Excess Profits Tax

Report Outline
Commitment to Revive Excess Profits Tax
Complications in Taxation of Excess Profits
Levies on Excess Profits in the World Wars
Special Focus

Commitment to Revive Excess Profits Tax

Moving to fulfill a commitment entered into by Congress before it recessed six weeks ago, the House Ways and Means Committee will open hearings Nov. 15 on a new excess profits tax. The hearings will necessarily be brief, for Chairman Doughton (D., N. C.) has said it is the committee's intention to have a bill ready for consideration by the House before the end of November. Both the House and the Senate must proceed expeditiously if they are to complete action on the measure before expiration of the 81st Congress and avoid leaving the job to be started over again by the new Congress.

Reimposition of a tax on excess profits of corporations, five years after repeal of the wartime levy on such profits, is being taken up at this time as a direct result of pressure applied during floor consideration of the tax increases incorporated in the Revenue Act of (Sept. 23) 1950. Efforts in Senate and House to include provisions for an excess profits tax in that measure failed, but the debate disclosed strong sentiment in favor of such a levy. Its proponents contended, moreover, that Congress should not increase the taxes of individuals, to help finance the Korean war and rearmament, without at the same time tapping extraordinary corporate profits anticipated from the rearmament program.

Pledge by Congress to Act on Excess Profits Bill

The Senate leadership recognized the political force of that argument on the eve of a general election by itself bringing in an amendment to the pending revenue measure to instruct the tax committees to report a bill for an excess profits levy in the first session of the 82nd Congress, but the House insisted that the commitment apply to the 81st Congress. The conference agreement provided that an excess profits tax bill should be reported “as early as practicable after Nov. 15 or, if the present Congress was not in session after that date, “as early as practicable” in the first session of the succeeding Congress. And the bill was to provide for a tax retroactive to Oct. 1 or July 1, 1950.