Montana labor news., 1950-03-23
BUSINESS
PAYS OUT OF
CURRENT BUSINESS

The House Ways and Means COM
mlt,cc. in framing the new tax bill. is
considering a proposal to cut down
on 4 hidden subsidy to big business
that amounts to SS0.OO,0O or $780,
vu,tsJ a year.
That subsidy. exposed by Rep.
Wilbur Mill, ID. Ark.). results from
the lac, that. under the present tax
law. corporation, are allowed to
pay their income taxes a year later
than other people. Taxes on the
profit, they are making this year
don't have to he paid till next year.
When Congress enacted the cur
rcn, collection system for income
taxes during the war. corporations
we're specifically exempted. Rep.
Mills has pointed out that this gives
big business a tremendous advan-
taec over small business.
Most businesses in this country
are unincorporatcd. The small en-
,erprisc usually is owned by an in
.diyidual or a partnership. The cor
porations do the great volume OF
The business, but they constitute only
abou, II per ccnt OF all the bus
mess enterprises.
Corporations. however. are often
III direct competition with small bus
mess run by individuals. A big
department store on one side OF the
street may be incorporated. Small
stores across the street may be
handling many Of the same goods,
hut be owned by individuals. The
small stores have to pay income
taxes currently as the profits are
realized, The incorporated store
across the street can keep the pro-
its Tor a year and use them a
while in any way it sees fit.
Ii the small businessman under
estimates his income tax by more
THAN , per cent hA IS xeQuired TO
pay a penalty u addition to his tax.
THE big Incorporated business isn't
even required 10 make an estimate.
II merely waits until the year is
lover. computes its tax, and pays in
Hour quarterly installments the fol-
lowing year
What this amounts TO is a con
tinuous loan OF about Sl0,0O,0W,-
600 Of Government money to the big
Corporations without interest.
Corporate taxes have been run
ning IN recent years from $1,000
100000 to Sl5,0ou,0OO.0OO most OF it
paid by the big companies. II the
corporations had To borrow this
money il would cost them from $780,
100000. to S+00, 10000 a year.
For General Motors alone. this
subsidy from the Government
amount, to something like $1,000
900 a year General Motors last
year made a profit, after taxes, of
S,O0.0OO.O0O, which means rs tax
bill i, close TO $500. .0O0. But
unlike millions OF small business
men. GM did not have to pay those
taxes last year as the profits rolled
in 1t can use the money for 4 full
year before it has to pay the Govern
mcnt.
Thus the taxes on the profits GM
made IN the first quarter last year
don't need to be paid until the end
lol the ilrst quarter this year. The
take, Tor the second quarter don't
have to be paid until the middle OF
this year. 50, in effect. GM has
continuously the use OF about $780,
100000 that really belongs to the
Government.
Yet a small businessman, who
lind, il much more difficult to Dor
raw than GIN. has no such advan-
tase. His taxes had 10 be paid a
Syar ago. as the profits were made
II he needed working capital. or
money 10 expand. he had to Dor
row il.
Congressman Mills is proposing
10 cut down this discrimination.
but not 10 abolish II He would moi
make corporations pay currently,
but would make them pay their n
tire taxes during the first six months
Of the subsequent year instead OF
giving them a iull year.
The daily newspapers have de-
scribcd this as a trick proposal to
balance the budget by requiring the
corporations to pay all their income
taxes before the Treasury's books
IRE balanced in mid-year. Actually
i would not mean the budget was
any closer to a balance than now
hut it. would save the Government
millions OF dollars in interest on the
public debt Ii corporations were
made 10 pay currently in quarterly
installments as other businesses
have to do, it would save the Gov
crument something like a quarter
OF a billion each year in interest.