The Start Down

The V-E day confetti had barely been swept from U.S. streets when Georgia's tax-conscious Senator Walter F. George said a mouthful: taxes should now be substantially reduced--"effective on 1946 incomes, regardless of the status of the war against Japan. Otherwise, we can't make the turn to peace and maintain a high level of production."

Two days later, the potent postwar tax committee (of the Senate and House), of which Senator George is .vice-chairman, started the ball rolling. It handed Congress a carefully drafted plan to ease the backbreaking tax load on corporations. Main point: some corporations should be able to use immediately some of the postwar credits which they have piled up (under the excess profits tax, emergency war plant amortization plan, etc.). By speeding these rebates, the committee estimated that corporations would get a rousing $5.7 billion, principally in the next three years, to help pay for reconversion and postwar expansion.

For Big Business. Most of this cash will go to big corporations. Under present law, the Treasury need not start paying out the excess profits postwar credit until two years after war's end. Right now was the time for corporations to start getting the money, the postwar tax committee said.

Specifically, it recommended that: i) corporations be permitted to use last year's excess profits tax credit currently, to help pay 1944 taxes (saving: $830 mil lion); 2) after January i, corporations should be permitted to start cashing in their credits for 1943 and 1942. This would add $1.3 billion to business cash reserves for reconversion.

In effect, this would cut the maximum excess profits tax to 85% from now on. In the same fashion, refunds to corporations due under excess profits tax's "carry-back" provisions, originally designed to cushion industry against reconversion losses, would be put on a current basis (i.e. they could be taken in the year the losses occur). Estimated savings and rebates: $1 billion.

For Little Business. The committee urged one outright tax cut, primarily to help little business. The cut: a boost in the excess profits tax specific exemption from $10,000 to $25,000. Thus any busi ness making less than $25,000 a year would pay no excess profits tax. At one stroke, this would take from "one-third to one-half" of all U.S. businesses out from under the tax. Estimated tax saving: $160 million a year.

For once, no one seemed to have objections to a tax plan. Even dour Henry Morgenthau, who has been flatfooted against any tax cuts till war's end, gave his blessing. There seemed little doubt that the plan would slide right through Congress.

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