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Against the tax
For the tax of soybeans is paid for by the oleomargarine industry, whereas the dairy farmers alone buy soybean meal worth more than two and one-half times that amount. Likewise, only 10 percent of the cotton farmers' income from cottonseed is paid for by the oleomargarine industry, whereas cottonseed meal sold for feed represents 11 percent."
1. Charles W. Holman, National Cooperative Milk Producers Federation (p. 298).
“The amount of cottonseed meal that is consumed right now in Texas amounts to at least as much as perhaps many times more to the cotton grower as this use of the cotttonseed oil amounts to."
1. A. B. Tarwater, Plainview (Tex.) Cooperative, Inc. (p. 425).
IMPORTED VEGETABLE OILS AND COCONUT OIL
Some of the oleomargarine-tax repeal We are heartily in accord with the bills provide for continuing the tax on idea of protecting domestic oils. all oleomargarine containing any im
1. Kraft Foods Co., Chicago, Ill. (p. ported oils. Such provision is contrary 505). to our foreign-trade program.
2. Friedman Manufacturing Co., Chi1. Representative Clifford R. Hope, cago, Ill. (p. 506). Kansas (p. 110).
3. Kent Products, Inc., Kansas City, 2. Charles W. Holman, National Co- Mo. (p. 507). operative Milk Producers Federation 4. The Churngold Corp., Cincinnati, (p. 293).
Ohio (p. 508). 3. Charles E. Bohlen, for the Secre- 5. Shedd-Bartush Foods, Inc., Detroit, tary of State (p. 481).
Mich. (p. 509). Cheaper foreign oils might replace 6. Mrs. Tucker's Foods, Inc., Sherdomestic oils in oleomargarine, and the man, Tex. (p. 510). soybean and cottonseed growers would 7. John F. Jelke Co., Chicago, Ill. be without a market for their oil. (p. 510).
1. Hassil E. Schenck, Indiana Farm 8. Vegetable Oil Products Co., Inc., Bureau, Inc. (p. 504).
Wilmington, Calif. (p. 511).
9. Standard Brands, Inc., New York (p. 513).
10. Durkee Famous Foods, Cleveland, Ohio (p. 514).
The enactment of pending legislation will definitely cause more domestic oils to be used in the manufacture of margarine notwithstanding trade agreements.
1. The Capital City Products Co., Columbus, Ohio (p. 506).
2. The Miami Margarine Co., Cincinnati, Ohio (p. 506).
3. The Blanton Co., St. Louis, Mo. (p. 513).
[M. Loretta Stankard, Carl A. Hagen, General Research Section, May 14, 1948. ]
DIGEST OF THE DEBATE IN THE HOUSE OF REPRESENTATIVES ON H. R. 2245,
REPEALING FEDERAL TAXES ON OLEOMARGARINE The debate in the House of Representatives on April 26, 27, and 28, 1948, regarding the repeal of Federal taxes on oleomargarine is digested on the following pages. Page references are to the daily Congressional Record.
Among those Members speaking for the repeal of these taxes were: Abernethy, of Mississippi; Buck, of New York; Corbett, of Pennsylvania ; Dorn, of South Carolina ; Elsaesser, of New York; Fallon, of Maryland ; Fletcher, of California ; Foote, of Connecticut; Garmatz, of Maryland; Gathings, of Arkansas; Keating, of New York; McGarvey, of Pennsylvania ; Mitchell, of Indiana ; Morton, of Kentucky; Poage, of Texas; Potts, of New York; Rivers, of South Carolina ; Sabath, of Illinois; Twyman, of Illinois; and Youngblood, of Michigan.
Among the statements which were made in support of the repeal of these taxes were: Fortified oleomargarine is a nutritious food product; pure food laws protect the consumer of margarine and should be used rather than taxes for this purpose; there is a great consumer demand for colored oleomargarine to save the housewife the time and inconvenience incurred when it must be colored in the home; with the present high cost of living, anything which will lower food costs is important and these taxes increase the price of a food which is used by 80 percent of American families; since consumers prefer their table spreads to be colored yellow, they should have them colored-butter manufacturers are permitted to color their product without stating this fact on the package, yet oleomargarine manufacturers must pay a punitive tax if they want to color their product; the fees, licenses, and regulations on manufacturers, wholesalers, and retailers of margarine are burdensome and prevent some dealers from handling the product; discrimination against one food product in favor of another is contrary to the spirit of free enterprise; and Federal revenue from the oleomargarine taxes is negligible.
