Where the Money Goes

The world's largest manufacturing corporation last week showed the effects of paying the world's largest tax bill. General Motors Corp. reported that its third-quarter earnings slumped to $92 million, 57% below the same period in 1950 and 34% below the second quarter, although sales ($1.7 billion) were only 10% below the second quarter.

In the first nine months, said General Motors, 76-c- of every sales dollar went to pay its employees and suppliers (see chart); more than 15-c- (and 3-c- for every cent of net profit) went for taxes. During the third quarter, the tax bite under the new tax bill was huge, but not as big (on an annual basis) as it looked. G.M., like many other companies, set aside enough in the third quarter to pay all of the retroactive tax increase to date. Thus the tax boost ($30 million) was three times as big as it will be in future quarters, if profits remain at the same level. Earnings of $1.01 a share, said G.M., would have been 33-c- higher if it were not for the retroactive increases.

With the notable exception of the oil industry, other companies reporting quarterly earnings last week were in the General Motors pattern: P: Bethlehem Steel Corp.'s profits of $18.5 million were down 46% from the 1950 period, though sales were up. Bethlehem's tax increase: 44%.

P:Union Carbide & Carbon's net tumbled 40% to $23.2 million, with taxes up 42%.

P:Admiral Corp.. now recovering from the deep slump in TV7 sales, reported profits down 75% to $1,300,000-without providing for the new tax. P: Packard, benefiting from a 35% rise in sales, pulled up from a $1,400,000 loss to a $4,900,000 nine-month net. CJ The Texas Co. netted $45.5 million v. $40.6 million in the 1950 period. P: Standard OilCo. (N.J.), reporting for the first nine months, netted $403 million, up 47% from 1950 for a new record.

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