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Excess-Profits Tax - TIME (477 words) |
 | The bill was as complicated as all excess profits tax bills. |
| They had feared being caught between two classic tax millstones—a tax on profits above a certain return (in 1917, 8%) on their invested capital (unfair to smaller, growing companies), and a tax on earnings above the average of recent years, unfair to railroads, others who have almost forgotten the taste of profits. |
| Thus, if a company averaged $100,000 a year in those years, and makes $150,000 in 1940, $50,000 is ascribed to the Defense boom, called "excess." From this is deducted a "specific exemption" (for the benefit of small business) of $5,000, leaving $45,000 subject to the tax. |
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