Senator Dirksen said something about the fear of the people. Well, in making my speeches, mainly to women-and with 2 million men in uniform around the world, there are about 3 million more women in the United States today than men-I feel that the women are up in arms. I think when the citizens of a country fear and begin to hate their Federal Government, that is dangerous. I think the income tax has done that.

Our organization is working to repeal it because of the waste and I can only quote the Hoover report that we are wasting $155 billion on unneeded goods. That is more than half our national debt wasted. That is all we are trying to do, stop the waste. As far as hurting the Federal Government is concerned, I don't think anyone is thinking about that.

I am fortunate enough to have an hour each year with Gen. Douglas MacArthur. Last January he said our debt is nearly $300 billion, and the credit of the Nation today is nearly $300 billion; that is $600 billion. That is all the United States is worth, between six and seven hundred billions of dollars.

As the general stated, as chairman of Remington Rand, their organization is worth between six and seven hundred million dollars and if they borrow more than two or three hundred million, they would be bankrupt.

I don't think the $15 billion which the 25-percent ceiling limit asks for-I think that can be taken out of $155 billion we are wasting, according to the Hoover report, easily. It wouldn't hurt our country.

There is some talk here about the different-I can't find it now, but the different budgets. In 1932, the budget was $4.5 billion. Five years later it was $7 billion under Mr. Roosevelt. In the last year of Mr. Roosevelt's tenure of office, it was $34 billion. He ran a war on it, and this is supposed to be peacetime.

Are there any questions that anyone would like to ask me about what we are doing?

May I just for the record put this note in? I have made a speech for some women and this has the imprint of the Senate on it. It said:

DEAR MISS GRIFFITH: Mrs. Davey had called my attention to the speeches you are making on the subject of income tax. I have given the tax problem a lot of thought and will give careful consideration to your question. I think the taxing problem has been abused. The whole tax question needs a study with a view to completely revising it.

With all best wishes.

Sincerely yours,

(Signed) ROBERT A. TAFT.

General MacArthur has said to me for my speech:

No nation may survive in freedom once its people become the servant of a centralized government, a condition toward which we are now headed with such dreadful certainty * * * through the imposition of excessive taxation. No one is talking about reducing the defense money. I just want to give you a quotation from Mr. Hoover, in the Hoover report, made up of the finest Democrats and Republicans in our country:

I may emphasize when we talk about savings, we talk about the elimination of waste and not the strangulation of either our defense or the public welfare. Now, on the opposition to private business, the Federal Government today is in the barge-operating business. The Federal Government is in alcoholic beverages, scrap iron and steel, boxmaking, metal heat

treating, printing, power facilities, tire recapping, and paint manufacturing. The Federal Government is in the coffee-grinding business and the Federal Government owns and operates today 162 ice-cream factories. Nobody is going to tell me that you can win a war with ice cream. If the tax were reduced or eliminated, the Federal Government wouldn't be in business in competition with private business. According to Mr. Willis, of the American Progress Foundation, the personal income tax for 1954 was between $31 billion and $32 billion and the Federal Government lost that year, in competition with private business, $34 billion. Those are the only things we are fight

ing.

Senator LANGER. Thank you, Miss Griffith.

Mr. MCNEILL. May I ask you one question, with the chairman's permission?

Are you familiar with the fact that a great many people are going out of active business because their profits are being absorbed by tax bills; retiring and quitting business?

Miss GRIFFITH. I know that I earn my living out of little stores and offices, and I know that in this last year, four small-business men went out of business because they couldn't take the taxes any longer.

I know that, shopping here in Washington on Connecticut Avenue, I run into German and Czechoslavakian glass because the merchants claim they cannot buy the products of American business today because they are so high.

Mr. MCNEILL. Thank you very much.

Mr. SMITHEY. Mr. T. Coleman Andrews, please.

STATEMENT OF T. COLEMAN ANDREWS, FORMER COMMISSIONER OF INTERNAL REVENUE

Senator LANGER. I am glad to see you again.

Mr. ANDREWS. Mr. Chairman, I think I should like to say first that I had not expected to be here, because frankly I hadn't had a chance to prepare any formal statement. I didn't want to take up the time of this committee.

Senator LANGER. Glad to have you here anyhow.

