The basic principles and purposes of the Excess Profits Tax Act 1940 might be said to be twofold. (1) The Moral Aim of Taxing Excess Business Profits, excess being defined as the difference between your war-time profits and your pre-war profits. This aim, in the opinion of some, springs from political soil. Dr. Harley L. Lutz of Princeton University has said of the American Act: “There is only one case for the excess profits tax and that is the political case. There is no real danger of creating war millionaires this time.” Possibly some Canadian economists may agree with him, but I suggest that advance statistics of 1940 profits and taxes from a considerable sample of Canadian companies might indicate striking evidence to the contrary. (2) To Secure Revenue from Business Profits to Finance the War Effort. As indicated in the last budget, the Excess Profits Tax Act is expected to produce $220 million in a full year. The revenue is to be produced only partly out of excess profits since there is a minimum tax now of 22 per cent on total profits if the 75 per cent tax on excess profits does not exceed the 22 per cent tax on total profits. Thus even the business which was highly prosperous during the pre-war period and has not increased (but may even have decreased) its profits since the war began, will pay a very substantial tax under the Excess Profits Tax Act.