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increased. The United States has changed from a debtor to a creditor nation. Our technological progress and mass production methods, together with the devastating effects of two wars in other industrial centers, made us the world's principal supplier. This privileged trade position, has, however, already passed. With our financial and other foreign-aid programs we helped rebuild the industries of other nations. This program to restore their economic strength has quite naturally stimulated them to again seek outlets for their production in the world markets. In the meantime we increased our productive capacity in many branches of industry so that our foreign trade has become a vital factor in our own overall economy. We are, therefore, now again in a highly competitive situation.

Our methods of mass production to some extent offset our high labor costs. But under our system of levying income taxes on our enterprises even on foreign earnings we have placed our manufacturers and business interests in a disadvantageous competitive position as compared with most other countries which either grant complete exemption or reduced tax rates on earnings abroad. This handicap is accentuated by the high tax rates which now prevail in the United States. It is, therefore, imperative, if we wish to stimulate American investments abroad and commerce with other countries that our citizens be given the opportunity to meet the present ever-increasing competition by equitable tax relief.

In Brazil industrialization, fostered by exchange and import restrictions, has made it necessary for some American manufacturers who formerly exported their products to that country, to establish assembly or manufacturing plants. But a new development has arisen since the Second World War—the inroad into Brazil of European and far eastern industrialists. For political reasons their approach to the problem is different than ours. American industry, while it may decide in certain instances, to establish a plant in Brazil to protect its past market and look to the long-range possibilities, nevertheless expects to carry on a profitable venture in the interests of its stockholders or owners. Many European and far eastern investors, however, having suffered great losses if not extermination in the two world wars, are often satisfied if they can remove their capital, machinery, and personnel from the shadows of the Iron Curtain and be freed from the possibility of repetition of the losses they have suffered in the past.

Countless examples could be cited of new industries being established in Brazil during the past 5 years by Swedish, Italian, German, and Hong Kong interests. The following is quoted from a report prepared by our chamber of commerce in São Paulo:

"In the investment field, let us list some of the projects which are already under way or are in active negotiations. In heavy industry we have the German Mannesmann industries putting up a large integrated steel operation in Belo Horizonte. The Krupp interests are planning a locomotive and railway car plant. The French Schwartz-Hautmont people are expanding their already considerable local interests. In the heavy equipment field, the British Metropolitan Vickers, the French Creusot, the Swiss Brown Bovery, the Swedish Bofors, and the Schindler groups are all reported to have ambitious plans. In the automotive field we have the recent negotiations between the Italian Fiat and Fabrica Nacional de Motores (built originally by the Brazilian Government for the manufacture of airplanes), a Mercedes plant being erected on the road to Santos, the very extensive plans for the local manufacture of the German Volkswagen, a projected factory in the south by the French Renault, and a large motorcycle factory being planned by Italian and Brazilian interests. In rubber and chemicals we have both Dulop and Imperial Chemicals already well entrenched.”

The concept of special tax treatment to income produced abroad by American investments and business does not envisage tax evasion or avoidance but simply to git American private enterprise a fair opportunity to meet the ever-increasing competition with the nationals of other countries which grant complete exemption or reduced tax rates to their nationals in their overseas transactions.

The CHAIRMAN. I submit for the record a statement by Senator Kuchel, urging the adoption as an amendment to the pending bill, H. R. 8300, the adoption of S. 3115 which would permit rapid amortization of devices, structures, machinery, or equipment for the prevention or elimination of air pollution.

Senator Kuchel's statement is accompanied by letters of endorsement from the Governor of California and many mayors and city managers of California cities.

(The statement and accompanying documents follow :)



Mr. Chairman, in coming here today I desire to express my appreciation for this opportunity permitted me to urge committee consideration of S. 3115, a measure that will give impetus to and supplement the varied efforts of municipal, county, and State governments as well as industry, in attempting to overcome the vexatious problem of air pollution.

I should like to make a general statement on the seriousness of this problem which is becoming more and more acute in many metropolitan areas throughout the country. As you are undoubtedly aware, air pollution-generally referred to as smog—has become a matter of great concern in the metropolitan areas of Los Angeles, San Diego, and San Francisco. A variety of bold steps have been taken to counter the problem and at every level citizens are facing this threat to their happiness and well-being. But California is not alone in its awareness of the problems brought on by this phenomenon. This is testified to by the fact that when somewhat similar legislation was considered before another committee testimony in favor of such legislation was given by officials from Indiana, Michigan, New Jersey, New York, Ohio, Pennsylvania, and Rhode Island.

Smog is no new phenomenon. Back in the Middle Ages London first became alarmed about the serious consequences of contaminated air. But in the last few years growth of industry and the rapid expansion of major cities have caused public officials and civic leaders to begin measuring the cost of atmospheric pollution which has a wide range of consequence.

