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The Pamphlet Collection of Sir Robert Stout: Volume 81

Large Investments and Small Actual Profits

Large Investments and Small Actual Profits.

From all these figures and others in the Commissioner's possession, he is of opinion that at least £40,000,000 sterling is invested to produce the £7,775,579 in respect of which invested capital no deductions are made in income tax returns. This sum at 5 per cent, is £2,000,000 a year. Hence a reduction for page 10 losses I have mentioned, and for interest on this invested capital, would reduce these assessed profits to some £3,700,000. which would give all persons, firms, and companies, great and small, an average annual profit over the exemption where allowed of about £630.

Now, I have gone into these figures to give the workers some idea—it may be only a very rough idea—of what amount of profits fairly and properly so called could under any circumstances, be made available for distribution as increased wages.

We have seen that income tax is assessed on £7,775,579. I have pointed out that for such a purpose as that last mentioned there must first be deducted the periodic annual losses in those business establishments employing labour. This would reduce the above sum greatly. But there must be the further deduction I have mentioned for interest.

Hence if you take the profits of every trading, manufacturing and commercial business carried on by a firm or person in New Zealand which is making over £300 a year, and all the profits of all the companies assessed, and deduct from the whole excess the great periodic annual losses of those establishments which lose in any given year, and further deduct that portion of this excess which is really interest on capital and not profits at all, you will find that the final balance of profits so produced would, if distributed as increased wages among all those wage earners employed in every capacity by the persons, firms, or companies carding on business in New Zealand (except of course, farming) leave these wage-earners but a very small increase, indeed, in their wages. Let it be also noted that the year's profits I have 'taken is a record—the largest that N.Z. mas yet seen. The average would leave the average employee still worse, off. But all this is a calculation upon a purely hypothetical basis. Any attempt to lay violent hands upon these profits for such a purpose would, of course, put an end to all business enterprise, and thus destroy the very source from which the profits are drawn.