Show F Excess Profits T Tai ax Bill BiD leaves 1 tee Committee for House Debate 1 WASHINGTON Aug 27 IFA JP- JP A combination excess profits tax and amortization bill bill long long urged as essential for accelerating de defense defense defense de- de preparations was preparations was rep reported to the house Tuesday with the unanimous approval of its ways and means committee After a protracted deadlock over some of the measures measure's provisions provisions provisions pro pro- visions the committee reached agreement late yesterday and leaders were hopeful the house would pass the bill before the end of the week The proposed bill contains these main provisions 1 It would impose on corporations corporations corporations corpo corpo- rations an excess profits tax of from 20 to 50 per cent with the war millionaires mil- mil object of preventing 2 It would permit defense in industries industries industries in- in to deduct from taxable income and profits over a five- five year period the full cost of expansion expansion expansion ex ex- ex- ex necessary to handle de defense defense defense de- de orders 3 It would suspend the present present present pres pres- ent 7 and 8 per cent limitation imposed on the profits a manufacturer manufacturer manufacturer manu manu- can make on government orders for aircraft and warships Unofficial estimates placed the 1940 yield from the excess profits profits profits prof prof- its levy at about as compared with the that would have been realized under the original tax schedules proposed before the bill was re re- re President Roosevelt has been urging excess profits legislation as necessary and quick congressional congressional congressional approval was asked by Defense Defense Defense De De- Commissioner William S. S Knudsen Knudsen declared that letting of defense contracts had been retarded because manufacturers manufacturers manufacturers first wanted tax credits for their plant expansions and they also desired to know how much excess profits tax they would have to pay Debate on the measure is scheduled scheduled scheduled sched sched- to start Thursday with passage passage passage pass pass- age expected by Friday night The final draft incorporated many concessions to both Democratic Democratic Democratic Demo Demo- cratic and Republican committee members Two methods of excess tax computation computation computation com com- were provided Under the average earnings method a corporations corporation's profits would be excess excess and taxable if they exceeded the average of its earnings for the four years 1936 to 1939 inclusive Under the invested capital method a firm would be allowed from a minimum credit of 7 per percent percent percent cent to a maximum of 10 per cent centon on its invested capital during the 1939 1936 base years depending on the percentage of earnings of the company on its invested capital capital capital cap cap- ital during those years Because high earning corporations corporations corporations corpora corpora- were expected to elect the 1 average earnings meth mett computing their tax the r rat rai rates for that method were at from 25 to 50 per cent rA 20 to 45 per cent rang provided for corporations the invested capital nn In n which was designed for th tb prosperous concerns j In addition to this excess its tax differential the cor cli cor r tee voted to increase the n ii income tax rate for corpor corpora using the average earnings earnings' l lod od from the present per pei to 25 per cent j jIn In another move to shit tax burden away from cor coi earning less than i If cent on their invested capita formula was modified to inc fat their untaxed credits |