Calculation for these taxes is carried on in an artificial atmosphere all but divorced from reality; they are a lawyer's plaything rather than a producer's levy; and they serve principally as a monument to the misdirected ingenuity of taxmakers. They represent the sort of complication in the tax system that ought to be avoided in the future, and they should be repealed certainly not later than the end of the war. More could be said for a genuine capital-stock tax, but it involves some of the same administrative vagaries as the excess-profits tax.
In conclusion, it can be asserted that an undistributed- profits tax is a far more promising candidate for a place in the permanent tax system than an excess-profits tax. Because of the unfortunate experience in 1936, the undistributed-profits tax is in disfavor with many business men, but the character of that experience was due to a badly conceived law rather than to an unsound fundamental objective. A sensible answer to the business-tax problem is more likely to be found along the road we then opened, although with inauspicious results, than on the road of excess-profits taxation we were forced to travel during the war years. Best of all, as we have indicated, would be the opening of a new road to the integration of corporate and personal taxes.
Considerable difference of opinion has always prevailed as to whether a business net-income tax should be flat or graduated, but the consensus among critics probably supports a flat rate. Nevertheless, in practice, business net-income taxes have often been graduated, as has been the case with the federal tax since 1936. In considering alternative forms of business taxation and the effect of taxes on monopoly and business size, attention should be given to rate structures.