Mr. ANDREWS. I hoped I might have something in organized fashion. But Mr. Martin and Mr. Dresser asked me to come and you invited me, so I am here.

Í should like to explain that telegram I sent you. I would not wish that telegram to be taken as meaning that I oppose

Mr. MARTIN. May I suggest to Mr. Andrews that he speak a little louder?

Mr. ANDREWs. I will do the best I can.

I say that the telegram I sent you was not intended to indicate that I oppose this resolution, but rather to indicate or that I necessarily had any qualifications about it--but rather to indicate that I did not want to appear to be in the position of favoring something that might foreclose the thing that I would really like to see done. That is the appointment by Congress of the commission to take a real, honest-togoodness look at the income-tax law, at the whole revenue system. Let's see, after 43 years of experience with it, making it more and more complicated all the time and more and more difficult to comply

with, more and more oppressive to the people, without any research to see whether anything better can be developed. So that we might make up our minds frankly whether we just had to live with it or whether there is something better. I personally believe that there is something better, but I am not willing to say just abolish the income tax without finding that. I think Congress has to create the mechanism for finding it. I don't think you can just do it by conversation. I think I should also say that I do not represent any organization. The things I have had to say about the income tax have been said in connection with speeches and articles that I have been asked to write on the basis of my long experience with the income tax and particularly my experience as Commissioner of Internal Revenue.

I would say that I would endorse the statement of Mr. Dresser, with two exceptions, one of which I would like to ask him about, because frankly I don't understand it.

At the top of page 2, Mr. Dresser, you make the statement that the amendment limits income taxes on both individuals and corporations to a maximum of 25 percent, but permits Congress by a vote of threefourths of the Members of each House to exceed that rate at any time without limit. Then you go on to say that it does have a limit of 15 percent above the base rate.

Mr. DRESSER. You are asking me a question. Perhaps my language is a bit unfortunate. What I intended to say there was that the sky was the limit so far as the top rate is concerned. But there is a question that the top rate must be kept within 15 points of the bottom rate.

Mr. ANDREWS. I want to make it clear that that point had me puzzled.

Mr. DRESSER. They can adopt any top rate they see fit but it must be 15 points within the bottom rate, if the top rate exceeds 25 percent. Mr. ANDREWS. In other words, with that qualification.

Mr. DRESSER. That's right.

Mr. ANDREWS. There has been a good deal said here about rich people this morning. I would like to make the observation that there aren't very many rich people any more, relatively not any. There is not one opportunity to get rich except one way, through the capitalgains tax. Not everybody has the opportunity or the gambling instinct to undertake it by that route. We have got a tax not on wealth, except insofar as you might be talking about taxes on estates and gifts. You have got a tax on accomplishment, and the more capable you are, the heavier the taxation. In other words, you are laying your tax on capacity, on personal capacity. You are laying it on in such progressive fashion that you are discouraging the people who have the most capacity. If you don't believe that, all you have to do is go down to Florida and take a census of men down there, by no means past the peak of their capacities who have decided to take what they have and rest the rest of their lives rather than work any more. There are just thousands of them there.

I think, therefore, that we have to recognize that this law is exactly what Secretary Humphrey, for instance, says it is a tax on incentive. At least, it tends to destroy incentive. He of course is on record also as saying that our taxes are too high.

President Eisenhower, for instance, and I think all of you know that certainly the most conservative thing that might be said about

me is, I am not unfriendly to this administration. He said in his message to Congress on May 20-I am going to use two dates and start at the back. May 20, 1953:

The Treasury must be assured of adequate revenues to finance necessary expenditures for national security and other essential purposes.

I don't think anybody in the world would disagree with that. Certainly I wouldn't.

At the same time, we must develop a system of taxation which, to the greatest extent possible, will not discourage work, nor savings, nor investment, but will permit and encourage initiative and a sound growth of our free economy. I suggest to you, sir, that we do not now have a tax system which will accomplish what the President says ours should accomplish.

On the 19th of May, 1953, the day before the President said in another message to Congress that our system of taxation must not only provide our Government with the resources to be strong for freedom's sake, but also enable our people to apply their initiative and industries fruitfully. This means taxes so adjusted as to fall where payment is less harmful and so planned as to create jobs and expand the income of the mass of our people.

