OHIO The Buckeye State Mutual Insurance Association, Covington The Druggists Mutual Insurance Co., Mansfield Erie County Farmers Insurance Co., Sandusky Farmers Mutual Aid Association of Van Wert County, Van Wert Farmers Mutual Fire Insurance Company of Darke County, Greenville Farmers Mutual Insurance Association of Seneca County, Tiffin Norton Mutual Fire Association, Barberton The Ohio Hardware Mutual Insurance Co., Coshocton Ohio Mutual Windstorm Insurance Association, Bucyrus Ohio State Grange Mutual Insurance Association, Newark The Patrons Mutual Insurance Association of Ohio, Bellefontaine Shelby County Farmers Mutual Insurance Association, Anna Washington Township Mutual Fire & Lightning Insurance Association, Lakeville OKLAHOMA Union Mutual Insurance Co., Oklahoma City OREGON Grange Mutual Insurance Co., Portland PENNSYLVANIA Allen Mutual Insurance Co., Allentown The Angelica Mutual Fire Insurance Company of Berks County, Mohnton Berks & Lehigh Mutual Insurance Co., Kutztown Briar Creek Farmers Mutual Insurance Co., Orangeville Brush Creek Mutual Fire Association, New Brighton Bucks County Mutual Insurance Co., Pipersville Cambria County Mutual Fire Insurance Co., P. of H., Ebensburg Carpenter Mutual Insurance Co., Curwensville Center Valley Mutual Fire Insurance Co., Vandergrift Chester County Mutual Insurance Co., Coatesville City Mutual Insurance Co., Lebanon Clarion County Mutual Fire Insurance Co., Clarion Commercial Mutual Insurance Co., Lebanon Conemaugh Valley Mutual Fire Insurance Co., Johnstown Coolspring Valley Mutual Fire Insurance Co., Fredonia Donegal Mutual Insurance Co., Marietta Elk County Mutual Fire Insurance Co., P. of H., Ridgway Empire Mutual Insurance Co., Philadelphia Erie County Mutual Insurance Co., Erie Farmers Alliance & Industrial Union Mutual Fire Insurance Company of Pennsylvania, Shinglehouse Farmers American Mutual Fire Insurance Company of Bucks County, Dublin Farmers Fire Insurance Company of Upper & Lower Saucon Township, Bethlehem Farmers & Mechanics Home Mutual Fire Insurance Company of Sullivan County, Forksville Farmers Mutual Insurance Company of Berks County, Robesonia Farmers Mutual Fire Insurance Company of Centre County, Spring Mills Farmers Mutual Fire Insurance Company of Hannahstown, Marwood Farmers' Mutual Insurance Company in the County of Lancaster, Elizabethtown Farmers Mutual Fire Insurance Company of Marble, Pa., Marble Farmers' Mutual Fire Insurance Company of Schuylkill County, Orwigsburg The Frankford Mutual Fire Insurance Co., Frankford Lykens Valley Mutual Insurance Co., Elizabethville Erie Merchants & Business Men's Mutual Insurance Co., Harrisburg Monroe Mutual Insurance Co., Palmerton Montour Mutual Insurance Co., Danville Mount Jackson Mutual Fire Insurance Co., Wampum MountJoy Mutual Insurance Co., Mount Joy Mutual Fire Insurance Company of South Bend Township, Shelocta Neffsville Mutual Fire Insurance Co., Lititz Nescopeck Mutual Fire Insurance Co., Nescopeck Northampton Mutual Insurance Co., Easton Penn Charter Mutual Insurance Co., Lititz Pomona No. 3 Mutual Fire Insurance Co., West Chester Southern Mutual Insurance Co., Quarryville Southwestern Mutual Fire Association, Uniontown Stewartstown Mutual Fire Insurance Co., Stewartstown Tulpehocken Mutual Insurance Co., Myerstown Union Mutual Insurance Company of Westmoreland County, Greensburg Wayne County Farmers Mutual Fire Insurance Co., Honesdale Western Mutual Fire Insurance Company of York County, York RHODE ISLAND Automobile Mutual Insurance Company of America, Providence The Providence Mutual Fire Insurance Co., Providence SOUTH CAROLINA American Mutual Fire Insurance Co., Charleston The Carolina Mutual Insurance Co., Charleston Grange Mutual Fire Insurance Association of South Carolina, Inc., Olanta SOUTH DAKOTA Farmers Mutual Fire & Life Insurance Company of Hanson County, Alexandria Farmers Mutual Insurance Company of Volga, Brookings County, Volga Farmers Mutual Tornado-Cyclone Insurance Company of Union & Clay Counties, Elk Point TENNESSEE Farmers Mutual Fire Insurance Company of Knox County, Knoxville TEXAS Collin County Farmers Mutual Insurance Co., McKinney Farmers Mutual Fire Insurance Association of Comal County, New Braunfels Germania Mutual Aid Association, Brenham Mutual Aid Fire Insurance Association, Kyle The Old American County Mutual Fire Insurance Co., Dallas Slavonic