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TEXAS LAWMEN Lawrence Sullivan Ross Sheriff-Statesman “Continue your good work and the people of Texas will not withhold their praise” school’s revered one-time President. A state teachers college is named for him; he was a distinguished Governor and State Senator, a Brigadier General in the Civil War. But .. before the years of soldiering and statesmanship Sul Ross had made colorful, turbulent he and his company broke the power of the Comanches. It was Ross who killed their chief, the noted Pete Nocona, then captured and returned to civilization Nocona’s white wife, Cynthia Ann Parker. Then, in 1873, on special duty, he became Sheriff of McLennan County, with full authority to rid central Texas of a horde of vicious intruders, who in reconstruction days had imposed their lawless “six shooter rule” and terrorized the area. In true Ranger fashion, Sul Ross soon had tranquilized McLennan, and several other counties as well! Today Texans still owe much to the lawmen who brought peace to the frontier .. and much also to industry and commerce, for bringing prosperity and pleasure. The brewing industry has done itl . part .. providing coop munity revenues. payrolls and the refreshment of moderate beverages. In Texas “beer belongs,” and the United States Brewers Association is constantly at work with brewers, wholesalers and retailers to assure the sale of beer and ale under pleasant, orderly and law-abiding conditions. TEXAS DivIsioN UNITED STATES BREWERS ASSOCIATION, Inc AUSTIN egla AUSTIN Governor Price Daniel came out fighting this week in testimony before the Senate state affairs committee. In his most strongly-worded statement of the legislative session, the governor attacked HB 727, the two per cent general sales tax, for being regressive, unfair, and loaded with exemptions favorable to business. “It seems evident that many of the special interests which have so vigorously advocated this type of broadbased tax are for it only so long as it is not broad enough to cover them,” he said. “I would feel obligated to veto it,” he declared, “and if I didn’t, and let it become law without my signature, you would be back here in a special session by Christmas, trying to straighten out the mess.” \(Daniel’s statement is excerptDaniel offered as an alternative to a sales tax his program of selective sales taxes contained in the “Hinson package.” Estimated to yield $166 million annually, his tax package includes a two percent gross receipts tax on natural gas pipelines, a two percent tax on utility bills by individuals and businesses, construction materials, and “motor-driven” objects, higher taxes on jewelry and watches, a three percent tax on restaurant meals over $1, a penny tax on soft drinks, a one percent tax on stock transfers, and increased taxes on liquor and wine. In a Senate chamber crowded with onlookers, mostly pro-sales tax lobbyists and businessmen, Daniel said the sales tax “is so burdened with exemptions in favor of commercial interests that its total impact is about 90 percent on individual consumers and 10 percent on business and industry.” He listed exemptions on oil and gas equipment and off-shore drilling rigs, and for industrial users of utilities. Rep. Charles Wilson of Trinity, sponsor of HB 727, said business would probably pay from 20 to 23 percent of the tax. He said a sales tax did not represent a complete answer to state fiscal problems and that revisions of HB 727 would be required. Asked if the House would re-pass the bill if the Senate sent it back with amendments, Wilson said he believed “we’re going to have to pass some kind of business tax before the House will pass it again.” Sen. Wardlow Lane of Center, state affairs chairman, referred the bill to the same subcommittee now considering HB 334, the “loophole” bill. Subcommittee members are Dorsey Hardeman of San Angelo, Jep Fuller of Port Arthur, Bruce Reagan of Corpus Christi, and Tom Creighton of Mineral Wells. E. B. Germany of Lone Star Steel, first of a parade of witnesses, estimated business would pay 35.7 percent and the consumer 64.3 percent of the sales tax. He said industry would be willing to pay that much. “What industry wants is a solid, stable tax program. That is more important than the amount,” he said. Other Witnesses K. Bredvad, who runs a small grocerS , store in what he identified as “one of the poorest sections of San Antonio,” testified against the sales tax. “The highest price item in my store is a broom at $1.19. In my area many people are on relief, on pensions. As one man said to me the other day, stopping to chat with me in the doorway of my store, ‘No trabajo. No dinero. Esta mat tiempo.’ With times as they are and conditions as they are, I can’t see why families with eight or nine kids, give or take a couple, should have to pay a tax on a box of soap or a mop or a broom they’ll use to keep their one-room home clean. “If I have to collect a sales tax, it won’t come to more than 20 cents a day. Nothing to the state. But sometimes a lot to these people. If we exempt anything, why not exempt items that make for cleanliness?” Doyle Willis asked Bredvad, “Isn’t it true that if this bill passes a lot of little kids will be deprived of a piece of candy or a stick of gum?” Bredvad said yes. Reagan, who had stressed the need for a sales tax to finance good schools, asked, “Those same kids want to go to school, don’t they?” “I can tell you, at least 10 per cent of the kids in that neighborhood don’t go to school because they don’t have clothes,” the witness said. “They don’t have shoes.” Other witnesses, representing special businesses not complaining about the tax itself so much as their treatment under it, appeared to testify. A candy manufacturer who told the committee he had made the Normandy invasion and the Batt of the Bulge and had eaten a lot of K-rations and C-rations, in which he always found, candy, said the Army considers candy a food and he would like for the state to do likewise. He compared ‘a good box of candy to a half-gallon of ice cream, exempt as food under HB 727, as to food value and price. Fred Schmidt, secretary-treasurer of the state AFL-CIO, said: “I find it hard to justify the taxing of a Mother’s Day telegram when a stock market telegram to a brokerage house is not taxed under this bill.” Electricity and water used by industry would not be taxed; utilities used by individual consumers would be. Patent medicines are taxed but prescription medicines are not, Schmidt said, so that a person who treats his cold with only the help of medicines like Vicks vaporub would pay a tax while the weathy man who can afford an