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DANIEL GAS TAX KILLED Moore Tries, Tries Tries, Finally Quits AUSTIN Aside from sponsor Sen. Herring’s efforts to restore the business taxes cut out o the general tax bill, the only broad assault on the Senate bill came from Senator Bill Moore. The Bryan Senator offered swee’ping amendments, complete substitute bills, and on the final day was prepaired to filibuster but was cut off when the Senate moved the “previous question” and passed the bill. Speaking seriously at first, and then with humor as his amendments were decisively rejected, Moore advised the Senate, “Our whole theory of taxation has got to be revised.” His proposal for a one per cent manufacturer’s gross receipts tax, similar to the house bill introduced by Rep. ,Jerry Sadler, was killed by a Senate voice vote. Moore then offered a combination general sales tax, individual income tax, and corporate income tax similar to the House bill sponsored by Rep. Louis Anderson of Midland. Moore said the three broad levies would produce $400 million for the biennium. “If you adopt this amendment,” he told the Senate, “we’ll have the finest schools in the nation. It hits the rich, hits the poor and hits the income. Who are we kidding when we say a cigarette tax of $63 million is not a sales tax? Who’s the Governor kidding when he says he’s against sales taxes and then favors selective sales taxes, mostly on sintobacco and liquor?” On a record vote, Moore got one vote, his own, as 29 Senators voted against it. He then offered an amendment cutting the cigarette increase from three cents per pack to one , cent, deleting $42 million in sales taxes from the bill. When senators objected he was cutting too much revenue out of the bill, Moore said, “This bill will not raise anything like $150 million now. They’ve got \(Compboozled and muzzled and he won’t say publicly how much it will raise.” The deduction in the AUSTIN Should the State of Texas grant an $800,000 tax reduction to the sulphur industry by cutting the levy from $1.40 per ton to $1.03? The Observer recorded these Senatorial. reactions: Sen. Culp Krueger, El Campo: “The facts show that if we reduce the tax and increase the competitive position of Texas sulphur, we’ll actually derive more revenue from the increased production than we’re getting from the present rate. Our taxes have priced Texas sulphur out of the world market, and our state revenues from the declining production has dropped from $5.8 million in 1956 to $4.6 million in 1958. I have a statement here from the ComptrollerI know you all respect the Comptroller to the effect that this reduction will actually bring $24,000 more into the treasury because of increased production.” Sen. Martin Dies, Lufkin: “If I understand Sen. Krueger’s argument, we’re going about this all wrongwe’re raising taxes. What we should be doing is reducing taxes on all these items so we can get more money.” Sen. Frank Owen, El Paso: “By THE TEXAS OBSERVER Page 5.: June 13, 1959 cigarette tax increase was tabled by a vote of 20-11. After the noon recess, Moore came back with a five percent severance beneficiary tax tied to a teacher pay raise. He said the amendment would produce $30 million from the long line gas companies f o r the available school fund. “If this five per cent won’t get the teachers the raise they need, let’s raise it to 15 per cent, 20 per cent, whatever. we need. Let’s put it on them.” “This amendment of mine,” he said, “may not finance all of the Hale-Aikin school programs, but it will finance what I am told by the teachers is the most important partthe teacher pay raise. “This goes along with my whole theory of taxationget it from them that’s got it. This Senate bill is filled with sales tax, chewing tobacco for instance which old age pensioners use. I know the gas lobby opposed this severance beneficiary tax earlier because they didn’t know where the money was going, just going to pour into general revenue. But under my amendment, it goes to the available school fund, for the school teachers, and, understanding that, I’m sure the gas lobby will approve this amendment. But I haven’t discussed this with the gas lobby; in fact I don’t have their permission to introduce this amendment.” Moore tried to convince his colleagues a teacher pay raise was a good thing. “In the called session in 1953, when the teacher pay raise came up, I sent a letter to all the teachers in my diStrict, telling them I couldn’t answer their correspondence because I was so busy working on a teacher pay raise. After we passed the bill, I followed with another letter announcing for reelection.” Whereupon the senator from Bryan called for a record vote on his amendment. It was defeated, 27 to 3, with Senators