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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*