MATERIAL SUBMITTED FOR THE RECORD-Continued Stricker, John E., treasurer, London Records, Inc., letter Taylor, M. B., president, Aerocar, Inc., statement.. Thurman, John N., vice president, Pacific American Steamship Association, letter dated June 10, 1964, to Congressmen Mills, with an enclosure___ Twin Coast Newspapers, Inc., John J. Mitchell: Letter dated January 24, 1964, from Eric Ridder, P.A. M. News Corp., to Hon. Harry F. Byrd, a U.S. Senator from Virginia.... Letter dated March 4, 1964, from Mortimer M. Caplin, United States Brewers Association, Clinton M. Hester, counsel: King, Henry B., president, statement Matt, Walter J., president, West End Brewing Co. (Utica, N.Y.), statement. United States Independent Telephone Association, William Exhibit 1. Taxes per independent telephone, 1947-63--Exhibit 2. Annual comparisons-households with telephones and median family incomes. Exhibit 3. Annual comparisons households with tele- Exhibit 5. State comparisons farm growth, telephones and income, 1950–60. Exhibit 6. Variations-State local exchange telephone rates (for minimum exchange groupings) independent commercial telephone companies___. Exhibit 7. Taxes per independent telephone, 1946-63. Letter dated August 5, 1964, to Congressman Mills. United States Olympians, Mrs. Patricia McCormick, Southern California Chapter, statement.. United States Table Tennis Association, J. Rufford Harrison, chairman, Equipment Committee, letter dated July 9, 1964, to Congressman Mills. Variety Stores Association, Inc., statement Voloshen, Nathan P., legislative representative, Distillery, Rectifying, Wine & Allied Workers' International Union of America, statement....... MATERIAL SUBMITTED FOR THE RECORD-Continued Page Full Summary statement of statement Wagner, Hon. Robert F., Mayor, city of New York, letter Exhibit I. Families and unattached individuals and Exhibit II. Owner-occupied nonfarm housing units- Exhibit III. Household-type water heaters-shipments Exhibit V. Shipments of household-type gas-(fired water Exhibit VI. Housing starts in the United States by types of structures. Exhibit VII. Selected business indexes_ 716 1340 Exhibit VIII. Excerpt from indexes of wholesale prices of materials used in construction _ _ Warn Manufacturing Co., Inc., Seattle, Wash., Colin Weigel, William F., counsel, Proprietary Association, letter dated July 21, 1964, to Congressman Mills. West End Brewing Co., Utica, N. Y., Walter J. Matt, president, statement... West Virginia Retailers Association, Charles Hopkins, ex- Wilbourn, H. R., Jr., president, Allied Telephone Co., Little Williams, Harold M., executive vice president, Hunt Foods & Wolfgang, Myra K., vice president, third district, Hotel and Restaurant Employees & Bartenders International Union, letter dated July 14, 1964, to Congresswoman Griffiths---. Worthington, V. T., executive director, Association of Petroleum Refiners, statement__. Wright, George T., vice president, New York Athletic Club, statement.. Wright, J. S., president, Zenith Radio Corp., letter dated EXCISE TAXES FRIDAY, JULY 31, 1964 HOUSE OF REPRESENTATIVES, Washington, D.C. The committee met at 10 a.m., pursuant to notice, in the committee room, Longworth Building, Hon. Wilbur D. Mills (chairman of the committee) presiding. The CHAIRMAN. The committee will please be in order. Our first witness this morning is Mr. Young. Mr. Betts. Mr. BETTS. Mr. Chairman, Mr. Young is a friend of mine from Cleveland and on behalf of the committee I would like to welcome him here this morning. He represents the Cleveland Athletic Club, which is quite a large and important institution of that type in northern Ohio and I am sure he has a message that we would all like to hear. The CHAIRMAN. Thank you, Mr. Betts. We are pleased to have you with us this morning, Mr. Young, and you are recognized, sir, for 12 minutes. STATEMENT OF CLEM YOUNG, PRESIDENT, CLUB MANAGERS ASSOCIATION OF AMERICA; ACCOMPANIED BY RICHARD M. LANDMARK, ASSISTANT EXECUTIVE DIRECTOR, CLUB MANAGERS ASSOCIATION OF AMERICA Mr. YOUNG. Thank you, sir. My name is Clem Young. I am general manager of the Cleveland Athletic Club, and president of the Club Managers Association of America. I have requested to testify today in behalf of the Club Managers Association of America. I am accompanied today by Mr. Richard M. Landmark, assistant executive director of this association, which is headquartered here in Washington. CMAA is an organization of the professional managers of bona fide private country and town clubs across the Nation. We have 2,300 members in all 50 States, in Canada, and in 17 foreign countries. The association is 37 years old; our aims are primarily educational; our dues are $50 per year. Not all private clubs have managers; and not all managers are members of CMAA-unfortunately. But with a half dozen exceptions, all the better operated clubs of the country have CMAA managers. We therefore feel we can speak for the entire industry. The formal objective of our association is: "To assist club officers, through their managers, to obtain the utmost in successful club operation." We are almost unique in this respect. Though an organization of individuals, virtually every service and facility our association 907 offers is designed to help our employers-the club members and their elected officers. There are no accurate, provable statistics available on the size of our particular field. Our association has been working to overcome this for a decade, as funds and time permitted. We are a rather specialized section of the hospitality industry, with which the Government has not, for various reasons, concerned itself in detail. The following therefore are our best estimates of the size and scope of our field. There are approximately 5,000 clubs worthy of the name in the Nation. Of these, 3,200 are "country clubs"-those offering primarily the outdoor type of recreational facilities including golf, yacht, beach, swimming, and hunt clubs. Another 