The only hope that we have to free the American people is to get rid of this income tax. I see only two arguments that have ever been arguments for the income tax. One is that the Government needs money. I contend that the Government has ample money for the necessary functions of this Government with what they would have left after the personal income tax is repealed.

The other argument I have heard is that we have to make the rich pay. This tax is no longer a rich man's tax. It is a poor man's tax. Eighty percent of this tax is paid by the little man who makes $6,000 a year and under. On top of that, every time that individual goes to the grocery store or goes to buy anything else, 25 percent of every dollar he spends goes to help pay somebody else's taxes and usually some rich man's taxes. Actually we have today fewer men in the $100,000-a-year bracket in proportion to our population than we had years ago, as shown by my record there. If you attempted to run the Federal Government on the incomes of people who received $50,000 a year and up, you could run this Federal Government for 12 days. This is no longer a rich man's tax. It is a poor man's tax and we are killing the initiative of the American people. We are destroying the freedom of the people and destroying the sovereignty of the States. That is what is happening to a Government that has been the ideal of free peoples all over the world and I know of no place to go except Congress when I say this to you:

We don't ask Congress or the American people don't ask Congress to repeal this, because you cannot repeal it. All in the world that we ask you to do is to give the American people the right to vote upon it. Certainly no one can find anything wrong with an argument that the people should be presented the right to vote upon it.

That is all that we can do. We ask that you give this serious thought.

I have furnished you with considerable information in my longer statement filed today. This is an immoral tax. It is an evil tax, granting powers to these people to destroy their enemies and protect their friends and it has been going on for years. If they don't like a man politically, it is used to destroy him. If they like him he can settle his tax return. These are powers that no appointive official should have. We ask you men who are elected by the people to protect our people from such unfair processes. I can assure you we will have a better Government when we get rid of that tax. We will relieve you of the burden of a lot of pressure groups who come up continuously and get something that they are not rightfully entitled to at the expense of the rest of us.

We will get this Government back in the hands of the people.
I hope I have made myself clear.

Thank you for your time. If you have any questions I will certainly be glad to answer them.

The CHAIRMAN. Governor Lee, we thank you, sir, for coming to the committee and giving us the benefit of your views.

Are there any questions?

If not, sir, we thank you again.

That concludes the call of the calendar for today and without objection the committe adjourns until 10 o'clock in the morning.

(Whereupon, at 5:25 p. m. the committee was recessed, to reconvene at 10 a. m., Tuesday, February 4, 1958.)

20675-58-pt. 8—87

GENERAL REVENUE REVISION

(Advisory Group's Reports on Subchapter C (Corporate Distributions and Adjustments); Advisory Group's Reports on Subchapter J (Estates, Trusts, Beneficiaries, and Decedents); Advisory Group's Reports on Subchapter K (Partners and Partnerships); Small Business; General Discussions)

TUESDAY, FEBRUARY 4, 1958

HOUSE OF REPRESENTATIVES,
COMMITTEE ON WAYS AND MEANS,

Washington, D. C.

The committee met at 10 a. m., pursuant to recess, in the committee room, New House Office Building, Hon. Wilbur D. Mills (chairman) presiding.

The CHAIRMAN. The committee will please come to order.

Our first witness this morning is Senator Sparkman. Senator Sparkman has not arrived as yet, and we call our colleague, the Honorable Emmet F. Byrne. Although we know you quite well, for purposes of this record will you identify yourself by giving your name, address, and the capacity in which you appear?

STATEMENT OF HON. EMMET F. BYRNE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

Mr. BYRNE. I am Congressman Emmet F. Byrne, representing the Third District of Illinois.

The CHAIRMAN. You have introduced several bills, Mr. Byrne, and without objection your bills will be included in the record.

(The bills are as follows:)

[H. R. 5194, 85th Cong., 1st sess.]

A BILL To amend the Internal Revenue Code of 1954 to increase the amount of the personal exemption to which a taxpayer is entitled with respect to a spouse or dependent who is a student and whose educational expenses are paid by such taxpayer

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) section 151 (b) of the Internal Revenue Code of 1954 (relating to personal exemptions for taxpayer and spouse) is amended by striking out "and an additional exemption" and inserting in lieu thereof "and (except as provided in subsection (f)) an additional exemption." (b) Section 151 (e) (1) of such Code (relating to additional exemption for dependents) is amended by striking out "An exemption" and inserting in lieu thereof "Except as provided in subsection (f), an exemption".

(c) Section 151 of such Code is further amended by adding at the end thereof the following new subsection:

"(f) INCREASE IN AMOUNT OF CERTAIN EXEMPTIONS WHERE SPOUSE OR DEPENDENT IS A STUDENT.-The amount of any exemption otherwise allowed the tax

payer for the taxable year with respect to his spouse under subsection (b) or with respect to a dependent under subsection (e), if such spouse or dependent is a student (as defined in subsection (e) (4)) at an educational institution (other than a public school) which imposes tuition and other charges and is accredited by the accrediting agency of a State or Territory or by a regional accrediting agency, and if the taxpayer pays over half of the educational expenses incurred by such student during the calendar year in which such taxable year begins, shall (in lieu of the amount of such exemption as provided in such subsection (b) or (e)) be—

"(1) ELEMENTARY SCHOOL.-$700 if such spouse or dependent is enrolled in any of the first eight grades; or

"(2) HIGH SCHOOL.-$800 if such spouse or dependent is enrolled in the ninth, tenth, eleventh, or twelfth grade; or

"(3) COLLEGE and graduatE SCHOOL.-$1,100 if such spouse or dependent is enrolled at any level higher than the twelfth grade.

