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The one great ride of composition is to speak the truth. THOREAU The We will serve no group or party but will hew hard to the truth as we find it and the right as we see it. T4 p . ‘\(` \(2, Ilk .<.* k q .\\ C> C, -1-\(k K’s 3 A o ,-\(.. 0. ,dli:Liberal Weekly Newspaper QC,’ Observer Vol. 50 TEXAS, JANUARY 31, 1959 10c per copy No. 43 Main Tax Plans and Their Sponsors AUSTIN Five approaches to the tax problem have sifted down in the House of Representatives, and this week the Observer discussed each of them with their principal legislative sponsors. They are Gov. Daniel’s program of natural gas, franchise, and selective sales taxes, the Seeligson recodification of tax laws and 1.5 percent general sales tax, the Eckhardt graduated oil tax on the 17 major producing companies, the Johnston graduated corporate net profits tax, and the Sadler tax on manufactured goods made or sold in Texas. Rep. George Hinson, Mineola, sponsored a dedicated reserves tax on natural gas first in 1953. The next year it passed the House, 88-44, but died in Senate committee. Now Hinson has introduced Daniel’s three percent tax on the beneficiary of the severance of the natural gas, expected to raise $40 million for the next two years. Hinson attackM i d Continent Oil & Gas Assn., whose president, Charles A 1 corn, assailed Daniel for the gas tax plan two days, Hinson said, be . Hinson fore the ‘bill was written. The association, Hinson said, “includes a lot of your major oil company executives, many of them out of state …. We’ll be prepared to defend every phase of the bill.” Hinson says with certainty that the tax “meets the tests applied by the U. S. Supreme Court.” Industry spokesmen say it may not hold up in the courts, and Rep. Frates Seeligson, San Antonio, agrees. A. E. Hermann, Amarillo, past president of TIPRO, scored the tax and advocated a sales tax to take care of inequities. Daniel said late last week the only caustic opposition to his program seems to be coming from “those who want to start taxing everything from shirts and shoes to bassinets and baby buggies.” At a press conference Friday Daniel hinted he might run for a third term, vowed “I’ve got my fighting clothes on,” and said “We’re not going to tax bassinets and baby shoes before natural gas if I can Rep. P. J. Lavalle of Texas City has introduced Daniel’s liquor, new cars, and tobacco sales tax increases; Rep. Jamie Clements, Crockett, his proposed end for the exemption on the cigarette tax on military bases; and Rep. Byron Tunnell, Tyler, his bill to end the same exemption on beer sales. Daniel also proposes a one-year increase in the business franchise tax, unsponsored late in the week. Jim Yancy, lobbyist for Texas Manufacturers’ Assn., told the Observer he would have to reserve comment on this tax. “You know corporations are naturally cautious,” he said. The Daniel-Bell-Hughes-Seeligson bill to obtain, for the state abandoned property now held by banks, pipelines, or anyone else was introduced. The Governor \(who said it would raise $20 milenue $15 or $20 million, co-sponsor Marshall Bell says. “We are just trying to collect what is justly ours rather than levy any new or additional taxes,” Bell told the Observer. Seeligson said he definitely will introduce a 1.5 percent sales tax on every thing except food, feed, and fertilizer. He has also authored a tax revision bill which would raise $11 million a year, including th $2.8 million “paid Seeligson by individuals” and $8.3 million “paid by business” He would decrease telephone and telegraph business taxes $2.4 million; repeal business taxes on chain stores, cement production, oilwell servicing, coin devices, and textbooks, $5.8 million; repeal consumer taxes on admissions, prizes and awards, radio-TV-cosmetics, and stock transfer, $3.1 million; repeal miscellaneous occupation taxes on clock peddlers, ship brokers, waxworks, and hobby horses, among other occupations, $100,000. He would increase the franchise tax $15 million, the car sales tax military cigarette taxes from zero to $2.9 million; and he would enact a uniform 1.5 percent tax on gross receipts of utilities for $1.6 million. Rep. Robert Eckhardt, Houston, proposes to replace Daniel’s auto sales tax, “a tax on necessities,” with a tax to yield the same income, $13 million, from the 17 largest of the total of 6,600 oil producers in Texas. He would exempt the royalty share from the tax. He would increase the present oil production tax from 4.6 percent to five percent for firms producing 700,000 to one million barrels a month, six percent from one to five million, and seven per cent for more than five million. The latter category would include only Humble 0 i 1, an almost wholly owned subsidiary of Standard of New Jersey; the tax increase for Humble would be $4 million. “All this does is recognize the tremendous advantage in general reserves, in sales position, in cheap imports, and in every other monopolis Eckhardt tic advantage that the very large oil companies have over all the others,” Eckhardt said. “There is,” he said, “a need for a return to some of the old Texas conscience against monopolies. We even recognize the evil of monopoly in our Constitutionthe only Constitution I know of in the world that does so. Texas has suffered from repeated monopolies, in railroads, lumber, and so on. I think the anti-monopoly approach is in the tradition of Texas and in the tradition of Jim Hogg.” Eckhardt also points out that the 17 companies and affiliates import 75 percent of the oil brought into the United States every year. Rep. Dean Johnston, Houston, has a corporate net profits tax “to distribute the tax burden more fairly among corporations, especially out of state corporations.” The rate would be zero up to $50,000 annual profit, 1.5 percent from $50,000 to $150,000, and 2 percent above that. All present state taxes would be deductible. The annual yield, Johnston says: about $20 million. He