Toledo union journal. [volume] (Toledo, Ohio) 1942-current, 1950-03-17
Big Business Enjoys
Free Loan OF
Billions From US
By Nathan Robertson
For Labor Press Association

WASHINGTON (LPA) - The House Ways
w and Means committee, In framing the new
tax bill, is considering proposal to cut down
on a hidden subsidy to big business that
amounts to $3oOOOO,OOO or $4OO,OO0,Ooo
year.
That subsidy, exposed by Rep Wilbur Mills
I'd. Ark), results from the fact that under the
present tax law corporations are allowed to
pay their income taxes year later than other
people Taxes on the profits they are making
this year don't have to be paid till next year.
When Congress enacted the current collec-
ton system for income taxes during the war,
corporations were specifically exempted. Rep
Mills has pointed out that this gives big busi-
ness tremendous advantage over small busi-
ness.
Most businesses in this country are unin-
corporated. The small enterprise usually is
owned by an individual or a partnership. The
corporations do the great volume of the busi-
ness, but they constitute only about IA per
cent of all the business enterprises.
Corporations however, are often In direct
competition with small businesses run by in
dividuals. 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, but be owned by indivi-
uualS. Inc Smdll stores nave 10 pay llCoIile
taxes currently as the profits are realized
The incorporated store across the street can
keep the profits for year and use them
meanwhile In any way 1t see fit.
II the small businessman underestimate
his income tax by more than 20 per cent he is
required to pay penalty in addition to his
tax The big incorporated business isn't even
required TO make an estimate. 1t merely waits
until the year Is over, computes its tax, and
tauta oil Al
lowing year.
What this amounts to Is a continuous loan
OF about $40 900, 900 900 OF government money
10 the big corporations, without interest Cor
porate taxes have been running in recent years
from $11000,0 900 900 to $13,000000,000, most
of II paid by the big companies. II the cor
porations had TO borrow this money it would
cost them from $500 900 900 to $400, 900 900
year.
For General Motors alone, this subsidy
from the government amounts to something
like $10,000,000 year. General Motors last
year made profit after taxes, of $500, 900, 900
which means It's tax bill Is close to $400, ,000-
600. 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 a full year before II has to pay the
government.
Thus the taxes on the profits GIN made in
the first quarter last year don't need to be paid
until the end of the first quarter this year.
The taxes for the second quarter don't have to
be paid until the middle of this year So, in
effect, GM has continuously the use OF about
$400,000000 that really belongs to the gov
ernment.
Yet small businessman, who finds II much
more difficult to borrow than GIN has no such
advantage. His taxes had to be paid year
ago, as the profits were made. II he needed
working capital or money to expand, he had
to borrow II.
Congressman Mills Is proposing to cut
down this discrimination, but not to abolish 1t.
He would not make corporations pay currently,
but he would make them pay their entire taxes
during the first six months of the subsequent
year, instead of giving them a full year.
The daily newspapers have described this
as trick proposal to balance the budget by
requiring the corporations TO pay all their in
come taxes before the Treasury's books are
balanced in mid-year. Actually il would not
mean the budget was any closer to balance
than now---but IL would save the government
millions OF dollars In interest on the public
debt II corporations were made to pay cur
rently In quarterly installments as other bus-
nesses have to do II would save the govern
ment something like a quarter Of a billion
dollars each year in interest
This Is the kind of economy that Senator
Byrd, ID. Va) somehow overlooks.