Some members spoke in favor of repealing the taxes on oleomargarine with reservations. These included Case, of South Dakota ; Combs, of Texas; Cotton, of New Hampshire; and Hill, of Colorado. These Members would support repeal of taxes and permit colored oleomargarine to be sold, provided that it be in such shape (triangular, round, etc.) that it would be easily recognizable as oleomargarine and would not be mistaken for butter.
Among those Members speaking against repeal of these taxes were: Anderson, of Minnesota ; Andresen, of Minnesota ; Arnold, of Missouri ; Bennett, of Missouri; Byrnes, of Wisconsin; Clevenger, of Ohio ; Curtis, of Nebraska ; Davis, of Wisconsin; Elliott, of California; Gross, of Pennsylvania ; Gwynne, of Iowa ; Hoeven, of Iowa ; Hoffman, of Michigan; Hull, of Wisconsin ; Jackson, of Washington; Jensen, of Iowa ; Keefe, of Wisconsin; Lemke, of North Dakota ; MacKinnon, of Minnesota ; Michener, of Michigan; Mundt, of South Dakota ; Murray, of Wisconsin; O'Hara, of Minnesota ; Phillips, of California; Robertson, of North Dakota ; Mrs. St. George, of New York; Schwabe, of Oklahoma; Stephan, of Nebraska ; Stevenson, of Wisconsin; Talle, of Iowa; and Vursell, of Illinois.
Among the statements which were made in support of retaining these taxes were: Consumers must be protected from the deception that colored imitation oleomargarine is butter; the fact that oleomargarine is sold uncolored is the housewife's best protection against fraud and the new packaging process simplifies the home coloring process; elimination of these taxes would greatly Increase the sales of oleo at the cost of decreasing the sales of butter, and this would seriously endanger the dairy industry since butter is the stabilizer of the industry; repeal of these taxes would cause reduction in the size of dairy herds which would bring about lower milk production, higher cost of all dairy products, soaring price of meat, shortage and high prices of hides and leather, and loss of stability in dairy farming which is an important element of agricultural life and which practices soil conservation and gives year-round employment to many people; the dairy industry is a greater outlet for soybean and cotton products (meal) than is the oleomargarine industry; if these taxes are repealed, uncolored oleo will disappear from the market and colored oleo will increase in price since there will be no lower-priced product competing.
Representative Thomas G. Abernethy (Mississippi)
Mr. Abernethy maintains that the farmers of the South are not seeking an advantage by favoring repeal of the tax on oleomargarine but instead are pleading for fair market. He pointed out also that consumers, generally, throughout America favor removal of the taxes. (April 26, 1918, p. 4989.) Representative Ellsworth B. Buck (New York)
1. The tax on oleomargarine does not benefit public revenue.
2. The tax on oleomargarine does not benefit the dairy farmer. “Despite the tax, margarine sales have increased more than eightfold in the 61 years of the
tax's existence. Meanwhile butter prices have recently reached the highest points in history and butter is still selling in my community in excess of $1 per pound.”
3. The tax does not benefit the cotton or soybean planter. The tax actually benefits no one, therefore it should be eliminated.
4. The tax does not harm the rich or the well-to-do who can afford servants but it does harm the large number of housewives who do their own work—“who must take time they can ill afford from their 14- to 16-hour day to add color which they and their families want but which has been denied them by the dairy lobby.” (April 26, 1948, pp. 4977-4978.) Representative Robert J. Corbett (Pennsylvania)
Mr. Corbett opposes the Hill amendment and all tax shackles on margarine. The proposal that the Congress legislate on the form of manufactured products is ill considered. Anyone inclined to commit fraud could melt the triangular margarine and form it into squares. If there is going to be anything done in the way of distinguishing one product from another, we should utilize the copyright laws just as we should utilize the pure-food laws to bring about the necessary controls. (April 28, 1948, p. 5107.) Representative W. J. Bryan Dorn (South Carolina)
The tax on oleomargarine is unfair; it is undemocratic; it is un-American, and discriminatory on the farmers of the South and throughout the country. (April 26, 1948, p. 4981.) Representative Edward J. Elsaesser (New York)
The punitive taxes and regulations on the manufacture, distribution, and sale of colored oleomargarine are imposed to benefit a certain group at the expense of our lower-income families.
There should not be any special privileges for margarine, either. Strict penalties should be imposed for any fraud or deception.
