Word: ept
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...evil arose in logical enough fashion. In World War I, the first excess profits tax was slapped on to prevent war profiteering. Its yield of $2.5 billion was big for those days, when a whole year's war budget was only $6 billion. In World War II, EPT's yield was tremendous: $28 billion, or 58% of all corporate taxes paid during the war. The tax again made a rough sort of sense because the bulk of industry was mobilized and fared equally under EPT. But when EPT was slapped on again in 1950, even...
...well-run companies that keep their debt low can only choose a profits base-and then be penalized when greater efficiency increases their profits. To make allowance for such inequities, Congress included so many exemptions and exceptions that no two accountants can agree on a company's EPT bill. As a result, virtually every payment has been protested. Another discriminatory result is that EPT affects only 15% of all corporations paying taxes and consequently yields comparatively little revenue (only $2 billion a year out of a total of $21 billion in corporate taxes paid last year...
...return so low that small companies have found it difficult or impossible to borrow money needed for expansion. Example: Georgia's Southwire Co., which saw an opportunity to cash in on the South's utility expansion, had the ill luck to go into business in 1950 after EPT. It was able to make only 1¼% profit despite a tripling of sales-a return so low that banks would not risk giving it a loan. Michigan's Whirlpool Corp. (washing machines) doubled its sales during the EPT period and made $28 million in profits (before taxes...
...EPT's topsy-turvy world, the accepted standards of business thrift and prudence go out the window. Companies in the EPT bracket have no hesitation spending money on extravagant projects. Example: Reynolds Metals Co., wanting to show off its new Jamaica bauxite mines, chartered an ocean liner and gave 130 bigwig guests an eight-day cruise to Jamaica and back. Of the total cost, the company really picked up only 18% of the check. The remaining 82% was EPT money which, if not spent, would have gone to the U.S. Treasury...
...Administration's decision to ask EPT's extension is based simply on the belief that Congress would not pass alternative measures-such as a small, temporary boost in the regular corporate-income-tax rate-to yield an equivalent revenue. Though Secretary Humphrey predicts that the tax will be extended, there is a good possibility that Congress may kill it, since it can do so by simply doing nothing. If EPT does die, it will hardly be a national tragedy. And the $800 million predicted yield for a six-month extension may be made up by increased collections...