The Wilmington morning star., 1940-08-10
EXCESS PROFITS
TAX IS URGED
aoroenthau Warns Con-
sress Deficit For Year To
Exceed 5 Billions

,,-oo noe, 900 federal deficit this
urged congress today to open
source of government reve-
and provide a better distribu'
of defense costs by enacting
an excess profits tax.
eventual increase in the pre-
cont $40, 900, 900, 900 federal debt limit
,ormit more deficit financing was
.,sdicted by Morgenthau, while Dan.
NV Bell, treasury undersecretary,
Ia that at the present rate Of de.
exnenditures 1t would be nee.
70 increase the limit by about
10000, 900, 900 next summer unless
,ow taxes were raised.
Appearing before a Joint meeting
Tho house ways and means COM
..oo and the senate finance COM
.it,oe the treasury chief also pro-
Aosed nrompt action on pending tax
,.a,s1ation because he said it would
n~o;;tate execution Of defense con.
tracts. =.
~Tbe national defense program"
uorgenthau said, places upon us
W. drtv of reconsidering certain
saotures of the tax structure now, in
a.der IN obtain a rapid expansion of
0.od,ction for defense and a better
s;strihution of it's cost to the taxpay-
err"
Tho excess profits tax has been es-
.;n.ted bv experts to yield $500, 000,-
NM to $500, 900, 900 a year.
The treasury and budget bureau
,ovo calculated that, as Of August S,
+he treasury faced expenditures Of
n,ore than s12, 900, ooo, 900 in the fis-
ns, wear ending June 80, 1941, Nor
rsnorted. totaled $6,367, 900, 900 in
ending the new defense taxes recent
ly enacted.
Unless new taxes were enacted, he
continued, virtually all Of the new
80 900, 900, 900 federal borrowing
mower would DO exhausted by June
80, 1871.
ION the basis of these estimates"
he said. lit is obvious that in view
Of the requirements of the defense
nrogram the present debt limitation
of s49, 900, 900, 900 will sooner or lat
or need to be increased"
May Be Delayed
The increase, however, might be
postponed until next year, he added.
He also called attention to pro-
visions of the pending excess prof
its tax bill which would suspend
the profit limitations on warplane
and warship contracts under the
n.Trammell act and authorize
manufacturers to speed up amorti-
cation, for tax purposes, Of new fac
tories built for defense production.
There has arisen in the minds
of contractors who desire to do bust
ness with the government" the Sec
rotary said, "a barrier of uncer-
tainty as to the conditions under
which they will operate.
In some cases, on this account,
contractors have been hesitant to
accept government contracts. To
remove this %hesitancy, it has been
my opinion that immediate steps
should be taken to obtain adequate
remedial legislation.
The Treasury department accord
ingly presented to the committee a
plan for an excess profits tax, with
corresponding changes in the amor
tlzation rules and the Vinson-Tram-
nell act.'
Discussing the revenue situation,
Morgenthau said that the provisions
Of the recent defense tax bill were
sufficient to meet the situation as
1t existed at that time"
Became Necessary"
With the rapid deterioration of
world conditions, however," he con-
unued, 1T became necessary to plan
l0f an expansion of the program
lof national defense. and the Presi-
oeht requested the congress to pro.
woe additional funds for this pur-
pose"
de presented a tabulation show.
ing that already approved or pend
ing appropriations and contract
lamentations for the Army and
navy totaled s14, 7o2, 900, 900, COM
posed Of 5000, 900, 900 for the Army
ana s',ess,oO0 900 for the Navy.
some Of this money may not be
spent until a later fiscal year, he
explained. but along with other gov
e'nmenial expenditures, the actual
Aah outlay Of the treasury in the
current fiscal year will total about
m.'o'S'oeo,ood, including Is 5000, 000.-
WV Tor defense, $1,4oo, DOC, 900 for
tel'ei' N,OsO, o00, 900 for regular civil
oepsftments and agencies, $780,
.s0'VVo Tor aids to agriculture, and
si'loo'oOo 900 for interest on the pub
lie debt.