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Bartlett Appears Exclusively in the Texas Observer THE FIVE OPTIONS THE TEXAS OBSERVER 041-rft- 1 0 When big-time Charles Alcorn, the oil lobbyist who led the Houston fight against adequate pay for legislators, attacked Gov. Daniel for advocating a natural gas tax, evidently he thought he was an eagle lighting on a lamb. But the Governor told Charley to read the bill again, and if then he still thinks the “oil producers of our state should bear the burden of fighting this measure, I ;stand ready to meet the challenge and fight for my proposal.” That was a new style sound from the Governor’s mansion. Daniel’s tax, introduced by Rep. George Hinson of Mineola, would be paid by companies for whom Texas gas is produced under contracts made before the actual production, or by the producers of gas not so dedicated in advance. As Daniel said, 53 percent of our irreplaceable natural gas is being sent outside the borders of the state, and his tax, plus the present production tax, would be less than half of Louisiana’s present production tax. New York, he said, collects nine times as much tax on Texas natural gas as Texas does. Opening up his rules committee to a minority report by liberals, Speaker Carr took a step toward assuring the majority of the members the right to keep the committees subordinate to the will of the House. By contrast Lt. Gov. Ramsey kept his rules committee stacked a monolithic five to nothing, for his mechanism of control over the Senate depends on his power to lay out what legislation he wants considered and to hold back what he doesn’t want considered. Nor is this the only contrast between the House and Senate committees announced this week. With the possible exception of education, the important Senate committees are so saturated by conservatives, minority reports \(without which floor action is almost impossible after giallenin 9. A new representative from Fort Worth, Don Gladden, introduced a simple repealer of the Sadler law requiring elections before local school boards may integrate. This was an act of simple courage. The law, based on a theory of local option on the American Constitution, prevents school districts from implementing integration in their own way, and it has also given Dallas hypocrites grounds for dilatory dissembling. Gladden knowingly decided against the expedient course, he was not silent when it would have been easy to be silent, he held forth an ideal, and we welcome him to the legislature. Published by Texas Observer Co., Ltd. JANUARY 31, 1959 Ronnie Dugger Editor and General Manager Larry Goodwyn, Associate Editor Sarah Payne, Office Manager Published once a week from Austin, Texas. Delivered postage prepaid $4 per annum. Advertising rates available on request. Extra copies 10c each. Quantity prices available on orders. Entered as second-class matter, April 20, 1937, . at the Post Office at Austin, Texas, under the Act of March 3, 1879. A possible consequence of the natural gas tax will be higher gas rates for consumers, both within and outside Texas. To the extent this will be so the tax is contrary to good policy ; precisely this objection against all selective business taxes causes us to advocate personal income and corporate net profits taxes. Yet there is no way to know how much of the tax will be passed on, and it is amateur economics or Lynn Landrum sleight-of-mind to think all of it will be. Supply and demand intersect at optimum price, and as long as costs and Minimum profit do not exceed this price, new taxes will not be passed on to the buyers, because the conseq6ence would be a lower total profit for the companies. If the companies didn’t know this, why would Alcorn be so agitated about Daniel’s new “raid on the petroleum industry”? If Gov. Daniel stands by his troops, even though some of them are rather recent enlistees, he may yet write his name down in a Texas history book or two, even as Beauford Jester did his second term. out of the question. The notorious labor baiter, George Parkhouse of Dallas, is chairman of the labor committee ; Senator Fly Of Victoria, hardly likely to worry about consumers paying most of the state’s taxes, is chairman of the finance committee ; the most popular of all the senators, Dorsey Hardeinan of San Angelo, who led the campaign against the legislators’ pay raise, is chairman of that Potter’s Field for worthy legislation, the Senate state affairs committee. On the House side, with the exception of the revenue and taxation committee, which Carr slanted ruthlessly against taxation based on ability to pay, minority reports are possible from every important committee, and liberals and moderate-liberals may have majorities on appropriations, education, and state hospitals. Discouraging though the continuing corporate control of the Senate is, the legislature is not to be written off as hopeless. The most important consideration to many a nervous senator is that he not give the junior politicians from his district in the House issues on which they can run and defeat him. Thus, when the House votes for an important state project or a. fair state tax, the senators will be under the simplest kind of political pressure to go along. How else could the 1951 legislature have passed the natural gas tax ? Then, too, the Senate proposed, and the House has accepted, a 120-day adjournment, and while this serves the Senate’s intent of precluding passage of much reform legislation, it also puts the House in the position of being able to tell the Senate to go to hell and a special session. EDITORIAL and BUSINESS OFFICE: 504 West 24th St., Austin, Texas. Phone GReenwood 7-0746. HOUSTON OFFICE: 1012 Dennis, Mrs. R. D. Randolph. 