The Nonpartisan Leader Newspaper, September 20, 1917, Page 8

Iets 'Em Profit by Bloodshed The Senate, While Slightly Increasing Tax on War Profits, Refuses to Force Those Who Make Money Out of War to Disgorge Unpatriotic Earnings ROVIDING for the raising of only an insignificant portion of the war expenses by taxa- tion, the United States senate has passed the war revenue bill. The expenses of the first year of the war, according to the latest esti- mate of Secretary of the Treasury Mc- Adoo, will be approximately $18,000,- 000,000. This covers only additional expenses caused by the war; not ordi- nary peace expenses of the govern- ment, The war revenue bill, as passed by the senate, provides for raising only $2,400,000,000, or less than 14 per cent, by taxation. The rest of the §18,000,- 000,000 will have to be provided by the sale of bonds. The bill now goes to the house, which passed it previously, but in a different form, and agreement will have to be reached on the senate amendments. OLD GANG SENATORS OPPOSE TAXING PROFITS Agitation for conscription of war profits forced the senate, against the will of a majority of senators, to add $500,000,000 to the bill, principally in taxes on war profits. - This was after Senator Simmons, chairman of the senate finance committee, had stated that it would be impossible to add a cent more to the taxes of the big cor- porations “without makeg the war un- popular.” Senator McCumber of North Dakota, Senator. Smoot of Utah, Sena- tor Penrose of Pennsylvania and Sena- tor Lodge of Massachusetts, all tried and true members of the old gang, also _added their voices against any pro- posed increase in rates which would make the war unpopular with Big Business. These senators and others, again and again on the floor of the senate, asserted that the bill, as passed by the senate, already provided for conscription of wealth. Let us look at the bill and see exactly what it does provide. In the first place the bill provides a corporation income tax of 6 per cent. That is not very large. There is a corporation income tax of 2 per cent for peace times. This war finance bill merely adds 4 per cent more to this. Remember, enormous corporations like the United States Steel corporation, which earned as much as $60,000,000 and $70,000,000 in peace times, will pay only 6 per cent on these sums. Next comes the tax on war profits. War profits are determined by taking the average income of a corporation during ‘the three years, 1911, 1912 and 1913, before the European war began. In the case of the Steel corporation, for instance, the average income for these vears was $63,585,777, on which sum it will pay only 6 per cent. HOW BILL WORKS AS SENATE FIXED IT This sum is deducted from the pres- ent profits of the corporation and what is left—the excess over the normal profits—is considered war profits. Taking the Steel corporation again, its profits for 1916 were $271,531,730. Deducting the $63,585,777 or normal profits, leaves $207,945,953 of ‘war profits.” A sliding scale is provided in the bill for the taxation of these war profits. For the part not more than 15 per cent above normal profits, the rate. is. 12 per cent. For that part between 15 and 25 per cent above normal, the rate is 16 per cent, and so on upwards. The highest rate is for that part of the profits which are more than 300 per cent above normal profits, and such portion of the profit is taxed 60 per cent. This last named rate will not reach most of the corporations, their average war profits being about 200 per cent above normal. TABLE ILLUSTRATES THE SENATE’S PLAN The average tax works out slightly above 30 per cent. To show clearly how the tax works take the case of a corporation which before the war made profits of $10,000,000 a year and which now makes $460,000,000 a year, due to the war. The first tax levied, the 6 per cent corporation tax, is levied against the entire $40,000,000 and pro- duces $2,400,000, To find the war profits the $10,000,- 000 normal profits are taken from the present profits of $40,000,000, which leaves $30,000,000 war profits. The first tax on war profits is 12 per cent on the portion of the war profits not more than 15 per cent above normal profits. Of the $30,000,000 there is $1,500,000 (15 per cent of $10,000,000) FIGURING $1.80 WHEAT UP ON THE OLD BARN DOOR John M. Baer, who drew this cartoon, remembers how his father used to keep books on the barn door, before agricultural colleges and county agents ushered in modern bookkeeping for farmers. about $1.80 to farmers at local elevators. Two-twenty No. 1 wheat at Chicagd eans TAGE EIGHT The government drafted the men it needed for war. The government drafted the = farmers’ profits on wheat. Why should it be more tender with swollen war profits? above the normal profits, and the tax on this portion is $180,000. The next tax is 16 per cent on the next $1,000,000, or $160,000. The next is 20 per cent on $2,500,000 and so on. The complete tax on the $40,000,000 profits would be $13,090,000, as is shown in this complete statement: War Profits Per ) Taxed Cent Produces $1,500,000 at 12 $ 180,000 1,000,000 at 16 160,000 2,500,000 at 20 500,000 2,500,000 at 25 625,000 2,500,000 at 30 750,000 5,000,000 at 35 1,750,000 5,000,000 at 40 2,000,000 5,000,000 at 45 2,225,000 5,000,000 at 50 2,500,000 $30,000,000 $10,690,000 Plus corporation tax; $40,- 000,000 at 6 per cent 2,400,000 Total ~ tax on $40,000,000 profits ....... BRETY +....$13,090,000 Far from being a “conscription of wealth” this leaves the capital of the corporation absolutely untouch- ed and leaves the corporation with $26,910,000 of profits in war times, as against $10,000,000 normal prof- its in time of peace. Carl Vrooman, assistant secretary of agriculture, told North Dakota farmers during his recent tour of the country that steel magnates, holding up the country for exhorbitant profits- on steel, were causing the government more trouble than the German armies. TAX WILL LEAVE GREAT WAR PROFIT The Steel corporation’s taxes under the proposed bill, as figured out by the finance committee, are $93,018,376. During the debate on the finance bill Senator Simmons, chairman of the finance committee, admitted that these figures probably were $16,000,000 too high. - However, taking these figures as they are, the bill will allow the Steel corporation, on the basis of its 1916 income of $271,000,000, a profit of $178,000,000 after paying all its taxes, while its normal profits before the war were only §$63,000,000 a year. The net- profit of the Steel corpora- tion_for 1917 is estimated at $500,000,- 000. . Its taxes on this basis will amount to about $150,000,000 and will leave a profit of $350,000,000, as compared with a profit in normal years of $63,000,000. Senators Borah of Idaho, Johnson of California, La Follette of Wisconsin, Gronna of North Dakota and a few others joined in a hard fight in an ef- fort to have war profits taxed 80 per cent, like England taxes them. When they were beaten on the 80 per cent amendment, they tried to get a tax of 65 per cent, or a tax of only 50 per cent, but the old gang steam roller, ably manipulated by the Simmons-Smoot- Penrose-Weeks-Lodge combine, simply toot-tooted on its way and flattened out the friends of the people. WILL HELP CONGRESS MAKE A FAIR BILL There is just one chance of providing for real conscription of wealth, That is for President Wilson or a majority of the house membership to insist upon " amendments while the bill is in con- _ference, for straightening out of the present amendments. Before the bill was acted upon by either house President Wilson pointed out the necessity of raising asemuch revenue as possible by taxation and the evils that would be caused by ex- cgssive bond issues through inflation of the currency and further increases of prices. President Wilson has since that time taken no part in assisting with the ng of the bill, ‘It is to enlist his elp and that of friends of the people fn congresg that the delegation of the .onga:ussé, league has gone to Wash-