The Big Bite

After a day and a half of closed-door sessions, House and Senate conferees last week agreed on an excess profits tax bill intended to produce $3.3 billion in revenue--slightly more than either the House or Senate separately had approved. The bill was quickly passed by the Senate, will probably be passed by the House and sent to the President within a few days. Major provisions:

P: An increase in the regular corporation rate from 45% to 47%.

P: A tax of 77% on excess profits computed either on a company's capital investment or average profits in its three best years between 1946-49. Most companies will probably choose the profit base, and pay 77% on everything over 85% of average profits in the three years.

P:Total taxes were limited to 62% of a corporation's total earnings.

The excess profits tax will be retroactive to July 1, 1950, but the higher surtax rate will apply only to taxable years beginning after June 30, 1950. Since 75% of all corporations figure their taxes on a calendar-year basis, most will not be hit by the 47% surtax rate until after Jan. 1.

In some ways, the new tax will be more painful than the 95% excess profits tax of World War II, since the regular tax rate then was only 40%. But in other ways, the new bill is more lenient. For growing companies and such industries as television and aircraft--whose 1946-49 profit base is low--there are special allowances to lessen the tax bite.

This file is automatically generated by a robot program, so reader's discretion is required.