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PAGE FOURTEEN (AKK.) COUKibK .NJsJWS , .TUNE 8, 1»M Profits Tax Poses Strange Dilemma By JAMES MABLOW WASHINGTON (AP) — The excess profits tax poses one of the «tr»nge»t dilem«s in American tax hstory. No solution — keeping it, soft- •nlnj it, or dropping it — will please everyone. It's heartily disliked in Congress, Die tax: probably by most members. Government tax experts frankly point out unfairness in it. And business' men despise it. Th« best argument In Its favor is that it does bring the government revenue: about 2!i billion dollars *. year. There are two main arguments against it, and they go like this: It is unfair; It discourages business by draining profits. Not because he liked it but because he said the revenue Is needed, President Eisenhower asked Congress to extend the excess profits tax (EPT) until Dec. 31. Otherwise, it will end automatically June 30. Congress, now considering his request, after the start of the Korean War raised Individuals' Income taxes and slapped EPT on corporations. Both kinds of taxes were meant to be anti-inflationary and to get money. (There is a good, but rarely mentioned, political reason for keeping EPT until Dec. 31. On that date the income tax on individuals automatically drops about 10 per cent. Voters might resent it if corporations got a tax cut in June, six months ahead of them.) Sore point from the beginning: What is an excess profit? Congress answered: a firm's earnings in pre- Korea 1946-1949 must be taken as average or normal. A certain percentage of present earnings, above that average, is excessive. EPT Is in addition to the regular maximum 52 per cent tax on cor- • porations earning $25,000 or more maximum tax of 70 per cent on a year. Congress aimed at a total, corporations—the 5 per cent regular tax combined with EPT. Firms under $25,000 pay cent, no EPT. « flat 30 per Some of the arguments against Unfair- Arguments Against It's particularly unfair to small businesses which were just getting started in the 1946-1949 period, when their profits were understandably low, but which have now hit their stride. Their present earnings, although much higher than before Korea may still be only normal for their industry. Yet, those present earn ings, or part of them, are treatec as an excess over their 1946-1941 earnings. Or take another example: Two firms, perhaps in the same town make the same product and are in competition. In 1948-1949 both were poorly managed, neither mat ing the profits it could have made. About the time of Korea the stockholders in one of these firms hired new managers. By drive and imagination, they expanded the firm, boosted its sales, increased its earnings. But it must pay high EPT because its present earnings are so much above its pre-Korean average. But the other firm, still bum' bling along, its present earnings not much above the pre-Korean days, hands out a smaller chunk of money, or none at all, in EPT. In short, the smarter firm is penalized for initiative. EPT hurts expansion by draining off profits- Aware of Example All firms are aware of the example Just given. Many of them .herefore, know that the harder .hey work and the bigger their profits, the bigger the slice that will be taken by the government. This discourages some from trying ,o do better. And many, since EPT will siphon off their earnings unless some of Little Rock Paper Says McMath To Seek McClellan's Senate Seat LITTLE ROCK (JP)—The Arkansas Democrat said yesterday that former, Gov. Sid McMath will run lor the U. S. Senate seat held by John McCIellan if he is assured of "a good segment of support." McCIellan, the senior Democratic senator from Arkansas, must seek re-election in next summer's Democratic primaries. McMath could not be reached for comment. His law partner and former executive , secretary, Henry Woods, said McMath had not arrived at their Little Rock office. The telephone line to the ex-governor's farm home near Sheridan was out of order. The Democrat quoted McMath as saying: "If there are enough people who really want me to run against Mc- CIellan, I will do It, but I want to be sure of at least a good segment of support before I enter such a race." McMath admitted thnt he has lost most of the support he had when he was governor, and said that he thought "big business probably would be against me" in a race for the Senate. Then, he added: Hypodermic Needle Said Used in Robbery LOS ANGELES (IP) — A womar told police yesterday she vraB hel< up, kidnaped and robbed at th point of a hypodermic needle. Mr«. Aivina AUen, 52, said that < she got into her car in front of bank Monday, a man demanded sh give him a ride. He produced a hypodermic needl filled with yellow fluid and said: "You're going where I want yo to go or I'll give you the needle." After she drove to the Sant: Monica mountains, the man orderei her to stop and took her watch, a $400 diamond solitaire and $60C cash, He left In a. car which ha> stopped nearby. The rattlesnake is tha most wide ly distributed poisonous reptile In the United States. Others are the cottonmouth or water moccasin copperhead and coral snake. It Is spent on company expenses ; go in for extravagances that are not good business and are actually nflationary, such ns big expense accounts, big parties, and so on There is another side to that coin, of course. Other companies plan for the time When EPT Is endet by putting money into research anc development. In the pre-Korean days some companies suffered disaster, like fire, flood or strike, which kept iheir profits abnormally low wiped them out. But their present earnings, although perhaps only normal, look extremely excessive when compared with the disaster period. They ask the government r or relief. They do so by estimating what heir earnings would have been in he pre-Korean period if there had been no disaster. That's a costly undertaking, easier borne by big firms than small ones. And the estimates must be convincing to ;he tax collectors. "You know It doesnt* take much money to run for the Senate as it does for governor." McMath, who first earned his political reputation as a "reform" prosecutor in his hometown of Hot Springs, was elected governor in I. He was re-elected In 1950, and then lost a bid for a third term last -ear to Gov. Francis Cherry. Read Courier News Classified Ads. 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