Detroit evening times. (Detroit, Mich) 1921-1958, 1942-08-12
Bad Tax Bill
Side+racked
By Senators
Would Ruin Business,
Committee Says
By PAUL MALLON

WASHINGTON Aug. Il
w Senatorial courtesy pre-
vented the finance committee
men from saying openly what
they think of the House tax bill,
but behind their hands they do
not see how a bill so filled with
disastrous mistakes could have
been passed by the other
branch of Congress.
The corporation tax rate was
fixed by the House at 40 per
cent of net income and 80 per
cent of excess profits, so offhand
any one would figure that bust
ness would be able TO earn at
least half what it earned in pre-
war days. Apparently that was
what the House thought.
But when the Senate commit
tee started prowling back into
the complicated new administra-
tive restrictions on interest pay
ments, altered allowances for
debt retirement, and provisions
forcing business TO abandon its
fiscal year system. il discovered
the bill would throw a lot of
businesses into the Improbable
class.
For instance, the Glidden
company of Cleveland (making
cuprous oxide for Shipbuilding
and paints) showed that its
profit margin had been cut so
much by taxes and price ceilings
that a change in its fiscal year
bookkeeping system TO the cal
endar year would leave il $685.
eta short of being able TO meet
its taxes this year.
In other words, it has planned
for its taxes on a fiscal year
basis, and thus has made insult
ficient provisions to pay its taxes
under the House scheme.
THE Rome Cable Corporation
Il of Rome, N. Y, a rapidly
growing new business making
cables vital to war commune
cations. submitted figures indi-
eating it would not be able to
make expansions demanded by
the army and pay taxes, al
though it was crossing more
money than ever before.
It's sales Tor the second quar-
ter this year were at the same
levels as last year, but operat-
ing costs had increased 20 per
cent and sales prices have been
pegged by the Henderson price
ceiling.
These economic factors with
out taxes, would force Rome's
earning rate down from 80 per
cent to 81 per cent (about half
and prevent it from paying its
dividend of Is cents a share and
expansion required for wartime
operation.
The Utah Power and Light
Company presented its books,
estimating its taxable income
for this year at $3,198.872, its
normal tax at S1,000,269 its ex-
cess profits at 1868, 576, allowing
only $1.225,000 to meet its le-
gally required preferred stock
dividends of S1.704,000 It's indi-
Gated deficiency was S481, 900.
business men rarely have
produced their books before at
tax hearings. but there was no
hesitancy this timeD
A NY concern with large in
"A creased sales and cost,
heavy debts, or a fiscal year
ending around June or July.
would be in somewhat the same
circumstances. and there are
thousands such. 1t is therefore
a foregone conclusion that the
Senate committee will consider
ably alter the complicated tech
nical administrative features of
the House bill, and may even
trim the corporation rates some
what.
While it is never politically
desirable for a congressman TO
think Of aiding a corporation,
especially in a campaign year,
this tax program is obviously
nearing the ceiling under which
a capitalistic system can be
maintained.
The rates and restrictions are
reaching the point where every
one. liberal and conservative
alike, can see the problem is 10
get just as much revenue as pos
sible out of business without
killing it.
The tax program must be
adjusted to a nonpolitical hair
line, which will just barely
maintain business incentive for
efficient operation, and keep our
production going at the war
time capacity required
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