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effect during the year 1951. The latest information from Washington is that the Senate Finance Committee has tentative­ly approved the corporate tax rates contained in the tax hill passed by the House. Under the House bill the rates are 27$ on normal income and 25$ on surtax income, or a combined tax rate of 52$ instead of the 47$ rate used in our calculations. The combined income and excess profits tax rate under the House bill is fixed at 82$. Furthermore, it is proposed to make the corporate tax rates under the new bill retroactive to January 1, 1951. These developments show the tremendous handi­caps, under which public service corporations operate because their earnings cannot be quickly changed to meet the impact of such additional costs. No wonder we read advice in the finan­cial papers that investment in the common stocks of utilities whose rates are subject to public control is a poor hedge against inflation. The certainty of substantial income tax increases is a factor which of itself alone should cause this Commission to be liberal and not overly conservative in its estimates of the costs which the Water Company is expected to incur. It is significant to note that if we disregard en­tirely all other errors in the opinion which we have pointed out relating to either the Railroad Company or the Water Com­pany and simply correct the opinion by making proper allowance for three items we have just discussed, the revenue deficiency calculated under the methods used by the Commission becomes -67-