T,-0WfWWf!fpy
The Commoner
SEPTEMBER, 1921
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its capital, a little-corporation, it pays $12,50
more in taxes than it, does under the -present
Now, gentlemen, I want to say this, that there
can be no question about the accuracy of thqse
figures. There is not an expert in the Treasury
Department who will dispute the accuracy of
them. You take a corporation with $50,000
capital stock, and under the present law when
It makes 6 per cent, it would pay $50. Under
the proposed laWyit would pay $62.50, or $12.50
more. When it makes 6 per cent it would pay
$25 more; when it makes 8 per cent it would
pay $50 more; 'when it pays 10 per cent it would
pay $75 more;, when it makes 15 per cent it
would pay the Treasury $47.50 more than the
present law. Now, when the corporation be
gins to profiteer a little bit more and makes
20 per cent, it pays $340 Jess. When it. makes
25 per cent it will pay $1,177.50 less than under
the present law.
When it makes 33 1-3 per cent it will pay
$2,093.34 less than under the present law. When
the same corporation profiteers to the extent
of making 50 per cent on its invested capital
under the prpvisions of this bill it will pay
$4,285 less taxes than under the present law.
In other words, the more these corporations
profiteer on the people the less taxes they will
have to pay.
The Democratic party believes that. the riore
these corporations make the more they - are
able to pay and should pay more toward paying
the war debt and the running expenses of the
government. You would reverse this and say
to the corporations, if- you will plunder the peo
ple, we will relieve you of taxation. Now, I
hope some gentlemen1 on the" Republican s'de
will tell the' House . and the country just why
you take this utihqly position.
v"hat have' the" 'people done to yoU- that you
want to see them r'obbed and plundered 'by these
large corpora'iidris? ' It seems' to me that the
people werervery generous with you in' the last
election. And this is the way you repay them.
Now, gentlemen, I want to answer some other
arguments' brought forward by ' Republicans to
discredit the excess-profits tax.J ' "You say the
laW is the cause of the high- codt of living; that
it ha's increased priGes
Gentlemen, that is propaganda bought and
pa'id for and circulated by special interests. Not
one word of truth in it.
If they make more they ought to pay more
and not less, gentlemen. There can be nothings
plainer than that. . .
EXCESS-PROFITS TAX NOT RESPONSIBLE
FOR HIGH PRICES
Now, gentlemen, the proponents of this bill
say that the excess-profits tax on corporations
retards business, therefore the tax ought to be
repealed.
Then, on the other hand, they argue that not
only the tax is added and passed on to the con
sumer, but in many cases more than the tax
is passed on the consumer, thereby contributing
to the high cost of living. These two state
ments are npt consistent and show how ridicu
lous some witnesses become when they are mak
ing any sort of argument that they think may be
necessary to shift the burden of taxation to the
shoulders ofthe other fellow.
There is absolutely no truth in the proposi
tion that the excess-profits taxes have been re- '
sponsible for the high cost of commodities.
These corporations have made more money in
the last five years than they ever made in the
history of the government, and the facts are
that they profiteered to the extent of many
billions of dollars, and now that we are in the
midst ofa depression and prices are falling, they
want to shift the burden of taxation to those
people who are less able to bear it.
The facts are that prices of commodities be
gan to rise in July, 1915, nearly two years be
fore we entered the war, and continued to rise
until in March, 1917, just before we entered
the war; that a commodity worth $1 in 1914 or
1915 was worth $1.61 in March, 1917.
The price level of commodities Continued to
rise after we entered the war until July, 1917,
when they stood at 86 per cent higher than
prewar prices.
Now, we did not pass any excess-profits tax
law until October, 1917, and at that time prices
stood at 181 per cent of the 1914 level.
Under the first excess profits- tax law that
of October, 1917 the corporations of the
United' states paid 15:27 per cent of their re
ported net incomes into the Treasury as excess
profits taxes, und they had an amount of net
Income left equal -to' 21 0 pep cent of the high
est amount which nthey- .had ever; made before.