As for the problem in Los Angeles which has become so widely known, our people are not asking the Federal Government to take on responsibility for its solution. They already have undertaken energetically and with determination programs that call for substantial expenditures of money and human effort. The California Legislature paved the way several years ago by forming an air pollution control district now policing the metropolitan area, investigating causes of air pollution, studying remedial measures. Our leading industries are participating vigorously—one in particular, oil producing and refining, has already spent over $15 million to control and reduce pollutants and in addition spent $1,250,000 for what then was called “the most extensive and expensive research program" ever undertaken. The aid of automobile designers and manufacturers has been enlisted in the hope of preventing more contamination of the atmosphere by the growing number of motor vehicles.

However, these efforts must be supplemented by help and encouragement from the Federal Government. Education and persuasion will not solve the problem alone. Adoption and enforcement of regulations and ordinances are only a partial answer to the question of how we are going to clean up our atmosphere. Closing of industries would upset our economy drastically, and dispersal would bring at best only temporary relief and be exceedingly costly.

The damages from smog are so great they cannot be computed. No one knows the toll in the way of infection of humans. Agriculture has suffered greatly—the loss to crops in the Los Angeles area during one short period of serious smog last year was figured at $500,000—and properties of all kinds, homes and automobiles and clothing, are affected.

When we require industries to cut the output of smoke and fumes we force them to make substantial outlays for equipment and construction changes. Floating roofs on oil storage tanks, precipiators for exhaust stacks, and intricate apparatus are very expensive. The legislation would permit accelerated depreciation of these capital expenditures. And I know many small industries of which we have thousands in my State, cannot put out the money required to comply with antismog regulations unless they get help in the shape of tax relief.

S. 3115 in essence amends the Internal Revenue Code to permit for tax purposes the rapid amortization (over a period of 5 years) of devices, structures, machinery, or equipment for the prevention or elimination of air pollution. This special tax benefit would be available, however, only from the date of enactment of this amendment, and then only at the election of the taxpayer.

Legislation of this type is necessary as a means of securing a sound and continuing solution to the air-pollution control dilemna. I have pointed out that the installation of small control devices are costly. It must be remembered that the installation of air-pollution prevention equipment is of no direct benefit to the company installing it. In fact, the capital expenditures result in higher operation costs because of added power requirements, the necessity to dispose of large quantities of fly ash and increased maintenance expenses.

For a period of many years the Federal Government has stimulated Government expansion in many sections of our country and this growth of industry has, of course, been in the Nation's interest. Having thus encouraged the expansion of industry it appears to me feasible and advisable that the Federal Government through its tax structure and for the welfare of the community provide for the encouragement of the construction of air pollutant control devices. This is in no sense of the word a handout to industry. is a method by which the huge capital outlays expended by industry will be recognized by the Government.

The bill before you carries a provision with reference to soil- and waterconservation expenditures permitting farmers to expense, rather than to capitalize, expenditures for soil and water conservation including the expenditures for water and land erosion. There is, it seems to me, the same public policy which permits this in the case of farmers in the instant amendment to urban areas.

I would urge the committee's favorable consideration of this amendment.

SACRAMENTO, CALIF., April 13, 1954. Hon. THOMAS H. KUCHEL, United States Senator,

Senate Office Building, Washington, D. C.: I am pleased to give my support to S. 3115 and H. R. 7703. The principle involved appears to me strongly and I am urging others here in California to support these measures which I believe will speed up the acquisition of instrumentalities and equipment for smog abatement, particularly in southern California. These bills represent a distinct forward step and if they are enacted I contemplate suggesting to our legislature that appropriate action be taken in California to offer similar exemptions to State taxpayers.


SAN DIEGO, CALIF., April 8, 1954. The Honorable THOMAS KUCHEL,

Member of Congress, Washington, D. C. DEAR Tom: The San Diego City Council has asked me to write you expressing the city's strong endorsement of your per amendment to the Internal Revenue Code, S. 3115.

Here in San Diego we have an incipient smog problem which we feel can be corrected through proper and timely legislation. The rapid tax amortization for air pollution control facilities is the type of legislation which we feel will accomplish a great deal. Sincerely,



Senate Office Building, Washington 25, D. C. DEAR SENATOR KUCHEL: We wish to express our appreciation to you for your sponsorship of Senate bill 3115.

We know that you are familiar with the beautiful resideniial and commercial area which makes up Glendale and also that you are aware of the suffering of our people from air pollution as it presently exists.

Our city government and most of our citizenry have taken the position that the solution of the smog problem in the Los Angeles metropolitan area requires an approach which takes into consideration all avenues of improvement, regardless of how slight. In an effort to do all we can to help, we have constructed a half-million dollar incinerator which fully complies with air pollution regulations. We now spend $300,000 a year of our citizens' money for the collection and smog-free disposal of combustible rubbish. Therefore, you can readily understand how urgently we feel the need for any and all remedial measures which may help with the problem.

