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Show COVERNMENT REBATE By -GEORGE S. BENSON President of Harding College, Seacy, Ark. Excess is a word that needs a new definition with each new use. It would have been a good thing for this country if the man who first said "excess profit" had used a term that meant exactly something some-thing Excess baggage is everything over 150 pounds, of course, and doctors know precisely what excess fat or excess sugar is when they find it but what is excess profit? Who knows what it is.' Our 1940 tax law calls a profit "excess" if it is greater in any one year than the same firm's average annual profits of lJib through 1939 War choked out a few firms completely, but a majority major-ity kept going and soon found their sales swollen by war conditions. Costs increased too but, even so, most of them are making bigger profits annually before taxes now than they did before the war. Costs Shrink ... Along with increased costs, born of war, many big corporations enjoy economics also incidental to war. Costs can usually come down with greatly increased volume, and many manufacturers are selling everything they make to the government as fast as they can make it. Some arc relieved entirely of sales expense and kindred expenses such as merchandising, warehousing, deterioration, etc. Business establishments have consistently given liberal discounts to big-volume buyers whose purchases keep plants busy and unit costs down. Government is always a preferred customer. Price concessions con-cessions to government departments are certainly nothing new, and firms with government contracts do not offer much protest against a stiff tax on war profits. Business men are able to see sense in it. Laws Stay . . . Technically, the excess profits taxes that corporations pay now are not price concessions because the firms actually get the money and pay it back later. It is almost precisely a rebate to the government govern-ment for large purchases. The only difference is that our excess profits tax is a law. War contracts are worded to cancel themselves the day war ends, but the tax law has to be repealed by Congress, or remain. Excess, in this law, is the unfortunate use of an ugly word. It describes profits that are not necessarily too big. The effective tax rate is 85 and if it is not amended to end with the war, American manufacturers will have to keep on rebating the govenment after the government quits buying. Selling and warehousing costs will return. There will be no big-customer savings to divide with anybody. any-body. If manufacturers give government 85 of any part of postwar profits, they will be obliged to hike prices. That will be an "excess", really, and the whole burden of it will fall on us average consumers. The only way we can protect ourseves is by having proper tax legislation legis-lation created now, to go into effect as soon as the war ends. |