'Now; pTicefHfn- -1918, under- the increased ex
Bess profit "tax Itxyr; averaged 96V)per cent high
er than in 1913, as against 76 per cent in 1917
and 61 per cent in March previous id our enter
ing the war. Remember, gentlemen, we re
duced the war taxes in 1919 and yet in spite
or tnat reduction prices increased to 238 per
cent of the prewar level, and by April of 1920,
after the excess-profits taxes had been reduced,
prices continued to climb until they got to 266
per cent of the prewar level. Now, gentlemen,
if prices increased before wo placed an excess
profits tax law on the statute books, and if they
continued to increase after we had reduced the
war taxes in 1919, how can any gentlemen on
this floor or elsewhere, with a straight face,
make the argument that the excess-profits taxes
were responsible for the high cost of living? In
other words the price level of commodities In
this country increased 61 per cent before any
excess-profits tax was even discussed in th's
country, and a further rise of 25 per cent ad
ditional before the law was placed on the statute
books; hence it seems to mo that these facts
-alone dispose of the argument that these taxes
have been passed on to the consumer and have
been responsible for the high cost of living in
this country.
Ah, gentlemen, if these corporations could
pass these taxes on to the consumer at this
time, they would not be here asking for a re
peal of this law. I have heard a great many
gentlemen testify before the Ways and Means
Committee on the tariff bill and on this bill,
and I have henrd very few of them express any
sympathy 'for the consumers of America. They
put in all of their time arguing that the burden
should be lifted from them and placed upon
the, other fellow, and they usually convince the
Republican members of the Ways and Means
Committee that that ought to be done.
"By the sweat of thy face thou shalt eat
bread," but these gentlemen who want high
tariff taxes and who want to repeal the excess
profits taxes and high surtaxes want to eat
' bread in the sweat of the poor man's face, and
they are going to do it under this adimnistra
'. tion.
.., The profits of all the corporations of this
country had never exceeded $4,000,000,000 be
fore. 1913. For the year 1917 these profits
reached the astounding figure of ten ami one
half billion dollars. For the four years 1916
1919, inclusive, profits averaged $9,000,000,
000 before taxes were paid and $7,000,000,000
dollars after all Federal taxes had been paid.
In other words, these corporations mado over
$30,000,000,000 durjng the four years 1916
1919, and they also made around $7,000,000,-
000 in 1920. Yet they come before the congress
of the United States and ask the congress to
relieve them of taxation, and, of course, they ad
vocate the sales or consumption taxes. Every
body knows that a sales tax would be passed
on to the consumer, and these gentlemen
practically all' of them are in favor of a turn
over sales tax, and they are for it because they
can pass it on to the consumers of America.
ARGUMENTS FOR REPEAL OF EXCESS
PROFITS TAX INCONSISTENT .
Now, gentlemen, if they can pass the excess
profits tax on to the consumers of America, why
is it they are so anxious to have it repealed
and substitute a sales tax, which everybody
admits would be passed on to the consumers
of the country? These gentlemen are almost
as inconsistent as the advocates who come be
fore our committee for high protective tariffs.
1 recall quite vividly that nearly every person
who appeared before the Ways and Means Com
mittee on the tariff bill, including Mr. Hoover,
the Secretary of Commerce, stated that we were
being swamped with imports from abroad, and,
now the figures have been disclosed by Secre
tary Hoover's testimony showing that they had
fallen off more than half before he testified be
fore our committee. Yes; Mr. Hoover said in
his statement that there was no help for the
country except through a great measure of pro
tection. You gentlemen here will recall Mr. Gilfford
Pinchot went all over this country for years
saying that the high duty on lumber would
.cause the destruction of our great forests by
stimulating the production of lumber; therefore,
Mr. Pinchot was very much in favor of free lum
ber. When the Payne-Aldrich tariff bill was
written stand-pat Republicans in some way con
vinced Mi6. Pinchot that he was wrong, and he
came out in favor of protection on lumber
when the Payne-AIdrich bill was being consid
ered, and, gentlemen, you have not heard very
much" from Mr. Pinohofc since that -time. He4
had sprint rpears educating the American peo
ple UP to his idea ana nis mea was Tigat ana
mroper, butwhen he changed- the people of
America failed to change witiuhim, and thepeo-
vple of America today 'are as ;xauch in favor of
free lumber as thoy over were. Mr. Hoover
knows that wo can not have exports unless wo
have imports. He has said it upon many oc
casions, before and after he appeared before tho
Ways and Means Committee; hence 1 think Mr.
