The daily monitor leader. [volume] (Mount Clemens, Mich.) 1942-19??, 1942-05-07
sTlEFER TAXES on WAR GAINS


sIiqhtIy sounder way Of taxing war pro-
fits than President RooseVeIt's recon-
mendotion hot the Government
should tax away all corporation income
above q permitted level Instead Of
this 100 percent tax on excess profits,
the committee proposes to rOise to "a
per cent the present rates Of IS and 90
per cent.
Mr.. Roosevelt himself stipulated
that the taxes should be within limits
that would not retord production.
There is good reason to believe that q
tax which leaves some incentive for
enterprise is better than one that sets
q flat n1oxirun to earnings. In this
case q rubber ceiling is better than an
iron roof.
Great Britain enacted q 100 per cent
tax on excess profits in 1910 but n1odi-
fled this in l941 to provide that 20 per
cent should be returned to the connPu-
MES after the war. This was done
in response to reports that the flat linn
it was discouroging production and re-
minders that some reserves would be
needed for postwar rehabilitation.
In one other respect the Ways and
Means Committee has moved to stiffen
the excess profits tax. If large corpora
tions calculate their excess on the capt.
toI investment basis, the rate Of return
allowed them would be reduced to 5 per
cent on capital above 100000.
Yet when the committees whole &C.
ton on corporate taxes is weighed, q
suspicion arises that the group has
been influenced by the traditional re-
Iuctonce to vote substantial tax in
creoses in an election year. 1t has made
the "a per cent look as big as possible
though it will come from relatively q
few companies. And where the Treas
ury recommended that the regular
corporation income tax be raised to O
noximunn of S. per cent the committee
has stopped at 40 per cent With this
and other changes the report falls
S7OO,OOO,OOO short Of the revenues
the Treasury asked from corporate
sources
So far as the total new collections Of
revenue are concerned Congress ought
to go beyond the S75OO,OOO,OOO goal
set by the Administration rather than
foil below it, This withdrawal Of Dur-
chasing power is needed both for the
budget and to help prevent initiation
If that is the reasoning pursued, the
sharper test Of Congressional courage
will come later on the IegisIoting Of
taxes that affect individuals. There is
discussion now Of q sales tax or Of re-
ducing further the exemptions in the
personal income tax. With this qoes q
great deal Of attempted analysis to dis
cover at what income level the greater
volumes Of new purchasing power are
being distributed
One cogent fact here is that added
money from the war effort is not going
10 whole classes at any income levels.
It is going to certain individuals With
in those levels.
In the case Of corporations, the ex-
cess profits tax singles out those cor
DOrOtiOpS thot ore ro0kir0 Ioroor prOf
its than usual or exceptional profits on
their valuation. Cannot Congress and
the Treasury devise also some reosono-
bly, simple tax which would apply in
particular to those individuals at what
ever income levels, whose earnings
have gone sharply up while purchasing
power Of the majority Of Americans
in view Of taxes and the cost of Ivino