The midland journal. (Rising Sun, Md.) 1885-1947, 1945-03-16
LOOKING
AHE4D
i GEORGE S. BENSON
| presidsMf--Hardisg CSiifge
Seaffg. Arkansas
Government Rebate

GACeSS Is pau tning, everybody
is against it. Every time the word
Is mentioned it brings up recollec-
tons of paying excess baggage on
a trunk, or recalls some friend
whose doctor has warned him
against excess fat or excess sugar.
Excess always makes you think
of something that's fine in modera-
ton but very bad, dangerous, sinful
maybe, if there is any extra.
1t would have been a good thing
for the United States and everybody
in it, if the man who first said "ex-
cess profit" had used term that
meant exactly something. Excess
baggage is everything over $50
pounds, of course, and doctors know
precisely what excess fat or excess
sugar is when they find it, but what
is excess profit? Who knows what
1t is? Quite often it is the unfair
use of an ugly word.
Taxed at IS Per Cent
There is such a thing as excess
profit, without doubt; easier to
recognize than define. What the
government calls excess profit how
ever, may not always be too much.
/ think everybody has right to
know just what it is that corpora
tons earn and then have to pay IS
cents out of every dollar back to
the government in a special tax.
Consider this:
The war choked out a few firms
completely, but majority kept 60
ing and soon found their sales swol-
len by war conditions. Costs in
creased too but, even so, most of
them are making much bigger prof
it's annually before taxes than they
did in good average year of bust
ness before the war. The 1910 tax
law calls profits excess" if they
are greater in any one year than
the average annual profits of 1886
through 1889.
Gift From Government
Along with increased costs, born
of war, many big corporations en-
joy economies also incidental to war.
Costs can usually come down with
greatly increased volume, and many
manufacturers are selling every
thing they make to the government
as fast as they can make it. Some
are relieved entirely of sales ex-
pense and kindred expenses like
merchandising, warehousing, deteri-
grafton, etc.
Business establishments with gov
eminent contracts do not offer much
protest against a stiff tax on war
profits. Business men are able to
see sense in it. They have generally
given liberal discounts to big-volume
buyers whose orders keep plants
busy and unit costs down. Govern
ment is always close buyer; price
cuts to government departments are
certainly nothing new.
Excess Prices Next
Technically, the excess profits
taxes that corporations pay now are
not price concessions because the
firms actually get the money and
pay it back later. It is almost pre-
cisely rebate to the government
for its big purchases. The only diff
ference is that our excess profits tax
Is law. War contracts are woYded
to cancel themselves the day war
ends, but the tax law has to be re-
pealed by Congress or stay in force.
If our $50 excess profits tax law
is not amended to end with the war,
American manufacturers will have
to keep on rebating the government
after the government quits buying.
Selling and warehousing costs will
return; there will be no big-customer
savings to divide with anybody.
If manufacturers pay government
$50 of any part of postwar profits,
they must hike prices. That will be
an excess" really, and the whole
burden of it will fall on us average
consumers. We can only protect
ourselves by having proper tax
legislation created now, to go into
effect as soon as the war ends.