Butter is colored 8 months a year and this fact does not have to be printed on the packages yet at the present time, margarine can be colored only if a tax of 10 cents a pound is paid. (April 28, 1948, p. 5102.) Representative George H. Fallon (Maryland)
“Nowhere in American economic life is there a more unfair violation of the economic spirit of the Nation than is presented by the cynical set of taxes which besets oleomargarine, and I feel strongly that this represents a national principle not in keeping with our democratic way of life.” Butter itself is artificially colored 8 months a year, yet to color margarine requires a $600 Federal license plus a tax of 10 cents a pound. This is too costly for millions of low-income families. (April 26, 1948, p. 4977.) Representative Charles K. Fletcher (California)
Present taxes and coloring restrictions on oleomargarine are unfair and unAmerican and amount to a tremendous inconvenience and added cost to the housewife.
This bill has nonpartisan support which is an indication of the power of the voice of the long-suffering consumer and homemaker.
Recent scientific tests given by the University of Illinois College of Medicine proved that oleomargarine is just as healthful and nutritious as butter.
The coloring restrictions which make the housewife spend many needless hours in the kitchen to satisfy the greed of special butter interests should not longer be tolerated. I am convinced that removal of these taxes and coloring restrictions will do no harm to the butter industry. (April 28, 1948, pp. 5117-5118.) Representative Ellsworth B. Foote (Connecticut)
At this time when the high cost of living is one of the vital issues of the hour it is especially unreasonable that margarine must be taxed by the Federal Government 10 cents per pound in the event that coloring is added to it and that the wholesaler and the retailer must get a permit in order to sell it. It is the only food product that I know of in the United States that is directly taxed in such a manner.
This tax is not levied for revenue purposes primarily, but for the prevention of an alleged fraud and deception. The packages are plainly marked so the consumer can tell whether he is getting butter of margarine.
According to the American Medical Association, margarine can be substituted for butter in the ordinary diet without any nutritional disadvantage.
This tax works a hardship on the busy housewife who must take the time to color margarine herself. It affects organizations who operate on a rather restricted budget.
No one group should have a monopoly on any color. If the butter industry colors its product yellow, why should the manufacturers of oleomargarine be criticized for doing the same.
The farmer gets a very small part of the retail selling price of butter. The elimination of this tax will in no way affect the price that the farmers of this country are receiving and will continue to receive for their products.
This unjust, unfair, and discriminatory tax should be abolished. (April 28, 1948, pp. 5102–5103.) Representative Edward A. Garmatz (Maryland)
1. Oleomargarine is as easily digested as butter and scientific experiments indicate that the food value of fortified oleomargarine is equal to that of butter.
2. Oleomargarine taxes are discriminatory and tend to distort the competitive position of two competing industries. “In the case of oleomargarine, the taxing power is used as a punitive measure against one industry, to advance the interests of another." These taxes tend to burden consumers far in excess of the amount of the tax.
3. Oleomargarine should be given the same legal status as butter or any other wholesome food. The public is safeguarded against misrepresentation of the product by the pure food and drug laws.
4. The removal of the restrictions on oleomargarine would encourage greater use of the product for cooking and on the table which would result in improving the nutritional status of the average person. (April 26, 1948, p. 4976.) Representative E. C. Gathings (Arkansas)
As pointed out by a member of the United States Wholesale Grocers Association before the House Agriculture Committee, many distributors do not handle margarine because of the taxes, license fees, and “the bother, worry, and expense of making out monthly reports.” One member of the association reported that it cost him $100 a month just to fill out the required Government forms. The regulations on wholesalers set forth 7 specifications of record-keeping, 11 specifications for handling monthly reports and more than 9 penalties of fines and imprisonment far various violations. The regulations occupy six printed pages of an Internal Revenue Bureau pamphlet. The burdens of the taxes, licenses, and regulations prevent thousands of retailers from selling margarine at all. This situation, therefore, denies millions of consumers who cannot afford to pay the high prices for butter an opportunity of purchasing the more reasonably priced margarine.
These taxes permit business discrimination within the framework of our highly cherished system of free enterprise. In addition, these taxes put injustices upon the consuming public, particularly that segment where every penny counts when it comes to setting a health-giving table.
Only 1 out of every 100 grocers stocks colored margarine, and only 1 out of every 50 stocks uncolored margarine.
The Treasury Department has stated that these taxes have little revenue significance. (April 26, 1948, pp. 4986–4988.) Representative Kenneth B. Keating (New York)
The sole question it seems to me is : Is the continuance of this tax on margarine justified as a revenue-raising measure? We are told that the total revenue produced by this tax is inconsequential in the over-all revenue picture.
