Evening star., 1941-05-19
Taxes
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than 5000 per cent larger than in
1899 Is subject to no excess profits
tax whatever on 1910 earnings and
this is a company which has thus
far received over $70,0O0,000 of de-
fense contracts
1T appears that only out of IL
large integrated steel companies
will be subject to excess profits tax
on the income of 1910, although steel
companies have in general received
huge amounts of defense orders"
Tax on Profits Over 100 Urged.
The Treasury plan provided a
complicated formula which had the
general effect of putting heavy taxes
on all corporate earnings In excess
of 10 per cent of invested capital
Companies which had not been
earning as much as 10 per cent on
invested capital would start paying
the taxes when they reached their
normal earnings.
II Congress is unwilling TO take
the drastic steps he proposed. Mr.
Sullivan said. it might consider as
an alternative repeal of the excess
profits tax altogether and increasing
the corporation income tax instead
A few weeks ago Mr.. Sullivan pre-
sented the TreaSury'S proposals fol
sweeping increases in individual and
corporate income taxes, gift and
estate taxes and excise taxes.
New Commodity Taxes Asked.
Noting that divergent ideas on ex-
cises have been given the committee
since Mr. Sullivan reiterated his be-
lief that new taxes should be put on
certain types of durable commodi-
ties. such as electric refrieerators
automobiles. watches, clocks and
cameras the reduced consumption
of which would be helpful to de-
fense, not only because the plants
are adaptable to defense work. but
also because the materials used in
these commodities are used in de-
fense articles and the workmen who
manufacture these things are pos
sessed of the very skills that are
needed in many of our defense
plants" D."
Concluding his plea for high cor
poration taxes, Mr.. Sullivan said
I'VE cannot expect to devise a pain
less tax bill. The situation calls for
sacrifices" He added: I'VE have
had unmistabable evidence that the
people are willing to make sacri-
fees according to ability"
He said the sacrifice of paying
higher taxes could not be compared
with the sacrifices by men who
are leaving their homes and jobs
to enter the Army.
Method of Fixing Tax.
The plan suggested by Mr.. Sulli-
van provided that the amount of a
corporation earnings to be taxed
for excess profits be determined as
follows:
In the case OF corporations earn
ing 10 or more per cent per year
on their invested capital. all earn
ings over 10 per cent should be
taxed
Corporations earning less than
10 per cent on invested capital
should be taxed on earnings in
excess of average return on invested
capital during a base period of
1886 -39.
In the case of low earning corpora
tions, minimum credit of 6 per
cent on the first S500.0O0 of invested
capital and per cent of additional
invested capital would be granted,
and corporations falling to earn that
much would be taxed at some NOM
inal rate.
To help new corporations. an 8
per cent return on new capital in
vested in the business would be al
lowed
If the old tax rates were kept un-
der the new methods of determin-
ing how much profits should be
taxed. the taxable profits would be
subject to levies of Is to so per cent.