Mutual Fire Insurance Association, East Bernard Svea Mutual Fire Insurance Association, Inc., Taylor Texas Employers' Insurance Association, Dallas Texas Hardware Mutual Fire Insurance Co., Dallas UTAH Bear River Mutual Insurance Co., Salt Lake City VERMONT Granite Mutual Insurance Co., Barre Vermont Mutual Fire Insurance Co., Montpelier VIRGINIA Dan River Farmers Mutual Fire Insurance Co., Danville Shenandoah Mutual Fire Insurance Co., Woodstock West Rockingham Mutual Fire Insurance Co., Harrisonburg WASHINGTON Farmers' Mutual Insurance Co., Enumclaw Northwestern Mutual Insurance Co., Seattle WEST VIRGINIA The Farmers Home Fire Insurance Company of West Virginia, Lewisburg Farmers Union Association & Fire Insurance Company of Preston County, Bruceton Mills Grange Mutual Fire Insurance Company of West Virginia, Philippi Inland Mutual Insurance Co., Huntington Municipal Mutual Insurance Company of West Virginia, Wellsburg Mutual Fire Insurance Company of West Virginia, Clarksburg Pan-Handle Farmers Mutual Insurance Company of West Virginia, Wheeling Safe Insurance Co., Harrisville West Virginia Insurance Co., Harrisville WISCONSIN Alden & Black Brook Mutual Insurance Co., Amery Arkdale Mutual Fire Insurance Co., Friendship Aurora Mutual Fire Insurance Co., Berlin Badger Mutual Insurance Co., Milwaukee Calumet County Mutual Fire Insurance Co., New Holstein Church Mutual Insurance Co., Merrill Citizens Mutual Insurance Co., Janesville Clyman Town Mutual Fire Insurance Co., Juneau Cream City Mutual Insurance Co., Milwaukee Crystal Lake Farmers Mutual Fire Insurance Co., Neshkoro Eagle Point Mutual Fire Insurance Co., Chippewa Falls Employers Mutual Fire Insurance Co., Wausau Farmers Mutual Automobile Insurance Co., Madison Farmers Mutual Insurance Company of Wisconsin, Madison Furniture Mutual Insurance Co., Milwaukee Germantown Mutual Insurance Co., Germantown Greenfield Mutual Insurance Co., Milwaukee Hardware Dealers Mutual Fire Insurance Co., Stevens Point Hardware Mutual Casualty Co., Stevens Point Kewaskum Mutual Insurance Co., Kewaskum Lima-Johnstown Town Mutual Fire Insurance Co., Whitewater Market Men's Mutual Insurance Co., Milwaukee Newark Mutual Fire Insurance Co., Beloit New Hope Mutual Fire Insurance Co., Amherst Junction Paris Mutual Fire Insurance Co., Union Grove Salem Mutual Town Insurance Co., Salem Trempealeau County Mutual Fire Insurance Co., Galesville Washington Town Insurance Co., Washington Island Mr. Reed. MR. REED. Mr. Chairman, I have received a communication from the Honorable James A. Farley, former Postmaster General, conveying the regrettable information that circumstances will prevent his appearing before our committee, as had been originally scheduled. I am sure that the entire membership of the committee will join me in expressing regret over this fact. Mr. Farley has rendered great public service to his country, and has also distinguished himself as a capable executive in our free-enterprise system. I believe, Mr. Chairman, that you have similarly received a letter from Mr. Farley, and, with your concurrence, I would ask unanimous consent that Mr. Farley's letter to you, his letter to me, and the statement he had planned on presenting to this committee with respect to the taxation of foreign income be included in the record at the appropriate place. The CHAIRMAN. Without objection, it is so ordered. HON. DANIEL A. REED, THE COCA-COLA EXPORT CORP. New York, N. Y., February 5, 1958. House Office Building, Washington, D. C. DEAR DAN: Completely apart from the discomforts of a broken arm, I am truly sorry that I will not be able to testify before the Committee on Ways and Means during the present hearings as I had originally planned. I wanted very much to see you and my other old friends in the Congress. As it turned out, I will not be well in time to testify in person before the present hearings end on February 7. I have written Chairman Mills explaining that I will not be able to appear and requesting that the committee accept my prepared statement for inclusion in the record. A copy of my letter to the chairman is enclosed. In my statement I endorsed H. R. 6248 and H. R. 7247, which I believe are very important and desirable measures. I would appreciate it very much if you and the committee would favorably consider and support these bills. With kindest personal regards, I am, Sincerely