Senator LANGER. Thank you for coming over, Mr. Andrews. He is not here. Mr. Roger Moure. STATEMENT OF ROGER MOURE, TAX CONSULTANT, ARLINGTON, VA. Senator LANGER. What is your address? Mr. MOURE. Arlington, Va. I have a prepared statement. Instead of reading this statement, in view of what has gone on this morning, I would like to file the statement with the committee. (The complete statement of Mr. Moure is as follows:) STATEMENT OF ROGER J. MOURE Mr. Chairman and members of the subcommittee: My name is Roger J. Moure. I am a tax consultant and have offices at 720 North Fillmore Street in Arlington County, Va. I appear here in my own behalf and do not represent any person or group of persons. On the occasion of a previous appearance on April 27, 1954, before your subcommittee, I offered a rather detailed statement of what I sincerely believe is wrong with the entire tax system of our country. If we would only take time to think back a few years and recall that following World War I, the administration then in office, sought by large reduction in the income-tax rates to return income taxes to a more realistic basis. In my prepared statement I recall quoting the late Hon. Richard E. Byrd, father of the distinguished Senator from the Commonwealth of Virginia, Harry Flood Byrd, and how his prophetic predictions have come true. At that time I stated that there was being considered what is now known as the Internal Revenue Act of 1954. This act, as amended, while liberalizing some aspects of the Federal tax system, any savings to the taxpayers or the Government were more than offset by the increased costs of enforcing the revenue laws. For example, between 1954 and 1955 the personnel employed by the Commissioner of Internal Revenue was reduced from 24,835 in 1954 to 24,205 in 1955, the revenue agents were increased from 10,605 to 11,255 and the salaries and other obligations of the Internal Revenue Service increased from $268,069,000 in 1954 to $278,834,000 in 1955. Furthermore the preparation of tax returns instead of being simplified was made more complex and complicated as shown by an increase in both the detailed instruction from 12 to 16 pages and the form itself from 3 to 4 pages. As presently set up the Commissioner reports that approximately 200 public-use forms and many internal forms were revised during the fiscal year 1955 to make them fit the present requirements of the 1954 Revenue Act as amended. The added complexity of the present revenue code is further illustrated by the growth in the number of rulings issued since 1953. Here is the record in short: 1953, rulings issued_ 1954, rulings issued. 1955, rulings issued_. 151 432 801 Previously I mentioned the increase in the personnel in the enforcement division from 10,605 to 11,255, a gain of more than 10 percent in 1 year. From the record so far, we can expect further increases in the enforcement personnel, mainly because the service no longer renders more than token assistance to taxpayers in the preparation of their returns. It is my opinion that we never will be able to bring the complex governmental task of collecting the revenues necessary to the operation of our Republic to a simplified basis until we revise the forms and also lower the rates to a level the people of the United States can afford to pay and still maintain a high standard of living. We need revisions in substance as well as form if the burden is ever to be lightened on the taxpayers administratively and financially. It was with this thought in mind, Mr. Chairman, that I prepared an alternative method of computing the individual income taxes with allowances only for personal exemption and nothing else. By such revision as I propose a tax on incomes would become more acceptable to the people and be far less liable to attempts at tax evasion. In his letter of April 26, 1954, Secretary Humphrey estimated that if this proposed amendment were adopted, the loss to the Treasury would be about $3.5 billion in income taxes plus less than $1 billion from estate and gift taxes, or a total of $4.5 billion. This amount might easily be saved if the Congress would put into operation several of the remaining recommendations of the Commission on Organization of the Executive Branch of the Government, headed by former President Herbert Hoover and assisted by many distinguished Americans. These reports and the task force reports accompanying them indicate not only serious defects in the operation of our overseas aid programs but also opportunities for savings in other places. The recommendations I have in mind are indicated in the table which follows: Income level 0 to $1,000. $50,000 to $60,000. Comparison of 1954 and proposed tax rates Tax under 1954 Revenue Act 20 percent of net taxable income. Comparison prepared by Roger J. Moure, Arlington, Va. Tax under proposed rate 1 percent of net taxable income. Mr. MOURE. I recall in the hearing that was had here in April of 1954, I had a prepared statement in which I recalled the speech of the Honorable Richard Byrd, father of our distinguished Senator from Virginia. In that speech, Richard Byrd stated: "It is a wise maxim of government to grant no power which is not properly safeguarded from abuse." The real objections to the adoption of the amendment, it seems to me, are these. The proposal of the amendment-the method proposed is not now inherent in the Federal Government. The proposition