Herring and Willis joining Moore in dissent. “A voice vote will be all right next time,” Moore said, retiring from the fray. Sen. Krueger’s figures, we would have to produce five million more tons of sulphur under the reduced tax rate to get the same revenue we’re getting now. That is more sulphur than has ever been produced in the state. Texas .Gulf Sulphur is not a sick industry; they made $14 million last year.” Krueger: “But as Senator Hudson always says, it’s not the profit that counts but the income with respect to capital.” Sen. Hubert Hudson: “Since you mentioned my name, Senator, may I say that of the leading 250 American corporations, the greatest return on investment for the past 15 years has been that achieved by Texas Gulf Sulphur.” Sen. Henry Gonzalez: “I got from the library the financial analysis of the sulphur industry by Standard and Poor. Listen to what they say: ‘Texas Gulf Sulphur is the world leader … after taxes, netted $13.3 million … long range forecast good. Competition increasing but the company is moving to meet this by extension of its operations to Canada and Mexico’ I thought the Senate ought to have this information before we vote. Either we are consistent and cut out these rebates and concentrate on rats AUSTIN Senate debate on the natural gas tax began as Sen. Herring offered an amendment adding a one percent severance beneficiary tax to the eight percedt production tax in the Senate substitute. Herring, noting that the committee boost in the production tax represented a 14 per cent increase in existing levies, said, “everything else in this bill is raised 20 to 40 per cent except natural gas. I wonder if we can raise natural gas as much as cigarettes?” Sen. Hubert Hudson of Brownsville said he thought Texas has reached the point, at which natural gas cannot be taxed any The Senate Debates more. Sen. Jimmy Phillips of Angleton added, “This $86 million on tobacco wouldn’t result in any unemployment in Texas like a tax on natural gas would,” bringing from Herring the reply he didn’t think the Texas natural gas industry would “go out of business because of a one per cent tax on the long line gas companies.” Sen. Grady Hazlewood of Amarillo also spoke against the tax. “When I first ran for the Senate AUSTIN With the statement, “It is my view the interstate corporations who do business in Texas should pay something,” Austin Sen. Herring opened Senate debate on the franchise tax formula on interstate corporations. The allocation formula, an integral part of the Daniel-Hinson tax package which passed the House, was deleted by the Senate state affairs committee. Herring offered an amendment to the Senate substitute putting the corporate levy back in the bill. Herring said he was “not out to get anybody, or to overtax anybody. But I hold the simple belief that if a corporation manufactures something in Texas and sells all of its products outside of Texas, they ought to pay something to the state government. The present franchise law discriminates against Texas companies and in favor of interstate companies. The Senate bill now before us increases that discrimination by an across the board increase in the rate from $2.25 to $2.75 per thousand. My amendment leaves the rate at. $2.25 but remove s the discriminations against companies that sell in Texas, It deletes $21 million and adds $24 million,” Herring said. ing money for the state or we should open the door to all industries who have declining business. As it is, we’re just turning this over to caprice and whim whichever industry has the best representation in the legislative halls gets excluded from tax bills.” The Senate, by a vote of 17-14, rejected any tax cuts for sulphur. the state by $1,780,000, as esticost the state $24,000 a year, as contained in the revised Comptroller’s report .qubted by Sen. Krueger in his arguments for the reduction. in 1940, I was as big a demagogue as the next fellow. I thought that Texas Gulf Sulphur was the biggest monster in the state. It was popular and I got elected. Some folks said I sounded a little pink but they thought I’d do all right when I settled down. Now I’ve been here a long time and I’ve seen it happen new fellows come down here and want to make a record and they pass a tax on natural resources. Time passes, they leaVe, other new ones come, and it is taxed again. More time passes, more taxes. Listen, this ole horse can’t be ridden any more.” Sen. William Fly also opposed the gas tax. “You know what the play is here,” he said, “They want to put on one per cent this time, a little one per cent severance beneficiary tax. Next time, they’ll raise the production tax a little and raise the severance beneficiary tax a little. Did you hear the testimony by the man from my