Full Steamroller Ahead

Like many another Administration tax expert, Secretary of the Treasury John Wesley Snyder has privately intimated that he is against an excess profits tax even though his boss in the White House is for it. But last week, when the House Ways & Means Committee opened hearings to draft a bill for such a tax, Secretary Snyder trotted over like a good soldier to do battle for it.

The tax should raise $4 billion in additional revenue, said Snyder, and he outlined a way to do it. His plan: use the average profit for the best three years of 1946-49 as an excess profits tax base. On 75% of the average profit, levy the present 45% corporate tax. On the remaining profit, levy a 75% excess profits tax. Even as he offered it, Snyder squared his conscience by making a fine distinction. He insisted that his plan was not a "recommendation" but a "suggestion." Snyder conceded that even his "suggestions" contained "inequities," that relief would have to be provided, for example, for U.S. aircraft companies. Snyder agreed that they needed "special consideration" because they made little if any profits during the 1946-49 base period.

"Expensing the Excess." If Snyder was a lukewarm advocate, several onetime New Dealers were passionately opposed to the tax. Ex-OPA Boss Leon Henderson, now a businessman's consultant, termed the tax "a built-in barrier to new investment." War profits, said Henderson, should be kept down by constantly renegotiating military contracts. He insisted that World War II's excess profits tax had not caught profiteers: "Only one out of every six corporations that earned any income paid an excess profits tax . . . No statistician will ever figure out how many corporations escaped E.P.T. by the simple device of expensing the excess." In the same vein, television's Dr. Allen B. Du Mont, chairman of the National Conference of Growth Companies, warned: "I resent the threat of my Government taking legislative action that will stigmatize [our] profits . . . under a completely false label ... If this fictional . . . legislation goes through I should feel that it would be my duty to myself, my company and its stockholders to see that there would be no 'excess' profits on which such a tax might be levied."

Merrill Griswold, a director of Boston's American Research & Development Corp., which finances new companies, told the committee that E.P.T. favors big, entrenched companies, penalizes new and growing businesses. Under it, said Griswold, "many new industries that might otherwise be born will never see the light of day." But the New York Times laid its editorial finger on the most glaring inequity of E.P.T. President Truman had asked for the tax to "recapture excess profits made since the start" of the Korean war. But Snyder's proposal, the Times pointed out, regards one-fourth of pre-Korean profits as "excessive." Snapped the Times: "This should not be called a war profits tax at all, but a tax on the housing, auto and television boom of 1949-50."

Choking the Argument. Businessmen were not blindly fighting higher taxes as such. Many of last week's witnesses had alternative proposals of their own, e.g., higher corporate income taxes, flat across-the-board profits levies. On the committee itself, New York's Republican Representative Daniel A. Reed tried to offer a plan to permit corporations to choose between a flat 55% corporate income tax or Snyder's 75% excess profits levy. But Chairman Robert Lee ("Muley") Doughton, 87-year-old North Carolina Democrat, refused to listen to any alternatives, insisted that Congress had given him a "mandate" to report out only an excess profits tax in time for the lame duck session.

Republican House Leader Joe Martin conceded that some kind of an excess profits tax would pass the House, but predicted it would not get by the Senate in the short session.

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