is, therefore, to increase enormously the Federal jurisdiction and power over citizens of the United States. This contact is in relation to the most vital concern of the individual. It means that the State must give up a legitimate and long established source of revenue and yield it to the Federal Government. It means much more than this. It means the Federal Government can reach into the inner-most citadel of reserved rights of the commonwealth. Those are statements that were made by the Honorable Richard Byrd in March of 1910, 3 years prior to the passing of the 16th amendment. In that statement, Mr. Byrd made one of the most prophetic statements I have ever had the privilege of reading. I would like to insert this complete statement into the record once again, as I did in 1954, because in it the statements made by Mr. Byrd, and which I explained at that time, are still statements of true facts that show what happened when the Congress of the United States was permited to tax the people of this country without any safeguard from that abuse, or any restriction or limitation. It was the intention of the original passers of the amendment that the tax rates should never go above the rate of 10 percent. That was in statements issued by Charles Evans Hughes and Elihu Root prior to the passage of that amendment. Mr. Ruttenberg in his statement said that there was a motivation. of States rights being an issue in this particular resolution that is before the committee. If it is an issue now, it was an issue back when the amendment was originally passed, back in 1913. I would also like to make one other comment on that prior statement. That is, that at that time in 1910, the statement was made that if enough States agreed to this amendment, a Federal Congress will enact a tax law, Federal judges will construe the law, and an army of Federal officers will enforce it. True, that has happened. Every statement that was in that original statement of Speaker Byrd, of the house of delegates, has come to pass. I am personally a tax consultant. I come in contact with the taxpayers of this country. Someone raised a question earlier this morning of whether or not they have seen businessmen go under because of the tax burden. I know personally of 8 men who, in the last 2 years, have gone under, and better than 800 jobs have gone under with those 8 men. One man alone, because of the tax burden, sold his corporation with all its assets, at a paper loss, took the entire amount of money he received, invested it in municipal and school bonds, and is living off that, and he eliminated better than 500 jobs off the labor market. That is what taxes have done to this country. I have for years felt that tax limitations followed the tax-limitations program. I am not a constitutional lawyer. I am not an attorney. I do know what is the best for my taxpayers, the people that I have to deal with. I have in my prepared statement put in a comparison table of the proposed 1955 tax rates under the 1954 Revenue Act and what I would term a proposed tax rate under Senate Joint Resolution 23. The proposed tax rate is one similar to that that was used by Mr. George Humphrey back in 1954 when he prepared a letter to this committee and stated that there would be a $3.5 billion loss in individual taxes and a $1 billion loss to estate and gift taxes, which is $4.5 billion. If, by using the recommendations of the Hoover Commission on the Organization of the Executive Branch of the Government, we will save $3 billion over that $4.5 billion loss. We will also take that $3 billion and apply that to reduction of our national debt. I will have to also state that back in 1920 to 1932, when we had a reduced tax rate, we did receive higher incomes into the Federal Treasury. We paid off more of our national debt. The statement has come up to me quite often that we are in a different type of a standard of living today than we were at that time. True, our standard of living is higher. Our national income of last year was $322 billion. Yet, because of taxation, instead of paying $1,900 per family for an average for our necessities of life, we had $900.84 for an average family of 4, going on a standard index of 1929, based on 100. There have been other questions brought up this morning as to whether or not this was a rich man's bill. I say it is not a rich man's amendment. It is not, for a number of reasons. In the first place, the amendment calls for a maximum of 25 percent. As long as that maximum is at 25 percent, there is no minimum, and that minimum could well be zero percent. Going from zero percent to 25 percent, as I have done on my table, taking a man at an $8,000 income, today he pays $1,960 plus 34 percent of everything over $8,000. According to my table, he would pay $270 plus 6 percent on everything over $8,000. Using that table, you would still come out to merely a $4.5 billion loss in revenue and not a $15 billion loss. I am also going to state that the immediate loss in revenue through the elimination of high individual taxes would be only temporary. By that, I mean it would be a loss of approximately 1 to 12 years. Following that time, it would increase. That is brought about by the fact of diminishing returns from taxation. That point has variously been put between 20.2 and 28.1 percent as your point of diminishing returns in taxation. Mr. Ruttenberg is an economist; I believe Mr. Dresser is. Mr. DRESSER. Not