The grade in which any such spouse or dependent is enrolled shall be determined as of the close of the calendar year in which such taxable year begins. For purposes of this subsection, the term 'educational expenses' includes expenses of tuition, books, customary fees and charges, uniforms, and (in the case of a spouse or dependent attending an educational institution away from home) transportation, board, and lodging, and any other expenses necessarily incurred in or incident to the effective pursuit of an education at such institution."

SEC. 2. The amendments made by the first section of this Act shall apply only with respect to taxable years beginning after December 31, 1956.

[H. R. 7127, 85th Cong., 1st sess.]

A BILL To amend the Internal Revenue Code of 1954 to increase the amount of the personal exemption to which a taxpayer is entitled with respect to a dependent who is a student and whose educational expenses are paid by such taxpayer

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) section 151 (e) (1) of the Internal Revenue Code of 1954 (relating to additional exemption for dependents) is amended by striking out "An exemption" and inserting in lieu thereof "Except as provided in subsection (f), an exemption".

(b) Section 151 of such Code is further amended by adding at the end thereof the following new subsection:

"(f) INCREASE IN AMOUNT OF EXEMPTION FOR DEPENDENT WHERE DEPENDENT IS A STUDENT.-The amount of any exemption otherwise allowed the taxpayer for the taxable year with respect to a dependent under subsection (e), if such dependent is a student (as defined in subsection (e) (4) at an educational institution and the taxpayer pays over half of such dependent's educational expenses during the calendar year in which such taxable year begins, shall (in lieu of the amount of such exemption as provided in subsection (e)) be

"(1) ELEMENTARY SCHOOL.-$700 if such dependent is enrolled in any of the first eight grades; or

"(2) HIGH SCHOOL.-$800 if such dependent is enrolled in the ninth, tenth, eleventh, or twelfth grade; or

"(3) COLLEGE AND GRADUATE SCHOOL.-$900 if such dependent is enrolled at any level higher than the twelfth grade.

The grade in which any such dependent is enrolled shall be determined as of the close of the calendar year in which such taxable year begins. For purposes of this subsection, the term 'educational expenses' includes expense of tuition, books, customary fees and charges, uniforms, and (in the case of a dependent attending an educational institution away from home) transportation, board, and lodging, and any other expenses necessarily incurred in or incident to the effective pursuit of an education at such institution."

SEC. 2. The amendments made by the first section of this Act shall apply only with respect to taxable years beginning after December 31, 1957.

Mr. BYRNE. Mr. Chairman and members of the Ways and Means Committee, it is a privilege to appear before you gentlemen on this cold morning in Washington, and I appear in behalf of two bills which were submitted within the 1st session of the 85th Congress. I refer to H. R. 5194, and H. R. 7127.

Both of these bills afford relief to the heavy tax burden on parents today, I believe.

In the first bill, H. R. 5194, the salient elements relative to this proposed legislation have to do with parents who have children attending private or parochial schools.

In the area that I represent, the southwestern part of Chicago, when I refer to parochial schools, I refer to schools of all religious denominations and private schools.

I have in mind schools in my area such as the Morgan Park Military Academy, which is a high school, the Loring School for Girls, which is a private school for girls that is nondenominational, and schools of the elementary character as distinguished from public schools.

In an area such as I represent, and in all parts of Chicago and adjacent counties, there are schools of the type that I speak of. My proposal is that the deduction of the head of a household who has a child be increased from $600 to $700, and in the instance where a child is attending a parochial or private high school that that deduction be increased from $600 to $800. In the instance of one attending a college, it would be increased from $600 to $1,100.

Now, in the Chicago area-and it is comparable in other sections of the United States of America-some figures might be of interest. In what is called the diocese of Chicago, for instance, as far as one particular religion is concerned, the Catholic religion, there is in that area some 415 elementary schools, 91 high schools, and 6 colleges. The enrollment at this time in those schools is some 329,566.

In the same area, too, as a comparative figure on the public schools as distinguished from the private schools or parochial schools, you have a number somewhat comparable to that. The total enrollment in the public schools is some 411,097, as contrasted to the number that I have just outlined.

In addition to the religion that I have mentioned so far in my remarks, there are parochial schools divided among some 6 or 8 other religions that total 212 schools in the Illinois area, and a total of some 23,962.

Some people might suggest that there are schools in an area such as Chicago, the public schools, and if a person does not avail themselves of those schools, they are entitled to no type of reduction in taxes of any kind.

But in the area that I represent, and all of Chicago and in Cook County, an interesting analysis of the tax rate, I think, might serve a good purpose.

In that area, for instance in the year 1955-we are always 1 year behind on the spreading of the assessment and I do not have the later breakdown of the tax rate, but it is somewhat comparable to this although it is somewhat higher-here in the Cook County area there is a tax made upon each $100 of taxable property. In other words, for each $100 of assessed valuation in the year 1955, the tax rate was $3.618.

That is divided up in the Chicago park district, where it is 0.3442, and the city of Chicago is 1.338, and the sanitary district, which takes care of some 96 or 98 percent of the private and industrial waste, has a tax of 0.288. The forest reserve, which is a park area, is 0.40. The county part of the tax, outside of the city of Chicago but within Cook County, is 0.264. For Chicago schools it is 1.324.