Page 1


BOW WILLIAMS Automobile and General Insurance Budget Payment Plan Strong Stock Companies GReenwood 2-0545 624 LAMAR, AUSTIN Let’s Abolish the Poll Taxi Profits Tax Gets a Hearing Carr Loses Ground As Coalition Forms AUSTIN In a bid to make Texas the 35th state to adopt such a revenue raiser, Rep. Dean Johnston of Houston laid his graduated corporate net income tax bill bef ore the House tax committee and heard it defended by a university economist and a labor leader and attacked by two oil industry representatives and two other businessmen. Sent automatically to sub-committee after the bearing, the measure would. raise an estimated $40 to $50 million annually, Johnston said. It levies a two per cent tax on corporations with a taxable net income of $50,000 to $150,000 annually and three per cent above $150,000. He said his was “the only tax bill” that met the objections raised by witnesses appearing against the series of broad-based tax bills previously aired before the committee. Specifically, he criminatory in that it was based run anyone out of business because no assessment was levied unless a company had made a profit in excess of the $50,000 andiscourage industry from coming to Texas because 34 other states, including the highly industrialized states, already have the tax with higher rates than proposed difficult tax of all” to pass on to porations owned by stockholders living outside the state, would provide the state “at last” with a AUSTIN Sen. Ralph Yarborough, addressing a joint session of the legislature, advocated a national park at Padre Island, indirectly slammed the rural bloc’s attempt to cut down the cities’ legislative voting strength, and advocated again a legislative pay raise this week. In foreign policy, he warned of another Munich in West Berlin and the defense lag behind Russia. He emphasized the importance of federal-state cooperation, adding lightly, “You fellows generously let us raise the money then you spend it.” On P a d r e Island, he said, “When Padre Island becomes a national park, Texas will really A Harris County grand jury continues investigating complaints of police brutality. A 37year-old pipefitter said his life was threatened until he confessed to a crime, and then he was slapped a n d threatened with shooting again when he told officers again he was innocent. About 100 sheriff’s deputie s were warned by top officers they will be fired for brutality. Six Latin-Americans \(of 13 assault to murder or simple assault after a state liquor officer and a deputy sheriff were knifed in a beer tavern \(Fairyland Dance had just arrested three LatinAmericans. A deputy sheriff driving down a country lane in North Fannin County on a tip found out a nudist camp attended over weekends by people from Fort Worth and Dallas. The operator said “We feel the sunsfhine helps method of receiving tax revenues from those who are exploiting her would be deductible from the federal income tax. Opposing the bill, James T. Cox of Schlumberger Well Surveying Corp. of Houston said “this particular bill is not bad, the temptation is to let it go, but it really is a privilege tax and this compounding of privilege taxes gets a little rich after a while.” Citing the tax bite the bill puts on stockholders, Cox said that 70 per cent of the stock in the United States is held by women, “widows who hate accumulated the savings of a lifetime.” E. M. Caldwell of Magnolia Petroleum Co. in Dallas objected to the bill because it taxed profits before the federal income tax was paid, whereas the four per cent income taxes in Oklahoma and Louisiana and two per cent levy in New Mexico are collected on profits after the federal tax. R. B. Heinger of the A. 0. Smith Corp. of Texas said he doubted that it could be passed on to “the ultimate consumer.” George Rafferty, Houston CPA who said he was representing himself, said “they’re no ifs, ands and buts about it, taxes are passed on to the consumer.” The simplest, fairest way for the legislature to raise money, said Rafferty, was a gross payroll tax. He did not elaborate. Appearing in behalf of Johnston’s bill, Dr. Carey Thompson, University of Texas economics professor, told the committee that net earnings are a “far better measure of taxpaying capacity reap a harvest of tourism. It would then become the winter playground for midwesterners, and Texas will have the Yellowstone of the wintertime in its own borders.” He said campaigning last summer he found that six and a half million people in Los Angeles have only one of 40 state senators but eleven of California’s 30 U. S. congressmen and so naturally turn to the federal government for their needs. “… this injustice is wrecking states’ rights” in California, he said. He again advocated legislation for mandatory oil import controls and a two-cents-a-barrel oil tariff. He was accompanied to the po us build and maintain healthy bodies.” Officers said there’s no law against it. Some area residents knew about the camp for a year or so but gave it no thought, “figuring it was no concern of ours.” Atty. Gen. Will Wilson has called a court of inquiry in Houston to investigate possible anti-trust violations by electrical contractors … Gulf Oil has lowered its posted price on crude oil seven cents a barrel in the coastal region … Rockdale City Council compromised with Bell Telephone on a rate increase … Farmers in the Rio Grande Valley say they are resisting federal efforts to bring domestic migratory laborers under the same wage and working condition minimums which now apply to Mexican bracero workers. The Travis County grand jury cleared John White of lawbreaking in taking gifts from his state employees and advocated a law regulating such gifts. than any of the other bases you have had under consideration.” He said business receipts are not a clear index of taxpaying ability, a point, he said, “made with considerable vigor, and in my judgment, substantial accuracy by other witnesses. With a tax on corporate profits, there is no penalty against the marginal concern, those just getting by, those who are victimized by temporary misfortunes,” he said. “Those who are better able to pay, pay more; those who have little tax-paying ability pay little or not at all.” He said the tax would fall partly on the taxpayer and partly on the federal treasury, would provide “better balance” to a state tax structure “already resting pretty heavily on particular segments and on the consumers,” would not likely have unfavorable effects on the overall economy, and “gets my strong vote.” Jerry Holleman, president of the State AFL-CIO, testified the bill offered a “fairer and better” distribution of the tax burden. He said that in “America’s expanding economy, ability to consume must expand in relation to the expansion of production or there will be cutbacks, men working for less than a full day’s wages, and a general weakening of the economy through decreased purchasing power. Ominous signs are present of just such conditions in America and they are here in earnest in Texas. A sales tax is a tax on consumption and thus imperils an expanding economy.” Within the present Texas tax ‘structure, he concluded, a corporate net income tax was “fair and equitable.” dium by Sens. Willis \(who introring, and Secrest, and Reps. Green, Hughes of Sherman, Korioth, Clements, Eckhardt, Harrington, Hollowell, and Kennard. Speaker Carr referred to him as “a distinguished American.” He received standing ovations at the beginning and end of his speech and was interrupted for applause once, for the reference to no Munich in West Berlin. Responding to Willis’s introduction that he had fought on the battlefields of World War II and also “the fields of Texas for the common p e opl e,” Yarborough said when he thinks of Sen. RusSen. Rudolph Weinert of the Texas Senate; Lyndon Johnson reminds him of Ben Ramsey, the Lieutenant Governor; b u t he doesn’t know anybody in the U.S. Senate quite like Willis, a man “of his own brand.” On the pay raise he said he did not stop working for it “just because I knew it was unpopular in some quarters.” “Some of the powerful interests in Texas that are trying to tell you how to vote showed little concernfor the legislature when they loosed their money-guns a g a ins t the pay raise,” he said. One reference interested those gifted in speculation. “The littlest bill in any legislative body may discourage the free spirit, greatest asset of the free world,” he said. If this was a reference to pending legislation, it would seem to have been intended to apply to the measure requiring affirmations of belief in. a Supreme Being of college professors; but Yarborough did not elaborate. He was writing the speech until 3:30 the morning of the occasion. Sen. Lyndon Johnson speaks to the legislature Monday. Texas’s growth and industrial expansion that our tax income will keep up with the State’s legitimate needs. In other words, a ‘broad-based’ tax. I recognize that various persons are trying to make that a bad worda synonym for ‘general sales tax.’ That, I submit, is sheer demagoguery.” The Speaker then addressed himself to the central problem. “I am aware also of the fact,” he said, “that a majority of the members of this House are committed, as of the last election, against a general sales tax. You will note that the revenue and taxation committee has not even heard the general sales tax bill which was introduced some time ago. “Yet,” the speaker continued, “I have found a strong sentiment among you for spreading this new tax across’ as much of the Texas economy as possible. You are, correct in believing that this is the only equitable solution. Texans do not want a plan which rewards political favorites or pays off political debts. You and I cannot engage in this type of fancy footwork. “You have told me that you expect your Speaker to make suggestions on this tax problem. You have asked me to assume personal leadership in an effort to arrive at a fair answer before this regular ‘session ends May 12. You have a right to expect this, and I shall not hesitate to assume the responsibility … I am convinced that we should put the cost upon as broad a segment as possible not just upon a few segments of o u r people or economy. We should spread this responsibility crippling no onetaking into AUSTIN Sandwiched among its internal disputes over the question of reporting the Governor’s deficiterasing program, the House revenue and tax committee this week completed its last hearing on the “broad-based” tax bills. The measure debated was a four per cent levy on first sale or use of manufactured goods proposed by Rep. W. T. Oliver of Port Neches. In response to business criticisms of his bill, Oliver said it “will not prevent them from doing anything in regard to passing along costs to consumers that they are not already doing.” In his introductory remarks Oliver had said his bill is not a general sales tax “in the sense which I interpret the definition of a general sales tax.” He described a sales tax as one in which only the consumer pays and cannot be assessed at any other level. “I’m opposed and will continue to., oppose a general sales tax,” he said. His later remarks to the effect that the bill didn’t prevent manufacturers from passing on the tax to consumers came after nine spokesmen for Texas companies appeared in opposition. Trent Campbell, San Antonio steel fabricator, said the bill was “unfair to manufacturers” because it exempted other segments of the business community. “It is not a broad enough tax. Manufacturers don’t make four per cent so you can’t get it out of us. We’ll pass it on, if we can,” Trent said. Asked by committee member Bill Jones of Dallas what kind of tax he preferred, Campbell said, “a gen consideration the economic condition of those taxedshowing no favoritism. “…I recommend to this committee that it report a bill to the House which includes a broad array of selective taxesincluding, but not confined to, ‘selective sales taxes. I would remind you that this type of tax is well established in the tax ‘statutes of Texas. It is not contrary in principle to the tax program recommended by the Governor, inasmuch as more than 50 per cent of his tax recommendations were for increases in existing sales taxes.” After endorsing taxes in areas the Governor proposednatural gas, liquor, cigarettes, and corporationsCarr suggested modifications to include “most, if not all, those items presently taxed but omitted from his program” and to bring in … new items and spread the burden so that the rate of tax will be less than that recommended by the Governor.” Recommending a teacher pay raise and admonishing the House not to “let anyone stampede you now,” Carr concluded “Whatever your decision may be, let us act on it.” The Governor responded to the Speaker’s efforts: “I was not at any secret meeting held by the Speaker and have no knowledge of what was agreed or proposed.” As for the speech, Daniel said he was “pleased that the Speaker has indicated he has abandoned a general sales tax or an income tax. He should have done it 30 days ago.” He said he agrees with much of what Carr says. L.G. eral sales tax. If they don’t want to pay it, let them keep their money in their pocket.” George C. Darr of Dallas, representing Dresser Industries, said the Oliver bill was “hurriedly drawn up” and could be “extremely dangerous.” In defense Oliver criticized other broad-based tax proposals, including some grass receipts taxes he himself had previously introduced. He said a gross receipts tax on business penalized buinesses which made no profit. “I know the committee is aware that I have introduced other tax measures which were single shot gross receipts measures … I am now of the opinion this would be one of the most unfair means of raising revenue,” Oliver said. He added he didn’t believe in the ability to pay approach either, because it “taxed a man for being a success. You follow it thataway, you’re saying, let’s all be failures.” Oliver also said he thought his tax “would never reach the ultimate consumer level.” THE TEXAS OBSERVER