district who said his company had a $45 million expansion plan to employ 400 men ififwe had a favorable business climate?” Agreeing, Hazlewood said “We can get it from a sales tax like they do in New York, in Michigan and like they do in that ole Proxmire state of Wisconsin.” Sen. Martin Dies of Lufkin asked for the comparative figures on taxation in Texas and the other gas producing states. Hazlewood said the Oklahoma tax was five per cent, below the Texas rate, and read many other states with lower rates. . “How By broadening the franchise tax to include corporations based in Texas but selling exclusively outside the state, Herring’s amendment enclosed within the franchise umbrella the long line gas transmission companies that sell little or no gas in Texas and thus pay no tax. “I just don’t think we ought to treat interstate corporations any differently than we treat our ‘own Texas companies,” he said. Sen. Jimmy Phillips of Angleton rose for a heated rejoinder. In his shouting, desk-pounding manner, Phillips said, “One witness appeared before the committee and said this increase would amount to 673 per cent on his plant. Another company 300 per cent.” Shaking his fist at Herring, Phillips roared, “These companies are IN Texas, Senator. This tax is untenable and unbearable.” Herring replied to Phillips by mimicking his style. Raising his voice and pounding on the desk, Herring said, “I don’t understand, Senator. You’re always talking about the little people, bleeding red blood on this green carpet about the little people, now it appears you are bleeding for the very biggest people. When did you change?” Herring pounded his desk one more time, turned, smiled pleasantly to the Senate, and sat down as the Senate roared. Sen. Bob Baker of Houston raised the issue of business taxes stopping industry from coming into the state. Herring replied industries came to Houston because of the location, proximity to natural gas, sulphur, and water, the labor market and presence of related industries. “Taxes are one of the factors, certainly, but I don’t believe in my heart that this franchise tax is going to stop anybody from coming to Texas. I just don’t believe it,” Herring said. about Louisiana?” asked Dies. “Louisiana is a little higher,” Hazlewood said, “but remember, that’s where the district court just the other day declared their tax unconstitutional. Now, I’ve heard a lot of talk against the gas industry for fighting the Texas gas gathering tax in the courts and not fighting Louisiana’s. Well, they didn’t fight that Louisiana tax because they were afraid of that Long administration.” Turning to Hazlewood, Herring asked, “Isn’t it a fact that Louisiana has levied a 2.3 centscents not per centa 2.3 cents per thousand cubic feet tax while waiting this constitutionality test of their gas gathering tax? Isn’t that a fact, senator? When the gas companies finally challenged that Louisiana tax after all these years, isn’t it a fact that the Governor called the legislature into special session and slapped that 2.3 cent tax on them?” Hudson rejoined, “I’m not going to sit here and vote industry out of my district just because the House passed some bill.” “You are so right,” said Hazlewood, moving to table the Herring amendment. The motion to table prevailed, 19-11, killing the severance beneficiary tax. The eleven senators voting not to table were: Herring, Aikin of Paris, Colson of Navasota, Gonzalez of San Antonio, Martin of Hillsboro, Moore of Bryan, Owen of El Pan, Roberts of McKinney, Rogers of Childress, Moffett of Chillicothe, and Willis of Fort, Worth. All others voted to kill the tax except Secrest, who was absent. Phillips rose again; “I have a little company in my district that employs 600 people. I have a letter from them saying that this tax would raise their taxes 340 per cent and would penalize them to such an extent that they could not make it. It is the Imperial Sugar Company and they market 90 per cent of their production here in Texas. They have competition from companies in Utah and Idaho who ship sugar right here into Texas. Imperial Sugar only has 67 per cent of the Texas market because of this competition. Texas has the fourth highest franchise tax in this land. You are going to penalize every corporation with capital investment in Texas.” Sen. Frank Owens of El Paso asked Phillips, “If you are for Texas business, why are you in favor of raising this franchise tax from $2.25 to $2.75?” Herring added that Texas franchise taxes appeared high because the state had no corporate net income tax. “All I’m asking you to do is to treat the interstate corporations just half as bad as you treat our own Texas companies. If you want to penalize the little corpor a ation Which does business in