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. We are dedicated to the whole truth, to human values above all interests, to the rights of man as the foundation of democracy; we will take orders from none but our own conscience, and never will we overlook or misrepresent the truth to serve the interests of the powerful or cater to the Ignoble in the human spirit. AUSTIN Legislators have five major income options before them which, in some combination, can easily raise more money than this legislature is going to appropriate, and without further sales taxes on ordinary consumers. The “crisis” talk is nonsense. If there is a crisis, it’s somewhere in the Republic Bank skyscraper in Dallas. Two Houston legislators, Dean Johnston and Bob Eckhardt, have proposed what can be regarded as alternatives to the business franchise tax and auto sales tax increases proposed by Gov. Daniel. The Governor has specified the three other desirable sourcesnot only the franchise increase if Johnston’s corporate profits tax is not passed, but also the natural gas tax on firms receiving the Texas production and the unclaimed balances bill. Johnston would raise $20 million with a corporate net profits tax of 1.5 percent on profits from $50,000 to $150,000 and 2 percent above that. Exempting profits under $50,000 a year, Johnston would also let cornpanics credit any other state taxes they pay against taxes due under this schedule, so that, as he argues, those thousands of businesses not now supporting the state government can start doing so, “but we will not be double-taxing companies already singled out for special business taxes.” His tax, he says, would achieve a broad-based balance among the extractive industries, other businesses, and the sales-taxed consumers. Eckhardt has introduced a most ingenious tax on oil production. It would fall only on the 17 largest of the 6,600 companies producing in Texas. These 17 companies, themselves or through affiliates, import 75 percent of the foreign oil brought into the United States. Eckhardt’s tax would amount to an increased dividend to the state from those few huge Eastern firms enjoying, not only the economies of mass production, but extra price-supported profits from their oil imports. He would exempt from the new tax the one-eighth royalty which goes to landowners. Of the $13 or $14 million the tax would raise, about $5 million would come from Standard of New Jersey, which owns Humble and, through some other companies, controls Magnolia. Because all but 17 of the 6,600 Texas producers, and all royalty receivers, are exempt, Eckhardt believes they will see that his tax might prevent another across-theboard increase on the entire industry through the omnibus tax bill. He pro poses that the $13 million Daniel wants from sales taxes on cars be pulled out of the budget and the $13 million from the oil production tax slipped into the notch. Johnston’s tax would be fairer than the franchise tax increase Daniel has proposed. The franchise tax falls heaviest on companies with large capital, but there is no necessary proportion between capital and profits. It is the better part of realism to acknowledge that once the franchise tax is increased for the year Daniel has suggested, it is not likely to be dropped again, so the decision should be made now, shall we spread the burden on corporate profits fairly, or shall we tax all. corporations some more without respect to their profits? Daniel’s men have been fishing around for someone to carry the franchise tax. One legislator who turned them down asked them why they didn’t support Johnston’s more, intelligent corporate profits tax. They replied that such a tax isn’t possible this session, but that the franchise tax is the nearest thing to it that can be passed. Apart from the gas tax, which is likely to pass, Daniel has also asked that the state require persons and companies using money which belongs to the state ‘under the escheat laws to turn it aver. There is no honorable argument why ‘they should not. It’s the state’s money and they haven’t delivered it ; that’s all there is to it. The background of the abandoned balances bill again proves the importance of acts of principle for objectives not attainable at the time. Rep. Marshall Bell, San Antonio, first suggested, in a one-page bill, that the state make an effort to get these funds in 1953. In 1955 Rep. Charles Hughes. Sherman, after extensive research, introduced a carefully drawn bill to accomplish this end, but it never cleared committee. Rep. Frates Seeligson, San Antonio, joined Hughes in 1957, but again the bill was killed. This session Daniel, Bell, Hughes, and Seeligson are united on the issue, and the bill has a good chance to pass. If it does, the state may realize anywhere from $20 million to $100 millionnobody can say how much. If the House of Representatives will work steadily with the piling up needs of the people, agree on an adequate spending program, and enact the taxes they believe just and reasonable without regard to what they think the Senate will do, they can then give the senators an opportunity to reflect on their political futures, and the compensations of private life. R.D. Let those flatter who fear, it is not an American art.—JEFFERSoN 11.., St y le Sound 5h e CommilleeJ