The CIO news. (Cumberland, Md.) 1942-????, 1944-01-03
Looking Ahead
By Len De Caux


Corporation profits today are four times higher
before taxes and more than twice as high after
taxes as they were before the war.
True, the total paid in wages has also increased
substantially But this is divided among millions
of additional workers working many more hours
than before the war, while the hugely increased
profits 20 to about the same number OF investors
as before without any more effort on their part.
Furthermore corporation profits are figured
after all expenses. If wages were similarly figured.
you would subtract taxes increased living costs,
ETC. leaving 'Toss" rather than profit" in most
cases.
Then too todays huge profits are largely guar
anteed under government cost-plus-proft contracts
without risk to the investor. Most additional capt.
tai has been put up by the government, and some
corporations have admitted counting taxes as part
of their costs and increasing prices to cover in
creased taxes.
But It NAV be said, doesn't the government get
back these big profits later anyhow through income
taxes on the individual coupon-clippers?
II Congress had not turned down the $4,000
limit on individual net incomes, and If 1t had closed
the many loopholes through which the wealthy
escape fair taxation, there might be more truth to
this contention
taxation in the upper brackets and has left every
kind of loophole wide open.
In any case, the corporations are holding on to
their big war profits instead of passing them on in
dividends Only about half of war profits are being
paid out in dividends.
Money making corporations have piled up some
SIG billion in undistributed profits from 1871 to
1943 and about $40 billion since 1889, which they
are holding to divide among stockholders after the
war, when income taxes are lower.
X X X
But again, 1t may be asked, how can such huge
war profits be accumulated, when there is a 900
excess profits tax?
This tax is as full of loopholes as most of the
rest of the taxes affecting the wealthy.
In the first place, there is 1919 refund, so the
net tax is only $40. Then corporations have
choice of yardsticks for measuring excess profits.
If they made huge profits on invested capital
before the war; they continue to make the same
rate of profit without paying any excess profits tax.
If, on the other hand, they have big invested
capital as compared with profits, they can measure
their exemption on the basis of this invested capital
And there are many more loophoes.
X X X
Then too there are dozens Of ways in which
corporations can conceal their war profits.
One of these is through depreciation and deple-
ton reserves" and corporations buying about S.
billion worth of new plants and equipment from
the government out of their war profits.
Another method of concealing war profits Ii
through huge salary increases, and Undersecretary
of War Patterson reported it to be quite common
for corporation salaries to increase from $4,000 to
$4,000, or from $4,000 to 100000.
X X X
nJo:v,o
on the money paid to the government in taxa
tion.
Congress has provided that II they have losses
after the war; they may get refunds from the
Treasury these taxes.
BY the end of 1914 there will be $26 billion
reserve for such refunds, which is enough to guar
anee the corporations normal profits for two years
after the war.
Wouldn't it be nice If Congress would similarly