Evening star., 1944-01-05
Senate Floor Battle
On New Tax Bill Seen
By Minority Report


next week over the new tax bill was
forseen today in minority report
made public last night, charging
that changes made by the Finance
Committee in the contract re-nego-
tiation law would pave the way for
"a new crop of war millionaires."
The report called for defeat of five
features of the new re-negotiation
program recommended by a ma
jority of the committee when it re-
ported the $2,275, 500 900 revenue
measure just before Christmas.
The minority report was submitted
by four committee members-Sena-
tors Walsh Of Massachusetts,, Con-
nally of Texas, Lucas Of Illinois,
Democrats. and La Toilette, Pro-
gressive, of Wisconsin. Their views
are concurred in by Senators Tru-
man, Democrat, of Missouri, and
Hatch, Democrat, of New Mexico, of
the War Investigating Committee.
In addition, Majority Leader Bark
ley has expressed general opposi-
ton to the committees re-negotia-
ton proposals.
zoo Examples Cited.
The report described 200 examples
OF excessive profits after taxes" and
said 40 of these companies that had
war contracts with the Government
show more than 100 per cent earned
after taxes in 1912 on the net value
Of these companies as shown by
their books
The highest per cent earned by
the companies listed in the report
is 965 per cent, and there are several
companies which have earned more
than 500 percent. the report charges.
THE real choice is between re-
negotiation and war prof1teering,
the report declared. an the long
run business itself will pay most
dearly for anv recurrence of war
profiteering. For 100000 men in
the armed forces and for their
families the war has meant heavy
sacrifices. The control of wages,
rationing and other restraints of
total war have imposed burdens
upon the people at large. Having
endured these sacrifices and burdens,
the people will not tolerate any re-
taxation of wartime profit controls"
Five Phases Of Attack.
The five phases of the bill at
tackled by the minority group are
described in the report as follows:
l. exemption from renegotiation of
standard commercial articles; 2, the
new retroactive definition of q sub
contract; 3, retroactive exemption
from renegotiation of prices and
profits on articles furnished in obedi-
ence to a War Production Board
directive and under a price ceiling
which the minority call Sleeper;
4, the provision permitting de. novo
appeal to the court of claims of all
renegot.ation cases, including those
contractors have agreed to close, and
5, section which the minority say
requires renegotiation to allow for
"a mares nest of suppositions-
probable net income after taxes,
hypothetical future losses, potential
reconverSion expenses, ETC."
Exemption of standard CONNER
cial articles would permit excessive
profits, free and clear of taxes.
amounting to $250,OO0-or $1,000
100000 before taxes-on Navy and
Maritime shipbuilding alone, the
minority assert. Describing this
amendment as a cross between an
error and a pretense, the report con-
tinues:
The pretense lies in the fact that
~" amendment would permit war
rrof1teering on most of the COM
pcnents going into an Army truck,
for example, while pretending to
prevent excessive profits on the COM
pleted truck"
Sub Contract Definition.
The minority said the new and
retroactive definition of a sub-con-
tract, exempting from re-negotia-
ton products which are not phys
ically incorporated in completed
contract, would require the Govern
ment to return to companies as
much as $500,0O0.
Commenting on the proposed ex-
emption retroactively of prices and
profits on any article furnished in
obedience to WPB directives and
under price ceilings, the report al
leges this provision may be tanta-
mount to repeal Of re-negotiations
Tor all war production except COM
bat weapons.
The report contends discrimina-
ton would result from requiring re-
negotiation to be guided by COM
panies' net income after taxes. To
illustrate, the report says x COM
pany would receive a higher price
than Y company, its competitor be-
cause K company's prewar opera
tionS had given it a lower tax ey-