representatives of the Treasury Department will be glad to come back and discuss such questions.

I would like to ask one question, Mr. Mills: It has been suggested that the reduction of the corporation income-tax rate may have a tendency to increase the revenue from that source. We are now convinced, I take it, that the reduction in the individual income-tax rates increased the revenues from that course. But are there not elements in the matter of individual incomes that are not present in the case of corporations?

Mr. MILLS. Unquestionably; but in the case of corporations, when you reduce the taxes you turn that amount of money back from more or less nonproductive purposes of Government to the productive purposes of business, and the general tendency is to increase business

revenues.

Mr. CHINDBLOM. In the case of individuals, the big item or element was that money was being withheld from industry and investment.

Mr. MILLS. And in the case of individuals there was a determined effort on the part of individuals to avoid the payment of what they considered excessive taxation.

Mr. CHINDBLOM. There was evasion, and there was the speculative feature in some investments, causing money to be withheld.

Mr. MILLS. There was a definite resistance down the line that does not exist at the present time.

Mr. CHINDBLOM. We can not hope, then, that the reduction of the corporation income tax will have any such effect as to increased revenue as did the reduction of the individual income tax.

Mr. MILLS. Clearly not.

Mr. CHINDBLOM. I think that is perfectly clear.

The CHAIRMAN. There is one matter, in looking over the estimates, that we did not sufficiently consider. We are likely every year probably to make the estimates more accurate. We did not carefully consider with sufficient, real care the conditions of business during the year for which the taxes were levied. If we had gotten at the taxes on corporations with substantial accuracy we would have come nearer on the taxes with reference to individual incomes. There is one item mentioned by Mr. Mills with reference to individual items which is very difficult to estimate, and that is the amount received from the sale of capital assets. We got a very large sum from that last year, and a pretty large sum the year before.

Mr. MILLS. There was a tremendous increase. That one item accounted for an increase, I think, of $68,000,000.

The CHAIRMAN. I do not know of any way to estimate that accurately. It is apparent that the time comes when a man who has certain assets can no longer sell at a profit, and men find they can make their investments in some other direction with greater profits, and so they sell. But I do not know how we can determine that. Mr. COLLIER. There is no rule at all by which that can be determined.

Mr. MILLS. Only in so far as stock transactions are concerned, on a rising market.

Mr. COLLIER. We do not know in advance whether there is going to be a rising or a falling market.

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Mr. HULL. May I ask one other question? Mr. Mills, it seems to me that in the interest of the taxpayers of the country knowing how to calculate in the future, at this stage after the war, we ought to be getting nearer a somewhat permanent level of taxes. With the sinking fund operating as it is, rapidly increasing the payment of the debt, and considering the $8,000,000,000, practically, that has been paid thus far, it seems to me we ought by this time to be able to put our taxes in as permanent and as nearly an equitable form as possible, applicable to a normal business year. Then any saving by economies would go on the debt, and any increase of revenues because of abnormal business conditions, in any one year would go on the debt, in addition to the sinking fund.

If anything further occurs to you, in revising your remarks, in reference to that question, as to when we are going to reach the stage at which our tax system will become stable and definite, and will continue along that line of policy, I would like to have you insert such a statement in the record.

Mr. MILLS. All right, sir.

STATEMENT OF JAMES A. EMERY, WASHINGTON, D. C., REPRESENTING THE NATIONAL ASSOCIATION OF MANUFACTURERS

The CHAIRMAN. Mr. Emery, you may give to the reporter your name and the names of those whom you represent, and then proceed. Mr. EMERY. Mr. Chairman and gentlemen of the committee: I represent the National Association of Manufacturers of the United States, a group of 24 State associations of manufacturers, with respect to the resolution to which I shall address myself, and with respect to what I shall say on the part of the corporate tax argument I represent the voluntary committee on tax cooperation, a committee of various associations that have dealt with the subject of corporate taxation alone. I shall file with this committee the names of that committee as I approach that point in the discussion.

Mr. HAWLEY. In what lines of manufacture are the associations you represent engaged.

Mr. EMERY. Every line.

Mr. HAWLEY. All kinds of manufacture?

Mr. EMERY. Yes.

The CHAIRMAN. Were you intending to speak particularly of the corporation tax?

Mr. EMERY. In part. I will read the resolution.

