The Ypsilanti daily press. (Ypsilanti, Mich.) 1928-1962, 1945-06-22
BY ROGER W. BABsoN


Washington. d. c.. June 22-The
past week have been trying 70
make an intelligent forecast OF the
prospects for reduced federal taxes
after Japan collapses. which should
be within six months. This is a
summary OF my conclusions.
Excess Profits Taxes
The average investor little real
ICES what tremendous sums corpo-
rations are penalized by excess pro-
iits taxes. In many cases these
taxes amount TO more than inves-
tors receive in dividends: in fact,
some times double or perhaps tri.
pie. II these were suddenly elm.
mated, after Japan collapses, some
companies could double or triple
their dividends. Yet in all probabi.
lily this will not happen. especial
ly Il company earnings fall of ma
terially.
] am sure that the excess profits
taxes will not be cut of altogether
and corporations will be lucky IL
they are cut in half within a year
after Japan collapses. My present
belief is that these excess profits
taxes will gradually be reduced as
the earnings OF companies gradual
ly decline during the postwar per-
iod. The general purpose OF such
a tax program would be to keep
corporation net earnings about
where they are today without Civ
ing them the advantage Of peace.
but preventing them from being
penalized by the falling off OF war
business.
Normal Taxes
Normal corporation taxes before
the War were 20ee. Then they
were lacked up to 400 at which
they are at present. My feeling is
that there will be a compromise at.
300 and perhaps sterilization at
this figure for some time. This
would be a fair thing to do II the
excess profits taxes are eliminated.
these excess profits taxes are
what are causing the. trouble and
may be a real factor in caus.
ing unemployment Congressman
should insist that these excess
profits taxes are eliminated as soon
as possible with a fair compro.
mise on normal taxes.
Some of the remaining New Deal
ers in the Administration are talk
ing about the entire elimination of
corporation taxes and putting all
the tax burden on individuals after
they receive their dividends. Their
theory is that with the present
high corporation taxes the small
investor is taxed on his careful saw
ings the same as is the multi.mil-
lionaire. Hence, they would let all
dividends come through from the
corporation without taxation and
then tax these dividends as they
are received by individuals. The
small investor would then pay only,
say a 209o tax: while the million
aire would pay a 90cS tax.
Political considerations
President Truman is an honest
man. Furthermore, he is thrifty
and sincerely hopes to balance the
buuStN btlolt lt luuS again lOT u
fee in 1913. He can so balance
the budget only by keeping up tax
alton. Hence, am not as optimls-
tic as some of my friends in be-
lieving that there will be radical tax
reductions after Japan collapses.
I'VE should hope for the best, but
prepare for the worst" At least
this is my conclusion at the pres
ent time. The only possible excep-
tion is in the case OF corporations
whose stock at market prices rep
resents actual cash invested. There
may be exemptions to the extent
that the book values of corpora
tions and the actual cash invested
are represented in the assets.
Finally. let It be remembered
that although President Truman is
both honest and thrifty, he has
been well.trained in the school OF
politics Although he may turn
neither to the right nor to the left,
yet he may perform that acrobatic