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THE GENERAL COUNSEL OF THE TREASURY WASHINGTON 25 July 29, 1943 Dear Marriner: I am sending you herewith a copy of Dunfs Review which contains my article on "Corporation Taxes and the War Time Tax Structure." Sincerely, Honorable Marriner S. Eccles Chairman, Federal Reserve Board Federal Reserve Building Washington, D. C. Enclosure BOARD OF GOVERNORS • F THE F E D E R A L R E S E R V E SYSTEM Office Correspondence To Chairman Eccles TTrnm Date inpm*. 11, lQliA Mr* Thu rston Subject: The most striking statement in Eandolph Paul*s article in Dun f s Review (which I've sent up to Musgrave) to my mind is the one that "for profitable corporations undistributed profits retained during the four years, 19UO-19U3, are estimated to aggregate $16,200,000,000 compared with only $5,900,000,000 in the preceding fouryear period. For both profitable and unprofitable corporations, estimated net undistributed profits of $9,800,000,000 for I I . through I9U3 compare with an ex94O cess of distributions of income of $31200,000,000 for 1936 through 1939 At the same time, as he points out, dividends have been maintained and for 19U3* he estimates, can be maintained by distributing only about half of earnings after taxes (as compared with distributing three-fourths of earnings from 1936 to 1938*) I am not trying to draw any conclusions, though superficially it suggests some further area for corporate taxation, but I T ve asked Musgrave to read the article — it's very good* 25 August 11, 19U3* Dear Randolph: Thank you for sending me your article in Dun f s Review* I ttes struck, particularly, by your estimate that profitable corporations for the years 19UO-U3, 'will have retained more than 16 billions-9*8 billions for all corporations. Your cotenents, \vith which I fully agree, on the role of taxation in inducing new investment in the future, are all to the good. Sincerely, Kr. Bandolph E* Paul, General Counsel, Department of the Treasury, Washington, D. C*