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THE TEXAS OBSERVER 7020P= Let those flatter who fear. it is not an American art.Jefferson Alternatives to Regression Observer Notebook 5he 5ax PropwaL rice r aoieJ the eta Telegraphic Punch in the Legislature Sitting in the House this week to hear our governor go through the motions of his third tax address, listening along with the others in a chamber as silent and cold as a mausoleum, we noted that he seemed a little tired and a little plaintive. Perhaps he had been too badly bruised by his off-again-on-again fights with the big lobbies in the last session ; or perhaps he despaired of his own leadership ; or perhaps, confronting again in what may be his last term the awesome project of getting the money, he simply did not know what to do. It is patently clear, however, what he did do : he made it plain, in the rhetoric of one House veteran, “that he’d leave us alone to chop our necks off down here to get a tax bill, and just wait and see what we can come up with.” On permanent revenue he said, in essence: “I’ve got an idea here some of my ,advisers came up with \(the but if you don’t want to, here’s the other idea they suggested \(more selecor you may want merely to raise every tax ten pereent for a year: I’ll take anything except a sales tax or an income tax, so please see what you can come up with, and if you want to slash my appropriations budget, even though it’s not very bold, well, go ahead. In the process of being so ambivalent, our governor outlined several sound proposals ; he also suggested a long catalogue of sharply regressive measures which the House should scotch without hesitation. The $50 increase in student tuition goes against the whole trend of modern society; the “alternative” plan spawned by the business-dominated advisory finance commission, a neat little package of selective sales taxes on gasoline, beer, soda pop, furniture, cars, restaurant meals, would, if passed, open the floodgates next time to taxes on everything from lemonade and diapers to footpowder and green onions. Let there be no doubt here : if the big lobby can get such a thoroughgoing program this time as the total tax bill to emerge from the session, you’ll never stop them. The first part of Daniel’s proposals, the emergency retiring of the deficit, generally deserves the energetic support of every responsible member in the House ; it should provide a base for a vigorous liberal-moderate coalition early in the session. It is sound strategy to get a deficit tax bill fast. If the Senate stalls, send someone to the microphone every day and ask what has happened to the tax bill; show the people what that distinguished joint stock company is up to. This was Daniel’s hope in the last session : the bottleneck, of course, was a speaker who threw in with the Senate, stacking every tax committee within hearing distance of the Balcones Fault. This time, we fervently hope, the case may be different. Daniel recommended a four-part deficit program. The bankers will no doubt return in force to try to muzzle the escheats bill, crying socialism and confiscated property and all the other red-letter words in the tory lexicon. The facts are simple : the property rightfully belongs to the state by law, 36 other states use this tax method, it has been endorsed by that dangerous brotherhood of fabians, the American Bar Association, and it was established in firm principle by that famous bolshevik, William the First. His proposed financing of the rural roads out of highway department funds rather than from the general revenue funds, thus relieving the latter of $30 million every two years, involves not one penny in reduction of the farm-to-market program so dear to rural hearts; it would simply create a way of financing it out of the immensely wealthy highway department, a vertible grand duchy in the middle of our greater province. Daniel’s alternative proposal to raise another penny on gasoline should be stymied. As Daniel himself said, the general fund is broke and there is an annual $35 million in highway department funds earmarked and available for the farm-to-market roads ; the plan to take the drain off the general fund is far more fair and sensible. The governor’s franchise formula to fall on interstate corporations, some with property and operations 100 times as large as Texas-owned companies but who are still paying less in franchise levies than our domestic firms, deserves serious consideration in the emergency retiring of the deficit. But there is a more reasonable and intelligent alternative: repeal of the franchise tax altogether, to be replaced by a corporate net profits tax, which is even fairer to home-owned industry, and a more just levy on corporations in general. The net profits tax would remove the franchise principle farther from capital and place it more directly on earningswhere it should equitably reside. Although the gas lobby will undoubtedly treat us to an encore of their pained genuflexions of two years ago over Daniel’s proposed increase in the natural gas production tax, we must not lose sight of the fact that a flat production tax evades one of the most basic issues of them all here in the colonies. For years Texas production has been dominated by the colossal giants, the truly great wealth is being made by the pipelines, and our natural resources in Texas are being drained right out from under us while the state receives no equitable return on the natural wealth it is losing every day. The flat production rate is the easiest tax in the world to pass on to the consumer, be he Texan or nonTexan. The House should seriously consider foregoing the increased production tax and fighting again for a levy that, in providing another constitutional approach to the severance beneficiary tax, would tax the wider profit margins of the big companies and touch the dedicated reserves. II As for the permanent revenue proposals, the payroll tax from the day of its announcement has been met by a mood ranging from sleepy languor to bristling opposition. First and fciremost, it is favorable to business, and the more profitable the business the more favorable