Evening star., 1941-06-24
House Program Seen
Harder on Firms Than
Treasury Tax Plan
Committee Would Boost
Excess Profits Rates
1929 in All Brackets
By the Associated Press.


Congressional sources estimated
today that corporations would pay
more taxes under the plan tenta-
lively approved by the House Ways
and Means Committee last week
than under the rejected proposals
OF the Treasury.
In addition to providing for a
revised method of computing ex-
cess profits taxes, the committee
recommended that such rates be
increased 10 percentage units in all
Notwithstanding at IS per cent
instead of Is and rising to so per
cent instead of so. 1t also approved
a corporation SurtaX of 5 per cent
on incomes of S25, 900 or less and S
per cent on chose above S25 1000.
A special "anti-war- millionaire"
tax of 10 per cent on part of the
excess profits of some concerns also
was approved in an effort to reach
the earnings of corporations which,
despite heavy defense contracts,
would otherwise escape excess prof
its taxation.
Under the committee plan, it was
estimated that corporations would
pay a total of S1,255 100000 more
than under present rates. This in
cluded an increase of about S1,118.-
100000 in excess profits taxes, or
approximately S400,000000 more
than the Treasury proposal would
have netted.
The increased burden will fall,
however, on only those firms which
now make more money than they
did during the base period years of
1936-1939, inclusive. That is the
basic difference between the COM
mittee and Treasury plans. The lat
ter would have required the more
profitable companies to pay sub
stantial excess profits taxes on a
part of their ordinary income.
Under the committee plan, cor
porations would not be permitted to
deduct their regular income taxes
in computing excess profits, fact
which will make many corporations
pay excess profits taxes which hith-
erto they had escaped. For instance,
q corporation with a credit of
S1,000,000 and earnings of S1200,000
during the current taxable year
would not pay any excess profits tax
under the present law because its
normal tax, at the rate of "a per
cent, would provide a deduction of
$685. 900, which would bring its tax
able income we'll below the amount
of its credit.
Under the committee plan, how.
ever, it would have to pay excess
profits taxes on the 100000 at the
rate of 35 per cent on the first
$4,000, 40 per cent on the next
100000, As per cent on the next
$4,000 and so per cent on the next
100000. Including the normal tax,
surtaxes and the defense supertax of
10 per cent imposed by Congress
last year, this would bring the firms
total tax bill to S466, ,130, in contrast
to the S292,644 it would pay under
existing law.
The special 10 per cent excess
profits tax would hit chiefly in
dustries such as steel, railroads, oil
and aircraft companies.
They would be allowed profits of
8 per cent on their invested capital
under the present law and few of
them would be likely to make such
profits even under the stimulus of
defense orders. Thus they would
not be subject to excess profits taxes
although their earnings, even at
the low rate, would amount to tre-
mendous sums. Therefore, the COM
mittee recommended that such con-
Germs be required to pay a tax of
10 per cent on the difference be-
tween their average return for the
1936-1939 period and what they
make during the taxable year.