It has been conceded, however, that this tax today is for the protection of the dairy industry. There is no other industry which enjoys the advantage of having a tax imposed upon its competitor. This tax is an artificial restraint upon free competition. It causes a discriminatory price rise in a product not primarily used by those who can afford such discriminatory treatment, but rather by those of middle and lower incomes.
Margarine is a wholesome and nutritious product which can be used in place of butter and purchased at about half the price.
It is a violation of law to represent margarine as butter under the Federal Pure Food and Drug Act. If that act needs strengthening in order to achieve its purpose of preventing a fraud on the public, that is the method which we should pursue to prevent imposition.
This tax punishes not the margarine industry, but the public. It represents an unmoral and uneconomic use of the taxing power.
The dairy industry is an essential part of our economy. We should not consciously take a step to do it an irreparable injury. On the other hand, neither should we grant it a favoritism of an unjustified indirect subsidy.
By the enactment of this measure we will end a 60-year-old anacronism. (April 28, 1948, pp. 5115–5117.) Representative Robert N. McGarvey (Pennsylvania)
Mr. McGarvey favors repeal of the Federal taxes on oleomargarine on the grounds that he represents a thickly populated industrial area in which the people favor repeal of the tax. The main issue, he maintains, is to relieve the American housewife of the burden of the “unfair and unjust Federal taxes on a product which she wants and needs." (April 26, 1948, pp. 4963-4964.) Representative E. A. Mitchell (Indiana)
1. There seems to be no justification for the argument that oleomargarine is less sanitary than butter. Soybean and cottonseed oils that are used in the manfacture of oleomargarine are put through a refining process to remove all of the available decomposition. Records of the Department of Agriculture, Pure Food and Drug Section, for the years 1930-47, reveal that there were 705 prosecutions pertaining to butter for filth or other unsanitary conditions. During this same period there were only two seizures in oleomargarine for filth or decomposition.
2. The claim that the dairy farmer will be driven out of business if the tax on oleomargarine is repealed appears to be without justification. In spite of the taxes oleomargarine consumption has increased from 70,000,000 pounds in 1902 and 1903 to 750,000,000 pounds last year or 10 times the amount which was consumed in 1902 and 1903. In spite of the increase in oleomargarine consumption, the income of the dairy farmer has not suffered. “The only person who has suffered because of these taxes is the American housewife."
3. "The tax has not hurt the margarine business; it has not helped the dairy farmer; it will not hurt the dairy farmer by its removal. It will not aid the margarine business anymore if it is removed. It will aid the American housewife.” (April 26, 1948, pp. 4971, 4987.)
4. The percentage of restaurants and hotels that would deliberately defraud the public by substituting oleomargarine for butter is very small. · The public is already protected against such fraud in 41 States which have laws "providing that if olemargarine is used or served, such fact must be stated on the menu, on a placard on the wall, or on the dish itself. So the job is approximately 85 percent completed already.” (April 28, 1948, pp. 5106-5107.) Representative Thruston Ballard Morton (Kentucky)
the basic problem involved has been obscured by acrimonious and emotional charges on the part of both proponents and opponents.”
The consuming public advocates repeal of these taxes in order to get a cheaper and more convenient table spread. At the same time, the consuming public is very conscious of the important part that the dairy industry plays in the over-all economy and prosperity of this country.
If it is true that repeal of these taxes would mean a reduction of 20 cents per hundred in the price that the farmer receives for his milk, it indicates that butter plays too much of a part in the formula by which milk prices, f. o. b. the farm are computed. “I am confident that the repeal of these taxes will not mark the end of prosperity in the dairy industry. Many people will always eat butter. The potential demand for other dairy products is enormous.” (April 28, 1948, pp. 5101-5102.) Representative W. R. Poage (Texas)
"Those of us who ask the repeal of these discriminatory taxes and license fees believe in free enterprise, and we believe that every group has same right to enjoy a free market for its products. We believe in the freedom of the consuming public to buy the product they want.” When the Government assesses a penalty on the purchase of margarine and does not assess a penalty on butter, it indulges in an inexcusable piece of favoritism. This tax-created quasi-monopoly has failed to supply to the Nation adequate amounts of spread. Under these taxes, the American living standard, especially that of the low-income groups, has been lowered.
The farmer does not profit from the high prices charged for butter. When butter prices jumped, after the Agriculture Committee voted not to consider any repeal of the taxes on margarine, wholesale establishments which buy milk