Evening star., 1950-11-26

with the World War II rate Of
8512 per cent.
On the face this seemed a mild
er bill than the one repealed five
years ago. But in order to pro-
duce the 81 billion year sought
by President Truman from an ex-
cess profits tax, Mr.. Snyder point
ed out that it would be necessary
to reduce a corporations base
period earnings by Is per cent
for the purpose of computing
credit. Business spokesmen at
tackled this idea and some tax
experts said it would make the ad-
ministration's proposed bill even
rougher than that in World War
II. According to some. the effect
of such step would be to impose
an excess-profits tax on corpo-
ration's normal profits.
Mr.. Snyder proposed to retain,
with notifications. features of the
World War II levy allowing cor
poration taxpayers to compute
their tax on the basis of an aver
age base period earning credit or
invested capital credit. However,
the Secretary suggested that the
base period should be established
as 1946-1949. with the taxpayer
being allowed to take the three
best years, instead of the 1886
1889 base used in the World War
II tax.
There was no great dispute over
the suggested base period. How
ever. some witnesses pointed out
that the years would work to the
disadvantage of some industries.
such as the aircraft industry which
encountered many difficulties in
the postwar reconversion period.
Others pointed out that new and
expanding industries. such as tele-
vision broadcasting. also would be
at disadvantage since. for the
most part, few if any stations
showed any profits during the pc
riod on which they could claim an
earning credit.
Results Questionable
Many witnesses attacked the
administration proposal as inf1a-
tionary and said it would encour-
age wasteful practices in indus
tries. However. Representative
Dingell, Democrat. of Michigan
said he would undertake to see
written into the bill provisions
guarding against wasteful prac-
tices. In this connection. he said,
for example, there should be some
provision to keep business inter-
ests from running up such un-
necessary expenses as maintain
ing suites in Washington hotels
for the convenience of their off,
cials doing business with the Gov
ernment.
There were serious questions
raised as to whether the tax
would produce the revenue eX-
pected by the administration. Leon
Henderson, former OPA adminis-
traitor and now an economic con-
sultant, said the World War II
tax was mo great revenue pro-
ducer." The National Associa-
ton of Manufacturers presented
figures showing that the SIG bill
lion raised by an profits
tax from the time it was imposed
in 1910 until it was repealed after
the war could have been produced
by fiat rate of 4S.4 per cent on
corporate income.
However. Mr.. Snyder said an
increase in present corporation
income taxes from a rate of As
to 81 per cent would be required
to raise the 81 billion sought by
the administration.
Numerous other issues raised by
the suggested tax came out dur
ing the hearings and will be solved
finally only when the matter
reaches the floor of the House and
Senate for debate. Many of them
may be carried over into 1851
when it is expected Congress will
be called on to write a new tax
program.
And that tax program. the adj
ministration already has indi-
Gated, will mean higher taxes for
individuals as we'll as corporations
as the country faces the long pull
of making itself stronger and
stronger against the threat Of
Communist aggression.