antibiotic at his physician’s advice would pay nothing. Using the tax burden index \(what the average person in Schmidt said “the man making a buck and a half an hour, or $3,000 a year has now a tax burden index of 2.97 a year higher than the man making $10,000.” “I’m not like the other witnesses,” Schmidt said. “I hope you’ll ask me what tax I would propose instead of the sales tax.” Culp Kruger: “I’ll ask you that.” Schmidt: “Our proposal is that the most equitable tax is a personal income tax of the piggyback naturetaking a percentage of the federal income tax paidand a corporate profits tax.” Reagan: “Do you think the corporate tax would encourage industry to come in?” “Yes, because they pay only as they profit. Small profits would pay small taxes. Thirty-four other states have it now.” Reagan: “I can’t see any sense in passing a tax that would cur. tail business and industry. Celenese at Baytown said to hold up expansion until they see what we are going to do about taxes.” Politicians, he added, have “made a bugaboo of the sales tax.” Schmidt replied that “all taxes are income taxes, so why shy from the name?” ‘Only Way’ Gordon Darnell, a sawmill owner from Carthage, likened the committee to the woman who broke the alabaster box to bathe Jesus’ feet. “She was rebuked and so are you being rebuked, but this tax is the only way you can raise the needed money.” He returned later to the same parallel. “We have heard a lot of talk about the poor people. Well, the best man who ever walked the face of the earth said the poor will be with us always. . . . Corporations are people, too. Not all the corporations in this state are shipping oil. There are a lot of little corporations caught in the same trap that would catch Humble Oil. “I’m from East Texas. East Texas and South Texas have more illegitimate kids than anywhere in Texas, and those people have only one thing in mindto get another illegitimate kid and another $16 a month income from the state. And we just keep paying it and paying it and paying it. As long as people come to this government and beg money, they should be expected to pay their share.” Reagan: “You’re right about their coming. They’re coming more every day, asking more schools, more highways, more hospitals.” Darnell: “What’s your name. I’ve been watching ydu all afternoon and you’re a bright young man.” Reagan : “I’m Senator Reagan. These people want more all the time, don’t they? And if they want more, they should be willing to pay for it.” Darnell: “Amen!” Later Darnell said his sawmill companya family corporation grosses between $700,000 and $800, 000 a year. He said he was orphaned at an early age and built up his business with only a sixth grade education. He added: “Do you think a man should go around bragging about being poor? He’s poor because he doesn’t have any ambition and is just a little lazy.” This was greeted by laughter and considerable applause. Frates Seeligson, former state representative from San Antonio, said he represented the South Texas, the West Texas, and the Valley Chambers of Commerce. “I was often accused in the House of being the last defender of the well-to-do, but if my tax plan had passed the well-to-do wouldn’t have done so well,” he said. He distributed charts showing how his sales tax plan would have hit the various economic levels, as compared with other sales tax plans. “If my bill had passed you would have had no deficit but a surplus. A sales tax will bring tax stability which would appeal to industry.” Tom Sealy of Midland, chairman of Citizens for a Sales Tax, said, “We can’t go on depending on a hodgepodge selective program. We have reached the point of no return. Cigarettes are taxed now at 53 percent of their, value.” Sealy said of Darnell, the earlier witness, “I think he spoke about as well for the people of Texas as anyone could.” At one point Sealy even mentioned an income tax as the right kind of broad-based tax, but he did not elaborate. He said he would prefer a sales tax with no exemptions. “We will say HB 727, while not that kind of tax, it is a long step forward,” he said. “A lot has been said about the impact of a sales tax on the poor. I don’t think anybody in the House would have voted for it if it had hit the poor. “A man making $3,000 a year would pay about five cents a day in retail tax. I don’t think he would mind paying that much for fine schools for his children.” “This really is a tax the people are ready for,” Sealy said. “I think they are going to be sorely disappointed if you don’t come up with a broad-based tax. The people of Arkansas just recently voted to increase their sales tax from two per cent to three percent. I think you’ll find, people will respect you more if you settle on a broad-based tax.” B.S., W.M. Session Drawing To Close AUSTIN All the major pieces in the legislative jigsaw were laid on the table this week, but at least one special session and possibly more were in the offing. Gov. Price Daniel’s broadside House-passed sales tax carried a distinct threat of veto and a lengthy tax battle over his $166 million a year program consisting mostly of selective sales taxes. A drawn out debate on Tuesday and Friday over Rep. Tony Korioth’s unemployment compensation bill in the House postponed action on two liberal-backed measures, the Wilson-Korioth corporEckhardt tax on dedicated reserves of natural gas until this Tuesday. Daniel was handed a perfect excuse for his threatened special session on escheats legislation when the House once again turned back Rep. Charles Hughes’ abandoned properties bill. With a Senate filibuster on the sales tax having been promised and a likely eleventh hour stalemate on taxes, the regular session which ends May 29 is swiftly approaching. Meanwhile, the ten House-Senate conferees on appropriations continued to work in an effort to iron out the $16 million difference between House and Senate versions, and the House passed and sent to the Senate a bill favoring a $810 annual pay raise for teachers and a House redistricting bill. If the appropriations procedure runs according to last session’s form, the conference committee will not report out a bill unless a revenue measure is approved before the regular session deadline. The Texas Board of Corrections made another urgent plea for more funds from the appropriations bill, warning that the situation in Texas prisons is “the most explosive in America.” The board had originally requested $14.9 million. The House bill provides for $19.8, the Senate’s $19.6. 0. B. Ellis, director of corrections, said if the proposed appropriation is passed, “the key peo THE TEXAS OBSERVER Page 5 May 13, 1961 Senate Panel Hears Tax Testimony