Word: excessive
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Dates: during 1950-1959
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...Washington last week, new proposals were being formulated from which all this excess baggage might be dropped. On four points the U.N. intends to stand firm...
...Excess Profits...
...since Prohibition has there been a U.S. law so widely condemned as the excess profits tax, which will die on June 30 unless Congress, heeding the President's appeal last week (see NATIONAL AFFAIRS), extends it. Nobody hates the tax more than Treasury Secretary George Humphrey. "Its worst enemy can very well voice our feelings about it," says he. "It's a bad tax." But he and President Eisenhower feel that the U.S. needs the $800 million that an extra six months of excess profits taxes would yield. Thus, Congress itself must decide whether expediency shall outweigh...
...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...
Actually, "excess profits tax" is a misnomer. The law does not merely take the "excess" profits, but starts its levy as soon as profits reach 85% of "normal," i.e., what they were during the "base period" of 1946-49. Furthermore, the tax has a built-in discrimination in the choice of payments. A company may elect to pay a tax based on its 1946-49 earnings, or one based on a fixed return (8%) on its total capitalization. Thus, debt-ridden companies with huge capitalizations, like many railroads, escape the tax. But well-run companies that keep their debt...