Repentance at Leisure

So fast that the nation scarcely had time to notice, a Congress which has done many things to business finally did something important for business last week. One day the House Ways and Means Committee received from its taxperts a series of amendments to the Excess Profits Tax. By this week the amendments had been approved by the Committee, passed by the House and the Senate, sent to the President.

Least edifying sight of Washington's muggy summer of 1940 was the skedaddling, ten-thumbed carpentry of Congress in slapping together the Excess Profits Tax (TIME, Oct. 14)--a jerry-built construction job which everyone knew would show many a chink, leak and missing windowpane when the March 15 wind started blowing. Working too fast, Congress wound up with a 50-page tax bill which not even the experts understood. The Congressmen themselves were reduced to giggling over it like schoolboys unable to hide any longer the fact that they did not know their lesson.

When the bill was about to be passed, big & little businessmen filed before the Senate Finance Committee to point out its most glaring mistakes: 1) it would stunt the growth of young companies (Philip Morris would be taxed more heavily than U. S. Steel, for all Big Steel's defense contracts); 2) it made no allowance for the business cycle and the fact that corporations have to put away funds in good years to tide them over bad ones. But Congress had no time then to listen.

Last week businessmen had the satisfaction of seeing almost every one of their suggestions adopted at last. If Congress had bungled in haste, it had done a good job of repenting at leisure. Chief items of the amendments:

> Corporations which improved their earnings over the 1936-39 base period will be permitted to compute their exemption by taking the average of 1938 and 1939 incomes, adding to this figure one-half the difference between it and the average for 1936 and 1937 (except that the exemption cannot exceed the amount of income for the best base-period year). Beneficiaries: "growth" companies. Some dopesters estimated that Philip Morris' excess-profits credit would be upped from $5,805,975 to $7,435,766, Pepsi-Cola's from $2,780,961 to $4,870,479.

> Unused excess-profits credits can be carried over for two years by all corporations.

> Allowance will be made for abnormally low profits (due to fire, strikes, etc.) in any of the 1936-39 base years.

To explain to its agents what the complicated Revenue Act of 1940 was all about, the U. S. Bureau of Internal Revenue bought from publishers Simon & Schuster 300 copies of J. K. Lasser's book: Your Income Tax -- How to Keep It Down.

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