argues that this tax would be hard to pass to consumers because it is figured on net after all costs have been deducted. “Small business Johnston es would be effectively exempt,” he said. Much of the tax paid would be deductible from federal income tax, so in this sense it is, he said, “federal aid without federal strings.” The tax has been enacted in 34 states, Johnston said \(“I feel like fairer than the franchise tax, which taxes capital without regard to profits. A one percent tax on all manufactured products made or sold in Texas is Rep. Jerry Sadler’s idea. The Percilla legislator says it will raise $400 million a year, 60 percent from non-Texans. The first $25,000 of a company’s gross receipts would be exempt. “If we’re gonna do all the things we need to in the State of Texas,” Sadler told the Observer, “we’ll need $ 4 0 0 million. I am tired of political taxes get a little bit Sadler here and a little bit there and don’t offend anybody if you can help it.” As for deterring industry from operating in Texas, Sadler said the companies can stay home “if they want everything free,” and that if they can’t pay a penny on the dollar, “they’re bankrupt anyway.” R.D. House Panels Reflect More Liberal Attitudes AUSTIN Speaker Carr’s committees, and especially his rules committee, reflect the more liberal character of the House this session. Lt. Gov. Ramsey’s committee patterns have not changed, in political complexion, from last session. Superficially all House and Senate committees seem to have clear conservative majorities except AUSTIN A gag on state employees, designed to prevent them from contacting state legislators, including their own, came to light and was confirmed this week by Dr. James Ruilman, executive director of the state hospital system. The state hospitals board, said Dr. Ruilman, adopted a policy “some months ago” under which he directed employees not to contact members of the Legislature without specific permission. He said the policy was adopted to prevent the state employees from bothering legislators and to keep too many persons from going over to the Capitol to talk to legislators. The policy, he said, does not prohibit’ an employee from appearing before committees or talk House appropriations, education, and state hospitals. However, the main consideration is whether a committee includes enough liberals and moderates to bring out a “minority report.” With such a report, any passed by a simple majority, but without it, two-thirds is required. Carr’s committees almost uni ing to legislators if the legislators ask for the employee to come to see them. Rep. Obie Jones, asked about the gag rule, said that he had been informed of the order by state employees and had been furnished copies of it. He said he had been told also that other department executives had issued similar orders to employees to stay away from the legislators. Jones said the department heads who don’t want their employees speaking to legislators seem to have the attitude that they know best what is best for the state employees. Jones, who represents Travis County, in which about 14,000 state employees live, declared he will get on the floor of the House next week and denounce the rule. He said it violates constitutional rights of free speech and petition formly permit minority reports. The conspicuous exception is revenue and taxation, a 21-member committee with one or two moderates, but no liberals. It will always be a close question whether a minority report can issue from the state affairs committee of the House, since there are five or six liberals and moderates on it, and five votes are required and is an effort to treat state employees as if they were “peons.” Jones is circulating a bill designed to increase salaries for the lower-paid state employees and said he hopes to get at least 30 co-signers before he drops it into the House hopper about the middle of next week. He said his bill will affect some 40,000 state employees all over Texas. It would provide an. increase of 20 per cent in the salaries of those who make $2400 a year or less, 15 per cent for those who make between $2,400 and $3,000, 10 percent for those making between $3,000 and $4,200, and 5 per cent for those making from $4,200 to $4,800 a year. He said lower paid employees were virtually ignored when pay increases were made in 1955; that some got a $3 a month increase, some got a “tip” of 50. cents a month. A. H. for such a report from a 21-member committee. Ramsey named Sen. Parkhouse, Dallas, chairman of his labor committee, which is as a whole unfriendly to unions; Parkhouse at once called hearings on his new Sen. Fly, Victoria, is chairman of Senate finance, Sen. Hardeman, San Angelo, of state affairs, and Sen. Weinert, Seguin, of rules \(a Ramsey has opened no gates. However, S e n. Willis, Fort Worth, who votes liberal as a general rule, is again chairman of education, from which committee it appears a minority , report can issue. THE SURPRISE Carr’s rules committee was the surprise. He named five liberals or moderates to the eleven-member committee, breaking House tradition that rules is the solidly stacked “speaker’s committee” by which he controls the House. Rules changes, including the one being discussed to permit bills’ re-referral to friendly committees without advance notice, could now be reported on minority from the rules committee, and the House majority, whatever it is, could then prevail. On the other hand, the fact that minority reports are now possible from most cf the House committees limits the practical significance of the “open” rules committee to revenue and taxation and possibly state affairs, from which minority reports are not likely often to emanate. But for the rules panel change, tax bills could be killed in revenue and tax without the House having a chance to vote on them. In the House, as in the Senate, popular attention was focused on a few conservative chairmen. Rep. Ramsey, who is from Beckville in