Evening star. [volume] (Washington, D.C.) 1854-1972, 1950-01-28
Corporation Tax
To Hit EARNINGS
Above $4,000
Smaller Firms Would
Have Burden Eosed;
Details Due Soon

Inc new corporation tax rates
to be advocated by the admins
tration at this session will take
more from big business and less
from companies earning between
$4,000 and $4,000 a year. &C
cording to informed sources.
The details of the new levies.
to make up for expected cuts in
wartime excise taxes, will not be
unveiled until House hearings
start Thursday. Official sources
said yesterday, however, President
Truman wants to ease the bur-
den on about $4,000 corporations
below the S119, income level,
and raise it on the $4,000 con-
Germs above that level.
While the House Ways and
Means Committee prepared to
start work on tax revision. mem
bers of the Senate Appropriations
Committee were hoping to improve
the TreaSury's condition from the
opposite direction-by Tightening
up on appropriations for so-called
fixed charges" of the Govern
ment.
Fixed Charges" to Be Studied.
Under the committees new
procedure. Senators said, the So
called fixed charges" of Gov
eminent will be given a special
screening by Senators and staff
aides.
In the past. the committee gen.
orally has accepted without ques-
ton a departments claim that
certain charges are fixed by law
and cannot be changed. These
include such items as interest
payments. rentals, certain admin
istration costs, veterans benefits
and others.
We've never questioned these
fixed charges" Senator Ferguson,
Republican, of Michigan said.
But now each department is
going to have to prove it's fixed
charge claims"
Once the committee determines
the fixed charges of Government,
then the members will turn to the
other appropriations. And that,
said Senator Ferguson, is where
1.-The real cuts must be made"
Most Firms Would Escape.
The Presidents plans for re-
vision OF corporation taxes. as re-
vealed by reliable sources, would
leave taxes of corporations with
profits under S25 900 at tie pres
ent rates: 81 per cent on the first
$4,000, % per cent on the next
$4,000 and Is per cent on the
next $4,000.
The great majority of United
States corporations-about 70 per
cent of the total, or some 1888 1000
in all-fall into this class, either
because they lose money or earn
under $4,000. according to the
Revenue Bureau data.
The plans would increase taxes
for fewer than $4,000 corporations
or, as the President said in his
message, "less than one-tenth of
all corporations.
This small group of big corpo.
rations thus would get the whole
burden of the extra 100000, 900
a year Mr.. Truman hopes to add
to Government revenues by his
plans.
New Proposals Outlined.
The new tax proposals would
work this way:
A corporation earning $4,000
a year would pay $3.50 income
taxes. the same as at present, and
the same $3.50 tax would apply
to the first $4,000 of all bigger
earnings.
Under present law, all corpora
lions earning $4,000 to $4,000
pay $3.50 taxes on the first $685.
600 and SO per cent on additional
profits.
Take a company earning S49,-
300 year, for example.
Under present law, it pays $3.50
taxes on the first $4,000 and So
per cent or $13,197 on the next
$4,000, or total income tax of
$18.947.
Under the Presidents proposal.
1t would continue to pay $3.50 on
the first $4,000. but only AZ per
cent or $10,458 on the next S24,900.
making its total tax 6,208-a
saving of $2,739 from it's present
tax bill.
Corporations earning $4,000 or
more now pay 38 per cent on every
penny of profits. Under the new
proposal, they would get the %
per cent average rate on the first
$4,000 and pay NJ per cent on
amounts above that.
The $4,000 corporation, under
present law. would pay SO per cent
on all profits, or $4,000 taxes.
Under the Truman proposal. it
(See TAXES, Page A-2)