Evening star., 1950-11-20
NAM Suggests
Flat Increase
In Normal Tax
Percentage Method
Called Better Than
Excess Profits Levy
BY J. A. O'Leory

a UNIFORM nat percentage IN
crease in the normal tax of all
corporations was urged on Con-
gress today by the National AS
sociation of Manufacturers as a
substitute for the Administration s
IS per cent excess profits levy to
finance the defense program.
Attacking the excess profits ap-
proach as "unsound, unavoidable,
and inflationary," Charles R.
Sigh, jr.. NAM spokesman, said
the Nation must grow in economic
strength to- prevail over its
enemies.
He argued that the excess profits
approach is founded on the
emotional goal of taking the
profit out of defense" He in
sisted that in today's complicated
industrial structure there is no
way of identifying precisely the
profits from defense as dis
tinguished from ordinary civilian
production.
G. o. p. Plan Stifed.
At the outset of today's hear
ings, Representative Reed, Repub-
lican, of New York, made another
futile effort to have the House
Ways and Means Committee hear
arguments on the Republican
alternative plan, which would give
business choice between an ex-
cess profits rate and a higher
normal tax rate. The committee
took another strictly party vote
of Is Democrats to 10 Republicans
to confine the hearings to the di-
rective Congress wrote into the
last tax bill in September, order
ing the committee to bring out an
excess profits plan later.
In the September law, Congress
boosted the income tax of indi~
viduals and also raised the normal
rate on corporations from 38 to
As per cent.
To avoid having the emergency
increases become part of the
permanent tax structure, the NAM
proposed today that Congress go
back to 38 per cent as the basic
rate on corporations, to be made
up of an ID per cent normal rate
and a 20 per cent surtax.
Favor Flat Increase.
The NAM then recommended
that the additional revenue need
ed now for defense be obtained
by collecting from all corpora
tions a fiat percentage increase
of 20 or 80 per cent of whatever
tax they owe at the normal rates.
For example. corporation with
81 million of taxable net income
would owe $375.000 on the basic
combined normal-surtax rate of
38 per cent. If the new special
defense tax was fixed at 80 per
cent it would pay another
$112,5 500. or a total of $487 500.
The NAM did not tie itself to a
particular percentage but gave
figures on either a 20 or 80 per
cent special defense tax.
The business organization en-
phasized that under its plan the
basic tax plus the percentage in
crement would in no case take
more than so per cent of the
corporations income. Under the
last World War II excess profits
plan, since repealed, there was
an overall limit of 80 per cent
that could be taken from the
combination of income and ex-
cess profits tax.
"It is obvious that the NAM
plan will provide far greater in
centiveS to keep careful control
of costs, and will therefore be a
far greater contribution to the
prevention of initiation than any
excess profits tax is capable of
being" said Mr.. Sigh.
Others Wait for Hearing.
A long list of other business
men were waiting to be heard
during the day.
The administration wants an
excess profits levy of rs per cent
on all business earnings deter
mined to be abnormal when COM
pared with income during the
1946-1949 period. President Tru-
man has urged that it be passed
this year, retroactive to July /.
Republicans on the Ways and
Means Committee are leaning to-
(See TAXES. Page A-30