Mr. GARNER. Mr. Emery, if I may say so, the association you represent is a very distinguished organization of men of this country, something like the National Chamber of Commerce. I suggested to the chairman a moment ago that in looking over this list we see the names of men who represent certain organizations. I believe it would be well not only to say that you represent an organization, but to briefly state how the organization is comprised, and how it sustains itself, so that we may differentiate between organizations of the type of that which you represent and some other organizations. I think that would be good policy, that each man should state just why his organization was organized, in a brief way, and how it sustains itself, and so on. You may insert that information. in the record, if you desire.

Mr. EMERY. Mr. Chairman, at this point I will state the names of the associations I represent and their nature, and then I will present the resolution which was adopted and which expresses the tax views of these organizations.

Mr. GARNER. I want you as a good example to start with.

The CHAIRMAN. How much time do you desire, Mr. Emery? Mr. EMERY. That will depend on the committee's favor. I had hoped you would accord me about 25 minutes or a half hour.

One of the associations which I represent is the National Association of Manufacturers of the United States, an association incorporated under the laws of the State of New York, and composed of manufacturers in every line of that industry in about 38 States of the Union. The membership of the association is composed of individuals, firms, and corporations engaged in the manufacturing industry. It is sustained entirely by the dues of its members.

I represent, in addition, the following State associations of manufacturers:

Associated Industries of Alabama; California Manufacturers Association; Colorado Manufacturers & Merchants Association; The Manufacturers Association of Connecticut (Inc.); Manufacturers Association of Wilmington, Del.; Georgia Manufacturers Association; Illinois Manufacturers Association; Indiana Manufacturers Association; Iowa Manufacturers Association; Associated Industries of Kansas; Louisiana Manufacturers Association; Associated Industries of Maine; Nebraska Manufacturers Association; Ohio Manufacturers Association; Associated Industries of Oklahoma; Manufacturers & Merchants Association of Oregon; Associated Industries of Rhode Island; Manufacturers & Employers Association of South Dakota; Associated Industries of Vermont; Virginia Manufacturers Association; Federated Industries of Washington; West Virginia Manufacturers Association; Wisconsin Manufacturers Association; and Tennessee Manufacturers Association.

All of these organizations are associations of manufacturers formed within their respective States to deal with the problems which naturally arise in the course of their industries, and they, too, are supported entirely by the dues of their own members and deal with the general problenis common to the manufacturers.

I said I represented a third group, and to prevent confusion I shall prefer to refer to that at the time I approach that part of the discussion in which I am authorized to speak for them.

The National Association of Manufacturers has just concluded its annual convention, held in Chattanooga, Tenn., at which there were represented manufacturers from 36 States of the Union, and as is customary at the time of their meetings, they have undertaken to define their views on public policies, among the most important of which is the great subject of taxation. The following resolution was adopted by the association at that convention:

Whereas reduction in the volume and reform in the method of national and local taxation presents a practical problem of vital importance, we urge:

1. That the Joint Congressional Committee on Taxation, due to report this year, have its term extended to assure adequate opportunity to make complete recommendations regarding the simplification of our revenue law and appropriate reform of its administration.

2. We urge that the Seventieth Congress make the corporation tax the subject of its major reduction: (a) Because it will remedy long-standing injustice: (b) because such action will confer the widest social benefit.

3. We believe that a fair corporate tax should approximate the normal individual tax rate, save in the possible exception of a national emergency. We

urge the largest reduction in rate which the fiscal necessities of Government, económically administered, will permit. We realize the adjustment we suggest can not be accomplished at this time, but press its recognition as a goal toward which a tendency should be firmly established.

4. We believe that the Federal Government should abandon the field of estate taxation to the States and reenter it only during national emergencies. We believe it should repeal all special excise taxes upon manufacture recognized as necessary war measures. We believe there should be a readjustment to a lower level of the intermediate surtax rates as the fairest method of relieving the undue burdens upon earned income. But, important as these are, we believe action upon the foregoing proposals should be subordinated to the lowest readjustment of the corporate rate now possible. We oppose further exemption of individual income from taxation as an unfair and unsound public policy.

The fifth resolution refers to local taxation, which I will read if desired, but it is not germane to this discussion.

I may also insert at this point a statement of the membership of the tax committee of the National Association of Manufacturers upon whose report the ultimate action of the association is largely predicated.