I. Mr. MOURE. They can check that if they see fit. I am sure the committee can also check it. I am sorry to take that much of the committee's time. Senator LANGER. We are glad to have you here. Any more witnesses? Mr. SMITHEY. I have a statement which Mr. Blyth Emmons has asked to have included in the record. Senator LANGER. It will be done. (The complete statement of Mr. Emmons is as follows:) STATEMENT OF BLYTH EMMONS, DIRECTOR, WASHINGTON OFFICE, NATIONAL SMALL BUSINESS MEN'S ASSOCIATION, INC. My name is Blyth Emmons. I live in Washington, D. C., and am the director of the Washington office of the National Small Business Men's Association, Inc., with offices at 925 15th Street NW., Washington, D. C. The association's national headquarters is located at 2834 Central Street, Evanston, Ill. The National Small Business Men's Association was founded in 1937 to give small-business men a voice in national affairs and to help preserve free competitive enterprise in the United States. We have members in all 48 States, representing approximately 170 categories of business. The association holds national membership meetings each year. All members are eligible to attend these meetings. At each meeting a program is adopted by majority vote of those present to guide the activities of the association until the next membership meeting is held and a new program adopted. At each meeting a financial statement is rendered showing all income and giving an itemized statement of expenditures. We had our 1954 meeting here in Washington April 5, 6, and 7. In 1955, due to the death of our president and founderDeWitt Emery-our association did not hold its annual membership meeting, and we have not as yet held our membership meeting this year. At each of our national membership meetings, starting with the first one in Pittsburgh in September 1938, the members of the National Small Business Men's Association have gone on record, by the adoption of resolutions, to make laws more equitable for the small-business men of the country. I would like to make part of this statement the following resolutions adopted by the membership at our 1953 and 1954 meetings: "We endorse Senate Joint Resolution 23 introduced by Senator Dirksen, of Illinois, proposing an amendment to the Constitution of the United States to provide that the maximum top rate of all taxes, duties, and excises, which the Congress may lay or collect, shall not exceed 25 percent, and other provisions of kindred import. "We recommend the adoption of an amendment to the Constitution of the United States to provide a maximum rate of all taxes, duties, and excises which the Congress may lay or collect." The text of Senate Joint Resolution 23 introduced by Senator Dirksen in the 83d Congress is identical to that of Senate Joint Resolution 23 introduced by Senator Dirksen in the 84th Congress, and on which your committee is presently holding hearings. Our association, from time it was founded 19 years ago, has been on record for a reduction of all Federal taxes, except in times of national emergencies. The time to repeal the 16th amendment is later than we realize perhaps, because so long as the Congress shall have the power to lay and collect taxes on incomes from whatever sources derived, including earnings, savings, gifts, and bequests, the question of free enterprise versus socialism is in serious abeyance. It is of importance to note that the top income bracket during World War I and immediately thereafter was 65 percent. In the late 1920's income tax rates were reduced all along the line. Yet, despite those reductions, Washington was able to balance the budget, pay off about one-third of the national debt, and cancel several billions in loans to foreign countries. If lower taxes could do all that, there was a powerful plausibility for returning to some such modest ceiling. It may be of interest to look at the exact record on revenue collections of the Federal Government from 1925 to 1930-the maximum income tax rates and the personal exemptions during that period. It is interesting to advance to the period 1939-51 and see the percent net increase in contrast to Federal, State and local taxes: This clearly shows what the Federal Government takes in the way of tax collections in contrast to what is left for the States and local taxable possibilities, or the amounts of money available to them to operate the States, cities and towns. Further figures show that between April 30, 1945, and June 30, 1952-a period of 7 years of which almost 5 years were peacetime years-the Federal Government collected $323 billion in taxes, which is $75 billion more than the $248 billion collected during the entire previous life of the Republic beginning with 1789. The effect of these tables shown above has had an eye-opening impact on the small-business man. In order to operate successfully, industry must have a steady continuing supply of new capital. The capital required for the maintenance and expansion of industry comes from the savings of corporations and individuals. Excessive taxation lessens or destroys the incentive to produce, save and invest such capital in industry and at the same time reduces the supply by the amount of the tax. Much of the capital for the maintenance and expansion of our industries is supplied by the persons having the larger incomes. The heavy progressive income tax strikes directly at this source of supply. |