Erased Write-Off

After a six-month suspension of the controversial fast tax write-off program, the Office of Defense Mobilization reopened it last week. The program is much smaller than before, applies only to production of new items and research for the armed forces or the Atomic Energy Commission. Virtually eliminated are write-offs for expansion of such defense items as B-52 bombers; out completely are such onetime participants as railroads, airlines, utilities and the merchant marine.

When the program was devised during the Korean war to spur defense construction, companies in almost every industry were permitted to deduct about 60% of expansion costs from taxable income in only five years instead of the usual 20. Defense facilities totaling $38.2 billion were given the break, and the result was a tremendous boost to the postwar economy as well. But since Korea, hardly anyone has been happy with the way the program has been run. While former Treasury Secretary George M. Humphrey decried the loss of tax revenue, which he said totaled $880 million in fiscal 1956, such industries as steel and airlines denounced ODM for no longer giving them relief for peacetime expansion of facilities vital to war.

In 1958 a selective boost in tax writeoffs for some depressed industries might be a healthy spur to business. But the program will now shrink to less than $300 million annually, down from $5 billion in peak years. Many of the 329 back applications will be knocked out.

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