I suggest also that that objective is not accomplished by our present system of government. Or perhaps some of you might wonder, as others do, why I am now speaking out, after I have served as Commissioner for 3 years. Why didn't I say something then? The answer is very simple. As Commissioner of Internal Revenue, I operated within a restricted area, that of enforcing the law. It was my job to enforce the law that was handed to me, not to unmake the law or to make new laws. My views on taxation were not questioned and, therefore, they were not given of it. I tried to enforce the tax laws to the best of my ability.

The thing that impressed me most in the discussion here this morning is the apparent resignation to the idea that we have a level of expenditure in this Government from which we cannot recede. That I submit, to take that attitude, for anybody to take it, is in my opinion the greatest disservice that can be done to the American people. Here we sit with a commission, appointed by the Congress of the United States, that tells us there is $72 million of waste in the budget now before Congress. Seven and a half billion dollars, rather, not in that budget, but in the operation of the Government. Senator Byrd, and I think I am as proud of him as anybody is, tells us that the budget has got $78/10 billion of unnecessary new expenditures in it.

Now ladies and gentlemen, and Mr. Chairman, that is $15,300 million or half of the amount of money collected from the income taxes on individuals today. We sit here talking about a stable or a fixed level of expenditures of this Government when we could, if we wanted to, or the Congress could, reduce the personal income tax in half from top to bottom. If anybody wants to read my mail from the people all over the country to see what they think about it, I will be glad to open it up to them. They don't like it. They know about it. They have been reading about it. Informed and authoritative people have been telling them about it, and they don't acept the idea that we have to continue to operate at the present level of expenditure. They want to know why expenditures are not cut to the extent that a commission appointed by the Congress of the United States said they can be cut

and to the extent that a respected authority like Senator Byrd says they can be cut. I suggest that that question is going to have to be answered, gentlemen, and if I judge the temper of the mail that I get, it is going to have to be answered right soon.

Something has been said here today about the $60 billion of property that the Government owns. There has been some reference made to an article that appeared in the papers yesterday that I wrote. I referred to that situation in that article. Here, simply, is what that situation is. We have a tax based upon income. Now, if all income were taxed, the level of revenue would rise with the growth of economy. But that isn't what is happening here. We have created vast accumulations of income-producing wealth in all kinds of competent organizations, and we have set the Government up in business in competition with private enterprise to the extent of $60 billion of property. I don't know if that is right or not. The Hoover Commission says that $15 billion of investments found in the Defense Department alone in over 2,500 business establishments. It is perfectly patent, therefore, ladies and gentlemen and Mr. Chairman, that an income tax under which, by those devices, taxable income is removed far from the reach of the tax collector creates a situation where there is an everwidening gap between the amount of income produced by the people, the economic growth of the country, an ever-widening gap between that and the amount of taxes as derived from that system. When you get to that situation, you have got an unhealthy situation and one which eventually is bound to fall flat on its face no matter what else happens.

I was pleased to accept the invitation to come here, because I feel that anything we can do now to reduce this unnecessary burden of taxation is a good thing. There are other people who would like to reduce the gross discrimination against people who make a little bit more than the bare cost of living, the middle income group, the white collar group. I think it will be fine to correct that discrimination. But the ultimate thing, I submit to you, the thing that we ought to all strive for, is the creation of whatever mechanism is needed by this Congress to take an honest to goodness second look at the whole situation. I do not appear here in advocacy of the repeal of the income tax here at this time. I may later on. But first I want to know the facts.

Nor do I appear here in advocacy of a wholesale wiping out or reduction of the budget without reason. This Government has to have money to run on. It has to have taxes in order to provide that money. What I suggest to you is that we ought to consider whether we really need all the money we are now raising and whether there isn't a better way to do it. I shall hope, therefore, that Congress will set up the machinery for ascertaining whether we can find a would-be able substitute for the income taxes and give the people of this country back the protective rights they signed away when they agreed to the adoption of the 16th amendment of the Constitution. That is the essential thing.

I am convinced that if that isn't done, the result will be to destroy our whole tradition of freedom. As Mr. Frank Chodorov puts it, "Wreck both that tradition and the civilization for which it has emerged."