1,600 are "town clubs"the athletic, university, luncheon, and other types of city clubs. The balance are military and miscellaneous special-interest clubs. There are about 3.4 million memberships in these 5,000 clubs. There is relatively little duplication in memberships: 88 percent join only one club. For most, this is simply a matter of personal economics. In comparing memberships with population, we must remember that a club membership invariably includes the wife and children. Assuming that the average family has 1 of each, roughly 3 times that 3.4 million are entitled to walk in the doors of our Nation's clubs. In round figures, allowing for some duplications and adding the labor force which will be mentioned in a moment, our industry directly affects a little over 9 million people, or 5 percent of the total population. These family memberships, incidentally, are fairly evenly divided between country and town clubs. Though there are twice as many country clubs, their memberships are routinely about half the size of a town club. The physical capacity of golf courses, swimming pools, and yacht basins, is frequently the limiting factor in size of memberships. To operate our clubs and serve our members, the industry employs 240,000 full-time men and women, plus another 75,000 part-time and seasonal people: waitresses, greenskeepers, lifeguards, et cetera. Their gross payroll is approximately $760 million per year-an average of $3,000 annually per employee. All but 10 percent of the clubs today permit tipping, so another estimated $100 to $125 million is added to the economy and reaches employee pockets from this source. This brings the average annual pay to about $3,500, on which club employees collectively pay an estimated $76 million in personal income taxes. Clubs are a $2.1 billion per year industry. Club members pay $650 million in dues and assessments; they buy $1.2 billion worth of food and beverages; and they spend another $250 million for other services: athletic fees, rooms, mooring rentals, tobacco, et cetera. The assessednot actual value of our total properties is $1.8 billion. As a point of comparison, the President's Outdoor Recreation Resources Review Commission-operating under Public Law 85-470-reports that in the past decade over $8 billion of the taxpayers' money has been spent buying and improving outdoor recreational facilities. Private club recreational facilities, instead of costing the Government money, actually add $300 million a year to Federal, State, and local coffers in the form of excise, property, and sales taxes. Nearly 25 percent of this, over $70 million, is paid for Federal excise taxes on dues and fees. Our clubs are regularly referred to as tax-free operations by the hotel and restaurant people. The vast majority of our clubs, though not all, are income tax exempt, but we're certainly not tax free. Dollar for dollar of gross revenues from all sources a club pays up to half again as much in taxes as a hotel or restaurant does. Further, most of this tax bite comes off the top-it's paid first because it's an excise tax-whether the operation is successful or not. The income taxes paid by hotels and restaurants, as you gentlemen well know, are payable only if their operations are profitable. Norman Gintsling, of Price Waterhouse, writing in the June 1964 issue of Club Management magazine confirms this: A nonprofit, tax-exempt social club may actually find itself facing more tax problems than a profitable business enterprise of corresponding size. Clubs are not "fat cats." We have our posh, exclusive operations, of course, but they're the exceptions. We read of them because they make good copy in the press; but they're not typical of the average club by a long shot. Today clubs are family recreation centers for the everbroadening middle class. The "exclusive male retreat" concept is long gone, particularly in country clubs. Yet here, basically, is where this traditional concept was born. An article in the Wall Street Journal for December 28, 1961, stated that 1.7 million families belonged to country clubs. Our figures confirm this and show that an equal number belong to town clubs. Dr. Herman Miller, of the Bureau of Census, reports that 1.7 million family units have annual incomes of $15,000 or more the same number as country club memberships. Even if every single one of these wealthier families belonged to a club-which, of course, they don't— we still have nearly 2 million families with less than $15,000 annual income who are club members. In fact, we estimate that one-half of our clubs' members make less than $12,000 per year. Scarcely the idle rich. Today, 2 out of every 12 months dues-plus-tax that a club member pays now goes to the Federal Government. A reduction in this excise tax from 20 to 10 percent would in effect return 1 month's dues to everyone; a total of $35 million, half of the $70 million now paid. This return would go into the members' pockets and be available for his increased use of the club and its facilities. By the basic laws of supply and demand this reduction in the cost of belonging to a club will inevitably attract more members. Thus the clubs broaden their gross incomes, expand their services, employ more people, pay deserved wage increases. Forty-eight percent of the average club's gross revenue is spent on payroll. An excise-tax reduction would put at least another $15 million annually directly into club employee pockets, which, of course, benefits the national economy. The other $20 million of this saving would also immediately be returned to the economy. Clubs are "nonprofit" in fact as well as fiat, and invariably spend their entire income each year. Each year a nationally recognized accounting firm compiles a statistical review of the operations of 100 representative clubs throughout the Nation. The latest edition, entitled "Club in Town and Country, 1962-63," is on file at the Library of Congress-Catalog card No. |