the tax. It is subject to criticism from small business, in fact, on the same grounds as an unreformed franchise tax, for an enterprise would be required to pay its portion regardless of whether it makes a large profit, a small profit, or no profit at all. More important, the payroll tax approaches being a double-levy on the employee ; the employer could pass his share along to the consumer, and the average worker would be hit from both sides. The original scheme came from the brain of one E. B. Germany .. . III The fairest principle in taxation is the principle of ability-to-pay : graduated corporate net profits taxes, Lagging Behind Again Gov. Daniel has come forward with some pretty shocking statistics on Texas’ water development program. As in most other services, we are lagging far behind again. Texas ranks 17th among the 18 Western states in development o f water resources, spending now only 17 cents a year per capita on our water program. New Mexico spends $1.36 and California $2.34. This Time, Waco Secondary school students in Waco public schools “will get their first intensive indoctrination into the evils and dangers of communism this spring,” the Waco News Tribune tells us in a news story, if a plan devised by Dr. L. V. McNamee, assistant superintendent, takes effect. “Waco would follow the leadership in this field set by other progressive schools, such as Dallas .. . McNamee believes that instruction should include “attention to the devious methods of communist political, economic, and subversive penetration.” Under his plan, “teachers and principals would organize study sessions during which they would attempt to learn all about the disease of communism.” The textbook for the teachers will be What We Must Know About Communism, by Harry and Bonaro Overstreet. Each principal would conduct study sessions for teachers. “A nationally recognized speaker would discuss the perils of communism before teacher groups, and lay experts might be used for assemblies during the year.” Of course “teachers graduated taxes on the giant oil producers, “equalization” taxes on the special interests which tear up our roads without paying their proportionate share, these are fair taxes constructed on a fair and just native theory. There will be such proposals this session in the House. In the process, we hope that Texas liberals will not be taken in by the old hue and cry against the personal state income tax, which for unadulterated political reasons has been made synonymous, in some quarters, with a general retail sales tax. Ultimately, the graduated income tax is the fairest tax of them all. The tax bill is not going to be written by the governor, or the lieutenant governor, or the Senate. It will be written by a majority of the House of Representatives. Last time, with the speakership and their own committees stacked against them, the majority finally won a victory against the greatest of odds on a tax . principle that may yet carry the day. We again wish them well. Published by Texas Observer Co., Ltd. Entered as second-class matter, April 26, 1937, at the Post Office at Austin, Texas, under the Act of March 3, 1879. JANUARY -1.4 1961 Ronnie Dugger Editor and General Manager Willie Morris, Associate Editor Sarah Payne, Office Manager Published once a week from Austin, Texas. Delivered postage prepaid $5 per annum. Advertising rates available on request. Extra copies 15c each. Quantity prices available on order. and principals would be urged to redouble their efforts in extolling the greatness of democracy and the American way of life.” For their “lay experts,” if the program follows according to form, the good Waco people will be able to draw on any of a number of regional soothsayers and medicine men. As for the study sessions for the teachers, we are all aware that high school principals are generally in the vanguard of American scholarship. In the best tradition of inquiring scholarship, they will probably do a good job of the job they are being told to do. Dallas Vote The civil rights commission has proposed cutting off federal financial aid to publicly supported colleges and universities which discriminate “on grounds of race, color, religion, or national origin.” The recommendation was signed by five of the six cornn’issioners. One of them : vice chairman Robert G. Storey of Dallas, exdean of the SMU law school. Endorsement The Houston Chronicle devoted a long editorial column to the speech made by Robert Nesmith, Houston contractor, at the Austin Freedom Rally last week, praising Nesmith for his remarks on the need for a union of conservatives to gain control of the pink-hued Democratic party. We read the article three times and nowhere did it mention some of the other, more flamboyant, statements made by the fellow : “I wouldn’t vote for Kennedy for dogcatcher, because he would either socialize’ the kennels or ship them overseas. As for Lyndon Johnson, I’ll say right here publicly Lyndon Johnson is nothing but a drunk . . . I’m 47, he’s 53. I’ll take him on. I’ve fought 100 aerial fights and 123 amateur fights and 67 professional boxing matches, so he doesn’t worry me . . . The socialists are communists without the firing squad . . . Socialists control the Democratic party . . . Sen. Javits is a socialist, in factor a 33rd degree communist.” Big newspapers, of course, have the right to choose their friends. If their “union of conservatives” is going to be anything like this, we hope they will follow the customary arrangement and use three rings. AUSTIN The copy desk of the Houston Chronicle has either been subverted by rabid Democrats or else does not understand the potential of juxtaposition. An eight column banner across the front page last week said : “GOP Places Power Behind John Tower.” A large black three-column headline just under it added : “28 Missing As Texas Tower Sinks in Atlantic.” And the headline under that confirmed: “Platform Toppled by Storm.” EDITORIAL and BUSINESS OFFICE: 504 West 24th St., Austin, Texas. Phone GReenwood 7-0746. HOUSTON OFFICE: Mrs. R D. Randolph, 419 1/2 Lovett Blvd., Houston 16, Texas. 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.