"Evil Brew"

Any company that pays an excess-profits tax is shortsighted. So Tax Expert Beardsley Ruml told the Gas Appliance-Manufacturers Association in Chicago last week. It is management's duty, said Ruml, to use any profits that would be clipped by the tax to pay for research, development, increased advertising and anything else that may better a company's competitive position in the long run.

Ruml, who thinks that the tax is "an evil brew of inequity, exception, exemption and privilege," said that it creates two kinds of dollars. They are 1) "cheap earned dollars which, if not spent, will be taxed at high [excess-profits tax] rates"; and 2) "expensive dollars which are taxed at ordinary rates . . . The excess-profits tax is therefore not a burden, but a subsidy. It provides cheap dollars to the profitable and established company."

Conversely, a company "weak in earnings, or young, or with inadequate capital . . . is at a double disadvantage as against its entrenched rival with tax-created cheap dollars at its disposal . . . The big will grow bigger and the small and weak will merge with them, or die."

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