Evening star., 1943-07-02
Some War Factories ]
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II as&-
Accused Of Charging.
- 3
Taxes 10 Expense !:
BY GOULD LINCOLN.

BY GOULD LINCOLN.
Huge profits made by corpora
tions and companies holding war
contracts, after the payment Of
taxes which are charged as part
of production costs, were laid be-
fore the House today by Repre-
sentative Engel, Republican, Of
Michigan,
Mr.. Ensel. in = speech to the
House on Tuesday. revealed high
costs OF war production due to ex-
cessive labor costs. -
The Michigan Representative.
member of the War Department
subcommittee Of the House Appro-
priations Committee, based his re-
port to the House on studies he had
made of 50 corporations and COM
panies.
Discussing the earnings Of ~ cor
porations, Mr.. Engel said:
The net percentage earned, after
taxes, per dollar market value of the
stock, ranged, in some instances, up
to more than So per cent in 1941 and
1912"
One Of these corporations earned
less than S. per cent in lS41 and
four Of them 5 per cent or less in
1912. But three of them In both
years earned from 40 per cent to
more than So per cent. In 194l, "a
of them earned from 10 to 20 per
cent, and Is from 20 per cent to
53.2l per cent. In l942. 16 earned
from 10 to 20 per cent, and II from
20 per cent to 1888 per cent.
Taxes Figured In.
Mr. Engel further pointed out that
these corporations figure their taxes
as 4 part of the cost OF production.
They paid In two years nearly So
000. 900 900 in taxes. There are liter
ally thousands Of companies in war
production showing similar pay
ments. he said. and 1t is only when
this fact Is considered, We can ap-
preciate the increased war costs due
to taxes.
What happens" he said. ais that
the Government pays these sums out
of the Treasury as war costs and
they are then paid back into the
Treasury as taxes. The 81, ,000, 900 900
does not include millions Of dollars
paid by these companies for social
security. unemployment insurance,
State. corporation and real estate
taxes and other taxes. which like
wise come out of the Federal Treas
ury in the cost Of production, but
are not returned to It,"
Even greater profits than those
Of the 4s corporations studied are
made by others, whose prlnclpaI
capital is furnished by the Govern
ment. either direct or through the
Defense Plant Corp. he stated.
We find Mr.. Eneels report to
the House stated. these corpora
tions earning a profit on large
! Government capital but distributing
that profit to small group OF
stockholders who have very little
capital invested.
Jack d HeintZ. Inc. gives a good
illustration OF TINS type OF corpora .
ton. The following is their set-up:
! Company Formed in ls4s.
This company was organized in
November. 1910. with a capital stock
structure consisting OF 100 share no.
par stock for which four stock.
holders paid in IS per share. They
also paid in s99 500 in surplus. Thus
We have tour individual stockholders
who have paid in 500. 900 in capital
ana surplus.
The total cost Of defense plants
machinery and equipment furnished
by the Defense. Plant Corp. as OF
! October 81. 1912. was $7,477.1OO
Earnings for the calendar year 1s4l
before taxes were $685., ,024 and after
taxes $3.50 .089. Earnings for the
year 1912 before taxes were $7,740..
829. and after taxes 31.740.S2e. The
earnings before taxes were 7.740 pei
cent OF the capital stock and PAID IN
surplus. and after taxes l,740 pc,
cent of the capital stock and palo-lr
surplus.
Thus in 1912 after setting aside
/ Sl73,680 for depreciation and obso.
lescence. after paying the three tor
officers sll6.645 each, after giving
4 Christmas bonus of 1914. 800. after
paying wages that. according tC
their statement. averaged an annua
rate of $5.l72 per employe. and after
paying $1,000. 900 600 in income ane
excess prof1ts taxes. this company
showed a total 1912 earnings Of
31,740.S39 on an invested capita
and paid in surplus of 100000. The
total payroll for 1912 was 81. .8S6 900