Hoover had better profit by tho experience of
Mr. Pinchot and stay on tho right track on this
question.
Great Britain during tho war did a much
better job in writing her income tax laws than
wo did. Right at the beginning of the war a
law was passed taking 80 per cent of the profits
of corporations and business generally. Wo lcjt
them two or three times as much as they had
formerly been making, in our taxation scheme".
Now, another thing, gentlemen, the year 191,8
was the year of tho highest oxcess-profits tax
rates. Out of 6,700 corporations, it Is shown
that 3,000 of that numbor paid no excess-profits
taxes whatsoever. Those 3,000 corporations
amounted to just about one-third of the invested
capital in all of tho 6,700 corporations. Is it
not reasonable to presume that these corpora
tions who did not make enough to pay an excecs
profits tax did not have some influence over
prices of commodities in this country?
Take two merchants in tho samo town, for
example. One of them does not make enough
to pay an excess-profits tax,' yet he competes
with the man across the street who does make
enough to pay an excess-profits tax. If the mer
chant who makes enough to pay an excess
profits tax tries to pass this tax on to the
consumer, what would happen and what has
happened all over tho country? The little mer
chant will get the business and use his influence
to hold down the prices. No; tho trouble is
that these excess-profits taxes are surplus of
these corporations; and all the economic writers
agree upon the proposition that the net surplus
of a cdrpQration, when you tax only the .net
surplus'' of a corporation, can not be passed on
to the consumers.
As a matter of fact, these people profited to
the extent of billions. They charged all that
the public could bear. Now the reaction has
come, and because they can not make exorbitant,
profits like they did during' the war they come
before the congress of the United States and
ask it to relieve them pf taxation, and then if
it doos, they will continue to go along and.jcon
tinue to profiteer, if it is possible to do so when
normal conditions return.
Ah, gentlemen, you can not afford to do It.
Tho people of America understand this proposi-,.
tion. Do not be misled by the great wave of
propaganda that has been sweeping over this
country for the past year and half. I wonder,
and I know that you must wonder, how many
millions of dollars have been expended in propa
ganda to make tho people believe that excess
profits taxes are passed on to the consumer;
that they are responsible for the high cost
' of living, arid, therefore, get all of the people
behind the proposition and have these corpora
tions relieved of their, just burden of taxation.
That is all this whole question means nothing
more, nothing less. This is not legislation by
facts; this is not legislation by economic truths,
but It Is legislation by propaganda paid for by
special interests.
While our soldiers were in France 2,000,000
of them and 2.000,000 in the camps of this coun
try; 4,000,000 soldiers under arms 2,000,000
at the front bleeding and dying for the people
of America, for our institutions that they might
survive and' continue, these corporations were
profiting and they profiteered to the extent of
fifteen or twenty billion dollars, and now that
the war is over the boys have come home, many
of them wounded and maimed ,and out of em
ployment,, you want to place the burden of pay
ing the Great War debt upon the masses of the
people of the country, including these boys; the
fathers and mothers of these boys,
It Is not fair. No party will ever be able to
sustain any such program!
PROPOSITION OF SURTAXES ON LARGE
INDIVIDUAL INCOMES
Let us take up the other proposition, the sur
taxes, on- the large individual Incomes. Now,
gentlemen, the same Is true of the surtaxes. You
can not defend that proposition. There Is not
a man in this House or in America that can de
fend it. And yet it is in this bill, "and you
gentlemen know it. But you can not defend it
and you know you can not defend it. You have
permitted the Republican members of the Ways
and Means Committee to bring in this bill with
that provision, when they knew that provision
was in it, because we had Mr. Beck's statement
several days ago, and they have passed it around .
to Secretary Mellon and Dr. Adams and otherF
' experts of the Treasury Department, and the
Waysand Mean's 'Committee knew wbafc'effect
I this bill was going to'have. And you pehnftted
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