Evening star., 1942-05-01
House Unit Approves
Corporate Taxes 10
Yield = Billion
Excess Profit Levy Set
At "a Pet, Normal Income
"a and Surtux 10
Earlier Story on Page A-19)

earlier Story on rage A lS.)
BY the Associated Press.
The House Ways and Means
Committee approved this after
noon a new 81, 500 100000 corpo-
ration tax program based on a
fiat "a per cent excess profits
levy, "a per cent normal in
come tax and a l6 per cent sur
tax.
Chairman Doughton of the COM
mittee announced the surtax rate
at the end of day-long session
and said that the question OF re-
pealing the capital stock tax and
the related declared value excess
profits tax, and of writing formula
by which the Government would
hold top layers of profits for post
war corporation needs. would be
discussed by the members Monday.
Morgenthau Request Refused.
Secretary of the Treasury Nor
genthau had asked Congress to
raise 5000 900 900 from corpora
tions, but the committee refused to
accept his recommendation for a
combined normal and surtax rate of
SIS per cent.
Representative Cooper, Democrat,
of Tennessee, who explained the
committees action with Mr.. Dough-
ton, said the members also had
agreed to revise the excess profit
credit allowed corporations on their
invested capital, as follows: 8 per
cent on the first $5,000,000 of in
vested capital, per cent on the
second $4,000, 900, per cent on the
next $190,000, 900 and S per cent on
the excess above 100000, 900.
Alternatives Retained.
The committee retained the ex-
cess profits credit alternatives of
invested capital or average earn
ings in the 1869 base period and
decided to double the present IS 900
specific exemption granted all cor
porations as an excess profits tax
credit.
Mr.. Doughton and Mr.. Cooper ex-
planned that the "a per cent excess
profit rate would mean that per
cent of excess profits would be left
to corporations and that portion
would not be subject to normal and
surtaxes as at present.
The present normal corporation
tax is graduated as follows:
ftNn of hn
first $1,000, Is per cent; 5000 to
$4,000, II per cent; $4,000 to $25,-
600, 10 per cent; above $25 5000, "a
per cent. Continuation of these
rates was voted by the committee.
The present surtax is at the rate
of 6 per cent for corporations with
net income of less than $25 900, 6
per cent on the first s25 900 above
that level, and 7 per cent in the
higher brackets.
Yield Not Estimated.
Members reported that there was
considerable sentiment for a Is per
cent surtax, which would give a COM
bined 40 per cent normal and SurtaX
for most corporations. But statisti-
clans presented figures showing that
combination of 40 per cent and an
excess porfits rate of 80 per cent
would not produce the 5000 000, ,00O
which Secretary of the Treasury
Morgenthau asked Congress in
March TO raise from corporations.
Committee members were not able
Immediately to give an estimate OF
the yield of the approved "a per
cent rate.
Committeeman reported there ap-
parently was decreasing sentiment
| for the suggestion of Treasury Off
cials and others that top layers OF
corporation taxes be withheld by
the Government as a nest egg
| for postwar industrial needs. Mr.
Doughton said that question prob
ably would not be settled for some
! time.
AS soon as the committee finishes
its work with corporation taxes, dis
cuSsion will begin on steeply-in-
creased individual income tax rates
which Mr.. Morgenthau said should
produce another $1,000 100000.