield of S225, 5,000, 900.
The Treasury, Mr.. Sullivan ex-
planned, figured the direct yield
would be s225 900 900, of which $685.
900, 1000 would be Offset by loss on
individual income taxes due to
smaller dividends to stockholders.
For the years after 1910, Mr.. Sullivan
said, the Treasury estimated the
excess profits tax net yield would
be $400, 900 600 to s480 900 900.
When the President proposes
spending four or five billion dollars
every time he gets back from a week
end" Senator Clark said to Mr..
Sullivan, 1880, 900, 900 is a drop in
the bucket, isn't it?"
Mr.. Sullivan said it was small
item" in the total budget picture.
Senator Clark then declared that
the tax was "sugar-coating to get
the public to swallow the amortiza-
ton plan for munitions plants"
MIR. Sullivan replied that he did
not believe that was true. The ex-
cess profits tax was under consider
alton before the amortization pro-
posal was brought up, he said.
House tax leaders decided, mean
while, to try to pass the new tax
bill within week, in order to
eliminate the bottlenecks which
manufacturers say have been i'm
peding defense production.
Chairman Dougton of the Ways
and Means Committee said major
opposition to the three-point revenue
program had failed to develop.
I'VE were ready to hold hearings
day and night, but it doesn't look
as If there are enough witnesses to
do that" he said.
Amortization Plan Urged.
The start of the hearings yester-
day brought pleas by leaders of the
defense program for the two other
features Of the bill-plans for manu-
facturers to amortize quickly the
cost of plant expansion and repeal
of the z and 8 per cent profit linn
itations on shipbuilding under the
VinSon- -Trammeil Act.
Secretary of War Stimson and
other witnesses said that uncer-
tainty over taxes, profits and amor
tization was causing some COM
panies to go slowly in expanding for
defenses purposes.
William s. Knudsen, Defense
Commission member, said the
amortization and tax features
should be combined in single bill.
Republicans had advanced the sug-
gestion that it might be well to
tackle amortization Immediately so
that it would not be delayed by
possible disagreements over the
profits tax.
Contract Distribution Assailed.
Senator Clark expressed concern
that less than / per cent of the new
defense contracts-for both mate
rials and construction-had been
allocated to the % States between
the big mountain ranges.
Mr.. Knudsen replied that the
vast program was just under way
and that as progress was made
there would be an inevitable ex-
pansion throughout the country.
Senator Clark said later that II
the Defense Commission did not
act quickly he would attempt to
make a Nationwide ALLEGATION Of
funds when the tax bill reaches
the Senate. He arranged a con-
ference for Monday between Mr..
Knudsen and Senators from the
Mississippi River region.