Evening star., 1944-01-19

Thus under the New Deal con-
ception of economic rights-which,
incidentally, President Roosevelt
completely overlooked in his recent
message, to Congress-the small cor
poration with 100000 of invested
capital pays just as high rate of
taxes as the $4,000, 900 corporation.
There is no graduated scale of tax
rates which is the very heart of a
capacity-to-p tax system. The
1941 law did provide such a scale
for excess profits taxes but the New
Deal insisted on a fiat tax which
now is to be 95 per cent instead Of
80 per cent, as in the present law.
Congress, which is supposed to
have achieved some independence
of the New Deal on tax matters in
recent years, seems to have con-
cerned itself lately with possible tax
relief for the $780, 100000 corpora
tions, renegotiation benefit for the
big companies, but no suggestions
for relief of the smaller corpora
tions has put in its appearance as
yet though the revenue measure has
gone through the House and is well
on its way through the Senate
Under the pending bill, a company
which has an invested capital of
100000 and earns $1,000,000 pays
a net tax Of 72.4 per cent, or $724 900
and can retain, therefore, only $276,-
900. But a company with $20,000,-
900 invested capital pays only $400,-
900 out of the first million it earns
and hence retains $600,00O.
Even on the basis of 25 per
cent return or earning on $20,000,-
600 invested capital, the overall net
tax rate is TBS whereas the corpora
ton with 81 100000 invested capital
that earns $1,O0O,000 pays 72.4 per
cent in taxes.
This means that the incentive to
earn not only is diminished, because
very few companies do earn ST.
100000 on a $1,0O0,000 invested cap
ital-but the situation is cor
respondingly adverse for companies
earning less than $l000,000
A business that can keep $2760 900
out of an invested capital of ST.
100000 is a small business as cor
porate affairs are considered now
adays because the gross volume of
many large companies runs into
billions or big fractions thereof.
The 1941 tax law took care of this
problem to some extent by a gradu-
ated rate which ran from 35 per
cent on the first $4,000 of excess
profits to go per cent on the incomes
in excess of S500,000. This was
fair and more equitable means of
taxation but the Treasury Depart
ment since has insisted on penaliz-
ing the smaller businesses by sub
jecting them to the same rates as
the larger enterprises. AS for the
so-caned relief provisions Of the ex-
cess profits laws from which so
much was promised, 1t turns out
that these are largely "jokers" and
that the Treasury is constituting the
measures narrowly or actually de-
laying the auditing Of these cases
so much as to prevent Congress
from learning in time to do them
any good whether any relief to the
smaller businesses actually is being
given.
1t is doubtful whether there really
will be any relief under section 722
which will give smaller businesses
any reduction that they do not al
ready get under the broad clause
limiting the overall tax of all cor
porations to 80 per cent.
The net result is to entrench big
business still more firmly and to
make it difficult for the weaker
competitor to strengthen himself
sufficiently for the postwar COM
petition. Some day Congress will
discover the small businessman
and the manner in which the New
Deal has protected the monopolies
by means Of the tax laws. But that
discovery as yet appears to be in
the dim distance.
(paprodurtiop piobte pacarvaJ