Evening star. [volume] (Washington, D.C.) 1854-1972, 1942-04-02

the manufacturers can no longer
pass on to the civilian consumer
the high costs of production.
Labor rates are going up and. as
demand increases, the work week
cannot be heightened without pay
ing paying higher and higher penal
ties for overtime.
Thus while a ceiling is put over
selling prices, the labor charges are
taking a larger and larger share of
net income from management just
as the Treasury also strives to take
more of the net income. InaSmuch
IS labor costs are deductible before
net income for tax purposes applies,
the Government and the labor or
CARNATIONS are engaged in kind OF
rivalry for each dollar of net income.
But while profits are being ground
between the upper milestone Of
price-fixing by Government edict
and the neither milestone of in
creased demands for wages by labor,
the Treasury is planning to take an
increasingly large proportion of net
income.
May Start Mt $50.
Latest plans recommended by the
Treasury indicate that the net in
come Of businesses will be taxed all
the way from SIS per cent to 88%
per cent. The base or starting tax,
irrespective Of amounts earned, will
be around SIS per cent if the Treas
ury plan is enacted into law. Then
on top of this will be imposed the
surtaxes which are termed excess
profits" but are really applied to
all companies irrespective of wheth-
er they are engaged on war con-
tracts.
Now with respect to those COM
panies that sell virtually all their
products to the Government, the
pincers movement takes on a diff
ferent kind of clawing operation. In
the first place. there is no ceiling
on prices. The Government pays the
cost, and labor charges are not ques-
toned. There is tendency to ques-
ton management salaries, but not
that Of the other employees. These
may go to fantastic heights. Some
talk is being heard about a ceiling
for wages but there Is little likeli-
hood Of legislation.
The fees for war work over and
above labor costs and other legiti-
mate expenses are to be limited.
These will be regulated by some
kind OF legislation, but, If not, they
are TO be regulated by the tax laws
so that whatever sums management
gets over and above expenses will
be subject to constant pressure for
reduction.
Heavier on individuals.
Not content with taking huge
chunks out Of net income, the Gov
eminent plans to exact another big
slice by raising the individual in
come taxes. In Britain it Is said
that even If q man earns up to
81 ,000,0 he cannot by any lawful
means retain more than about s28,-
600. During wartime the patriotic
urge is counted on to furnish the
proper incentive, but it is admitted
that such an incentive will not
carry over into peacetime.
The problem Of incentives is
difficult one from psychological
standpoint, Notwithstanding the
urge to patriotic effort. Labor lead
ers say that If pay envelopes are
cut, 1t is human nature for workers
to do less work or at least to feel
depressed and dispirited. Some
thing of the same kind of argument
might be made about management
men, but thus far in this war there
has been little sign Of it. Business
men often refuse to take contracts
that will not earn a fair profit
after taxes are deducted, but they
insist on this usually because of
their debt or stakeholder situation.
Arrangements know that their
tenure in office depends on whether
they can meet debt retirements
promptly or pay dividends, and that
Is one reason why so many COM
panies are now sending such de-
tailed statements to their owners.
A major surgical operation on
business and industry is being per-
formed in this war. Many millions
Of citizens who see no limits placed