May we also take advantage of this communication to send you our best wishes and our deep appreciation for the splendid representation that you are giving us in the United States Senate. Very sincerely yours,

C. E. PERKINS, City Manager.

CULVER CITY, CALIF., April 1, 1954. The Honorable THOMAS KUCHEL, United States Senator,

Senate Office Building, Washington 25, D. C. DEAR SENATOR KUCHEL: On behalf of the city government and surrounding area, this is to express the hope that your Senate bill No. 3115 providing for tax amortization for certain air pollution control facilities will be approved at an early date.

It is imperative that everything possible be done by all agencies of government to aid in the solution of this problem with which you are completely familiar.

I am sure that all concerned are grateful to you for this bill or any other measure which you may feel disposed to introduce which will in any way assist in alleviating the condition which is giving the residents of this section such concern and which is so detrimentally affecting them. With kindest regards and all good wishes, I am Very truly yours,

M. TELLEFSON, City Attorney.

TORRANCE, CALIF., April 7, 1954. Hon. Senator THOMAS H. KUCHEL,

Senate Office Building, Washington 25, D. C. DEAR SENATOR KUCHEL: The city officials of the city of Torrance, Calif., offer their full support of your bill, S. 3115, as a provided means for the control and elimination of air pollution in our area. We believe that the rapid tax amortization provided will permit installations which should control and reduce the volume of air contamination. As a resident of this area you know the seriousness of the problem in Los Angeles County. Please be assured of our full support in any manner possible. Yours very truly,

GEORGE W. STEVENS, City Manager.


Merced, Calif., April 9, 1954. HON. THOMAS H. KUCHEL,

Senate Office Building, Washington 25, D. C. DEAR SENATOR KUCHEL: The chambers of commerce of Merced County wish to support you and urge you to do everything you can concerning your Senate bill 3115. Copies of this letter are being sent to Senators Knowland and Millikin and Congressman Oakley Hunter.

May we take this means of thanking you for your constant and effective efforts in our behalf. Sincerely,

JACK M. ROTH, President, Merced City Chamber of Commerce, Inc.

GYLE MILLER, Chairman, National Affairs Committee.

MERCED, CALIF., April 6, 1954. Hon. THOMAS H. KUCHEL, United States Senator, Senate Office Building,

Washington 25, D. C. DEAR SENATOR KUCHEL: I am sending you a copy of a letter to Senator Capehart and would also like to relay to you the endorsement of the City Council of the City of Merced of your bill, S. 3115, now pending before the Finance Committee when it takes up the Revenue Revision Act of 1954.

We believe that making some provision for accelerated write-off of investments in air-pollution devices will encourage and enable industry to make installations to abate or reduce air contamination. Due to the serious threat of the air-pollution blight to American cities this problem needs to be attacked immediately and vigorously. Furthermore, due to the large capital outlays which are required by industry to make effective installations of pollution-control devices some arangement needs to be made so that it will be within the realm of practical possibilities for industries to take these preventive measures. Respectfully submitted.


City Manager.

PERRIS, CALIF., April 8, 1954. Senator THOMAS H. KUCHEL,

Senate Office Building, Washington, DC. DEAR SIR: The council of the city of Perris, at their April meeting, voted to go on record as definitely supporting your amendment, S. 3115, to provide rapid tax amortization for air-pollution-control facilities.

We are keenly aware that air pollution has become a serious problem in many areas of the State and living here in an agricultural area, we realize the damage that can be done by this blight to plants and vegetation of all kinds, as well as possibly affecting the health of residents.

We are highly in favor of any legislation that will assist in controlling or eliminating this scourge to health, business, and agriculture. Very truly yours,

By M. B. MARTIN, Clerk.

LA VERNE, CALIF., April 8, 1954. Hon. THOMAS H. KUCHEL,

Senate Office Building, Washington, D. C. DEAR SENATOR KUCHEL: The City Council of La Verne has been informed, through a letter from Mr. Richard Carpenter, executive director and general counsel of the League of California Cities, of your introduction of legislation to amend the Internal Revenue Code in connection with air pollution control facilities.

The council has studied the provisions contained in the amendment to the Internal Revenue Code which provides rapid tax amortization for air pollution control facilities built by industries and has instructed me to inform you of their specific interest and complete support of the amendment. The council and residents of the city are very much aware of the seriousness of the blight caused by air pollution and the retardation of satisfactory development of the community. Very adverse effects have been evident in the health, business, agriculture, and general welfare of the city.

The council wishes to convey its strongest encouragement to you in obtaining this legislation, S. 3115, since we consider it a matter of the utmost importance. Very truly yours,

Administrative Officer.


Senate Office Building, Washington, D. C. DEAR SENATOR KUCHEL: We would like to endorse your bill S. 3115 which provides rapid tax amortization for air pollution control facilities built by industries in conformance with State or local law.

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