Full text of Marriner S. Eccles Papers : Letter to Marriner S. Eccles, Box 25, Folder 12, Item 4

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

```THE G E N E R A L C O U N S E L OF T H E

TREASURY

WASHINGTON

August 18, 1942

Dear Marriner:
I enclose herewith a
confidential copy of Mr. Stam's
Fiscal Year Plan.
I also enclose a copy
the so-called Ruml plan.

Hon. Marriner S. Eccles,
Chairman, Board of Governors,
Federal Reserve System,
Federal Reserve Building,
Washington, D. C.

Enclosures

STRICTLY CONFIDENT!
Fiscal Year Plan
Corporations
Compute the corporation income and excess-profits tax under the
1941 law for the full fiscal year.
In the case of a corporation with a fiscal year ended after May 31>
1942, impose the following additional tax for that year:
(1) Assess an additional excess profits tax for the fiscal year
computed as follows:
(a) Determine the adjusted excess-profits net income according to the 194-1 law. Apply to this an excess profits tax rate of
30 percent.
The additional tax will be an amount equal to that proportion
of the total tax under (a) which the number of months ending after
May 31* 1942, bears to twelve months.
(2) Determine the surtax net income according to the 1941 law,
except in arriving at such surtax net income reduction should be made
of the adjusted excess profits tax net income instead of the excessprofits tax. Apply to this a surtax rate of 14 percent.
The additional tax will be an amount equal to that proportion of
the total tax under (2) which the number of months ending after May 31> 1942,
bears to twelve months.
The following examples show how the plan operates:

2.

Corporation "A11

STRICTLY omvj-n^jrvT *

Fiscal year ended June 30. 1942.
(Computed under 1941 law)
Normal tax net income before excess-profits tax
Excess-profits tax net income
Excess-profits credit
Excess-profits tax:
1st \$500,000.00
\$254,000*00
Balance (\$5,500,000.00) 60%
of
3,300,000.00

\$ 12,000.000.00
12,000,000.00
6,000,000.00
6,000,000*00

3.55A.OOO.OO

Normal tax:
Normal tax Net Income
Less Excess-profits tax
Normal tax base
Normal tax at 21\$

12,000,000.00
5fi4,000.00
8,44,6,000.00
2,027,040.00

Surtax:
Surtax Net Income
1st \$25,000 at 6%
Balance at 1%

8,446,000.00
1,500.00
589.470.00

Total surtax
Total tax:
Excess profits
Normal tax
Surtax
Total

590,970.00
3,554,000.00
2,027,040.00
590.970.00
6,172,010.00

Excess Profits:
Excess profits at 30\$
Additional tax - (1/12 of excess-profits tax)

\$6,000,000.00
1,800,000.00
150,000.00

Surtax:
Surtax Net Income
Taxable Surtax Net Income
Surtax of 14\$
Additional tax - (1/12 of surtax)

12,000,000.00
6.000,000.00
6,000,000.00
840,000.00
70,000.00

STRICTLY CONFIDENT

3.

150,000.00
70.000.00
220,000.00

Excess-profits
Surtax
Grand Total
Regular tax

6,172,010.00
220.000.00

Grand Total

6,392,010.00
Corporation "B"

Fiscal Year ended November 30. 1942
Regular tax
Excess-profits 6/12 of \$1,800,000.00
Surtax 6/12 of \$840,OCX).00

6,172,010.00
900,000.00

420.000.00

1,320,000.00

Grand Total
Regular tax