yours, JAMES A. FARLEY. FEBRUARY 5, 1958. Hon. WILBUR D. MILLS, Chairman, Ways and Means Committee, House Office Building, Washington, D. C. DEAR WILBUR: I first want to thank you for including me among the witnesses scheduled to appear before the Committee on Ways and Means during the current hearings. I must apologize to you and your committee for my absence on the day on which I was to testify. As you know, I had the misfortune to break my arm just before my planned appearance. I appreciate your kind invitation to reschedule my testimony for a later time during the hearings. I do not come to Washington very much any more, and I was looking forward with great pleasure to appearing before your committee and seeing old friends again. However, it is now certain that I will not be well in time to testify before the present hearings end on February 7. I consider H. R. 6248 and H. R. 7247 to be very important bills, and I wanted to emphasize their great value. I hope that your committee will act favorably on them during the present session. I would appreciate it very much if you would include my enclosed statement in the record of the hearings. I wish to congratulate you on becoming chairman of this great and important committee, a task for which you are so eminently fitted. With kindest personal regards, I am, Sincerely yours, JAMES A. FARLEY. STATEMENT OF JAMES A. FARLEY, CHAIRMAN OF THE BOARD OF DIRECTORS, THE COCA-COLA EXPORT CORP., DEALING WITH SECTION 904, INTERNAL REVENUE CODE OF 1954 My name is James A. Farley, and I am chairman of the board of the Coca-Cola Export Corp., 515 Madison Avenue, New York, N. Y. I have requested permission to appear before this committee for the purpose of inviting your attention to a harsh and inequitable United States tax treatment accorded many United States corporations which derive income from abroad, and for the purpose of speaking in support of H. R. 6248, introduced by Congressman Herlong, and H. R. 7247, introduced by Congressman Simpson. These identical bills would relieve the present inequity and would, at the same time, encourage wider foreign private investment which can support and implement the goals for which the Government is now spending billions of dollars annually on mutualsecurity programs with friendly nations. My company, the Coca-Cola Export Corp., is a United States corporation which sells, either directly or through foreign subsidiaries, Coca-Cola products throughout the free world outside of the United States, Canada, and Cuba. At the present time, we pay taxes to foreign countries at the rate of more than 52 percent of our consolidated foreign income. Nevertheless, the United States superimposes still a further tax, so that the total effective tax rate on our foreign income is substantially above 52 percent and substantially above the tax imposed on it at its sources. This is the result of the so-called per-country limitation on the foreign-tax credit contained in section 904 of the Internal Revenue Code. This provision, in effect, requires the separate treatment of each foreign country for foreign-tax credit purposes. The income arising in each country is separately determined, and the taxes imposed by each foreign country are also separately determined. The credit associated with each such segment of income is then limited to the lesser of the amount of foreign tax paid or the tax which the United States levies on such income segment. As an illustration of the operation of section 904, consider an American corporation earning equal amounts of income in Germany, on which income taxes are levied at the rate of approximately 60 percent, and in Belgium, on which income taxes are imposed at the rate of about 45 percent. On the combined income from the two countries, the American corporation would pay to those countries income taxes in excess of 52 percent. The credit for taxes paid to Belgium would be limited to the amount of tax actually paid to Belgium, and the credit for taxes paid to Germany would be limited to the tax which the United States imposes on the German income. Thus, while the total income from the two countries would be subject to foreign taxes at a combined rate in excess of 52 percent, nevertheless, the United States would impose additional income taxes on this same income. This additional tax is entirely the result of treating foreign |