Evening star., 1950-11-26

enthusiasm PfeS.dent truman S
corporation earnings above a pr
designed to produce 81 billion a
year to help pay the cost of the
country's vast and expanding re-
armament program.
A week Of public hearings did
nothing to enhance the chances
Of the Presidents program being
enacted into law before the 81st
Congress goes out of Office in
January. The hearings were held
under a congressional mandate
for the tax-writing committees
of the House and Senate to re-
port an excess profits tax bill as
soon as practicable for considera-
ton at the short session.
A solid phalanx of businessmen
testified in the course of the
hearings and attacked the admin
|istration's proposal in particular
and the whole philosophy of an
excess-profits tax as unfair, ad-
ministratively unavoidable, inf1a-
tionary and one that would stifle
production. Three labor spokes-
men backed up the administra-
Ition plan; they even went further
and called for an excess-profits
tax that would produce between
Sc and ST billion a year.
AS the hearings ended and the
House committee scheduled execu.
| tive sessions to write a tax bill
there was talk of a compromise
involving moderate increase ir
corporation income taxes as 8
part Of an excess profits levy
substantially modified from what
! the administration has proposed
Administrators Reasoning
Such a compromise was ad-
vanced as possibly meeting some
of the objections of business to a
straight excess-profits tax. As
brought out during the hearings
the hard core of business think
ing was that increases in taxes
are inevitable during the long and
costly rearmament program and
that the country should pay for
them on a 'pay-as-you-go" basis
and. if possible. balance the Fed
eral budget. But business insisted
its part of the burden should take
the form of "a defense profits
tax added to the regular cor
poration income taxes.
In view of this widespread op-
position to an excess profits tax
why, then. has the administration
proposed one? In the first place
it should be noted that such ia,
traditionally has wide appeal.
is grounded in the feeling which
no one would contest-that there
should be no profits out of wal
or the preparation for a possible
war.
This reasoning, however, otter
fails to take into consideration
the comolicated nature of an ex-
cess-profits tax and the admins
trative difficulties of administer
ing it. Secretary of the Treasury
Snyder, in detailing the admins
tration's plan to the committee,
frankly recognized these difficult
ties. But he ruled out an increase
in the regular corporation income
tax as one that would impose
particular hardship on corpora
tions whose profits are declining" a"
Business witnesses, on the other
hand. contended that an excess
profits tax would create even
greater hardships. In this con-
nection they pointed to their ex-
perience in World War II with
an eXcess-profits levy. Out of
286,000 returns filed under that
law. $1,000 claims were filed for
reileI. NOW, tve years after the
law was repealed, one witness
testified, there are still about
$4,000 relief cases pending in
volving 81 billion, a thousand
cases are in the court and new
cases are being filed at the rate
of one a day.
Snyder's Suggestions
The tax plan unfolded by Secre-
tary Snyder was patterned after
the World War II one with modi-
flcations and .revisions suggested
by changing conditions. He sug-
gested-he insisted throughout his
testimony he was merely suggest
ing" and not recommending-a
rate of rs per cent, as compared
4 Views Clash