The CHAIRMAN. Just hand it to the reporter.

(The list is as follows:)

Tax committee, National Association of Manufacturers of the United States:
Ernest T. Trigg, John Lucas Co., Philadelphia, Pa.

Henry L. Calman, Emil Calman & Co., New York City.
John L. Kaul, Kaul Lumber Co., Birmingham, Ala.

Frank H. Miller, G. Levor & Co.

C. S. Mott, General Motors Corporation, Detroit, Mich.

H. Boardman Spalding, A. G. Spalding & Bros., New York City.

Hon. William S. Bennet, Edward Hines Lumber Co., Chicago, Ill.

P. C. Wentworth, National Ring Traveler Co., Providence, R. I.

Mr. CHINDBLOM. Is it your intention to insert in the record that last resolution to which you have referred?

Mr. EMERY. I will read it, if you prefer.

Mr. CHINDBLOM. I do not care especially about it, but I would like to know their views on that subject. It has some bearing.

Mr. EMERY, Will you permit me to read it, then, and it will be inserted entire. It reads:

5. Realizing that State and, particularly, local taxation is equalizing by its continuous advance the reductions in the Federal field and is sadly in need of more efficient administration, we recommend that this association continue as a major activitiy its energetic effort to develop a tax-conscious citizenship and constantly expand its present cooperation with like-minded associations that public extravagance may be curbed and inefficient administration reformed.

The association is deeply grateful to your honorable committee for an opportunity to present, in advance of congressional consideration, such views as its experience seems to justify as its recommendation for your committee's action.

In the gathering which has just been held by the association, and in which there were present over 800 manufacturers, from all parts of the United States, the major subject for consideration was taxation. It was widely discussed, within and without the convention, and the effects of the present policy were matters of major anxiety. We found that shared not by manufacturers from any one section of the country but by manufacturers from all sections of the country. The more we gather in meetings of this kind, the more we realize that sectionalism in industry has long since passed away. There is little difference between the great section in which we had the pleasure of

meeting and that from which many of the manufacturers came, save, perhaps, the realization that we say "I choose" in Massachusetts and "I reckon " in Tennessee.

The committee has urged as a first recommendation-

That the Joint Congressional Committee on Taxation, due to report this year, have its term extended to assure adequate opportunity to make comp.ete recommendations regarding the simplification of our revenue law and appropriate reform of its administration.

Mr. HAWLEY. The joint committee has an indeterminate length of

life.

Mr. EMERY. That committee is due to report to the Congress by the 31st of December.

The CHAIRMAN. I may say that the joint committee will not be able to finish the work of simplification by that time, and the committee itself, I think, desires to continue its work, because it feels that if it should cease its activities right now it would just be presenting a part of the work which ought to be done. I think it is the judgment of the committee that under the statute we are a continuing committee unless Congress provides otherwise. Is that your idea, Mr. Garner?

Mr. GARNER. My impression at the time we framed the law was that that committee was to continue until Congress took direct action. to discontinue it. The only limitation placed on the committee was that it was compelled to make what we term "a preliminary report in order that the first session of the Seventieth Congress might get the benefit of the work it had done.

Mr. TREADWAY. Mr. Chairman, if that matter is up, I may say that it is perfectly apparent that we are a continuing body. It might be well to put into the record, if you think there is any question about it, paragraph (b) of the section under which we

appointed.

were

Mr. COLLIER. It would take an act of Congress to discontinue the committee.

Mr. TREADWAY. Certainly. It provides:

No person shall continue to serve as a member of the joint committee after he has ceased to be a member of the committee by which he was chosen.

Then it goes on to provide how vacancies shall be filled.

Mr. GARNER. AS I understand the suggestion of the National Association of Manufacturers, through its representative here, it is that they hope that this committee will report on some plan of simplification, and that it will continue its work until the law shall be simplified.

The CHAIRMAN. Until all concur?

Mr. EMERY. I am not suggesting indefinite tenure.

Mr. GARNER. But you hope something will come out in the form of simplification?

Mr. EMERY. Yes, sir; because I think that those who have had contact with the administration of the law realize that perhaps more savings are to be effected through simplification of the law and reform of its administration than perhaps will be achieved through a reduction in rate. The cost of administering the law to those who live under it is in some instances to-day greater than the amount of the taxes which they pay.