While we are in no respect opposed to big business and we know it is vital, and essential and important, I have noted some of the inequalities and others who have testified have also pointed them out. This committee cannot hope to correct all the factors which favor the big and discriminate against the small; but we can make a start, and in our view the revisions in the tax structure that we propose would present the best practical point for such a start.

As I have said, there is wide and bipartisan agreement on the desirability of legislation along the lines proposed by the Small Business Committee, the House committee's recommendation, the Senate committee's recommenations, the President's Advisory Committee on Small Business, and others.

The only criticism offered, we all know, is that during this emergency we cannot afford the loss of revenue. I should like briefly to direct my remarks to this point.

I have already pointed out that laws which will go into effect on July 1, unless modified by Congress, provide for reductions in the corporate tax structure. These provide not only reductions in the lowest brackets but some in the higher brackets. If the Congress saw fit to give relief in the lowest bracket where it is most vitally needed, but maintained present rates on higher brackets, there would be no actual loss of revenue from a reduction of the normal tax rates from 30 to 20 percent, on the contrary, it appears that there would be more revenue than would be available in the coming year if the present tax laws remain in effect.

In the second place, we are making these recommendations not to relieve people of taxes and our Government of revenue, but because we firmly believe that these changes would stimulate economic growth. You cannot collect taxes unless there are earnings to tax. A farmer who keeps taking all the eggs the chickens lay and who does not leave them some to hatch into chicks, will soon find himself without any hens to lay eggs for him to take.

It takes no gazing into crystal balls to see that unless some encouragement is given to small business, its earnings will fall rapidly and in consequence there will be no revenue to levy a tax on. On the other hand, if we give small business the means to prosper and to grow, its earnings will increase and we will receive more in tax revenue even if the rates are lower. I am firmly convinced that within a short time, following the enactment of this proposed legislation, the earnings of small business, and big business too-will rise sharply and produce a higher return in taxes.

In the third place, small business has already made more than its proportionate share of sacrifice for the continued emergency this Nation has faced for the past 15 years. It seems to be that it would be simple justice, at this time, when small business itself is facing a severe emergency, to shift some of the burden to others, more able to make the sacrifice.

Finally, let us not forget that one of the most important things we are trying to define in this present emergency is the opportunity which this land has always offered and which we trust it will always continue to offer. Small business, I repeat, is the place where opportunity and free enterprise start flowing. If in a near-sighted overconcentration on our military defenses we permit this climate of op

20675-58-pt. 2—31

portunity to wither away, we will have managed to do ourselves far more damage than all the efforts of our enemies.

I repeat, in conclusion, speaking for myself and the majority of my colleagues on the Small Business Committee, that if we believe in doing our best to maintain our system of enterprise and opportunity it is time we took appropriate action to encourage and stimulate it. The modifications we propose are in our view, the very minimum that can be done-and should be done-in this direction. Many of us think this is by no means enough and I am sure all of us have ideas on additional things which can be done. But we have subordinated our own ideas and joined together in these proposals in the hope that we can unite in making a start on this vital task of keeping this a land of opportunity and we commend them to your attention in this light.

Thank you very much, Mr. Chairman and gentlemen of the committee.

The CHAIRMAN. Mr. Evins, we appreciate very much your bringing to us the views of the members of the Small Business Committee of the House. We realize that you are speaking for the chairman and the majority members of the committee.

A few days ago Mr. Sheehan, who is also a member of that committee, appeared before us speaking for himself, and as I understand, the minority members of the committee. There are some differences in the views of the two groups on your committee, as I understand.

Mr. EVINS. Yes. There are some members on both sides of the aisle who would like to go much further. There are some who would just like to adopt the President's recommendations, but our majority bill has the President's recommendations with the one additional provision for the plow back. They are all in unanimous agreement that something should be done. I know this committee hears many appeals, but our little committee especially hears the grievances and appeals on the problems of financing and the first thing they all say is, We should have some tax relief. The burden has been too great and too long."

The CHAIRMAN. The point I wanted to bring out is the answer you have already given us, namely, that though the committee is somewhat divided as to what should be done there is unanimous thinking in your committee that something should be done with respect to the problem of small business.

Mr. EVINS. Yes, and we are pretty much in agreement on the provisions. All of the members were perfectlye willing to support Mr. Hill's bill, the ranking minority member of the committee. This other bill was agreed upon by the majority because it went one step further, but they would accept the other if this committee would act. Of course we have no legislative jurisdiction. The jurisdiction resides here.

The CHAIRMAN. Has your committee reached the conclusion that most of the problems of small business can be resolved by making adjustments, with respect to tax rates?

Mr. EvINS. Not most of the problems, no, sir, Mr. Chairman. There are legislative provisions pending with respect to the antitrust laws, problems with relation to the procurement of a fair share of Government contracts under the defense program, and many other things are recommended, but first and foremost is tax reduction.

Another measure they are considering is the matter of capital financing. The small Business Administration we think is doing a rather effective job in making loans. Small business has no means of getting capital in some instances and when hard pressed they can get a loan. They are pretty much up against the wall and Dun & Bradstreet reports the numbers that are falling by the wayside each year, last year having been one of the largest ever.

The CHAIRMAN. Are there further questions?

Mr. Keogh will inquire.

Mr. KEOGH. Mr. Chairman, I know it is not necessary for me to commend our distinguished colleague to the members of the committee, but I should like the record to show that it was my good fortune a number of years ago to serve with him on the Select Committee on Small Business, and therefore I know of my own knowledge of the tremendous diligence and application to the work of that committee that our colleague has expended.

I congratulate him for his continued interest in this important segment of our economy.

Mr. EVINS. You are most kind and generous.

The CHAIRMAN. Are there any further questions?

Mr. Reed will inquire.

Mr. REED. Mr. Evins, I was very much impressed with the presentation that you made here.

Thank you very much.

Mr. EvINS. Thank you, Mr. Reed.

The CHAIRMAN. Are there any further questions?

If not, Mr. Evins, we appreciate your coming to the committee and giving us the information you have.

Thank you, sir.

Mr. EvINS. Thank you.

The CHAIRMAN. The Chair understands that Mr. F. Joseph Donohue desires to join the next group of witnesses listed on the calendar and that Mr. Donohue desires to speak for the fifth witness, Mr. David G. Bress, who will not be here. Do you desire to introduce the other members of the panel of witnesses present, Mr. Donohue?

STATEMENTS OF F. JOSEPH DONOHUE, ROGER F. MURRAY, R. C. VOGT, AND GEORGE S. GEFFS, IN BEHALF OF THE AMERICAN THRIFT ASSEMBLY, WASHINGTON, D. C.

Mr. DONOHUE. If I may be permitted to do it, I think it will economize your time.

The CHAIRMAN. Without objection we will permit Mr. Donohue to do so.

Mr. DONOHUE. Mr. Chairman and gentlemen of the committee, I am F. Joseph Donohue, a practicing attorney here in the Nation's Capital, and I am serving as chairman of the legislative committee of the District of Columbia Bar Association and as chairman of the committee on retirement benefits of the American Bar Association, and am here particularly this morning as chairman of the American Thrift Assembly, an organization that was created just about a year ago when upon the invitation of the then president of the American Bar Association, the Honorable David Maxwell, from Philadelphia, a meeting of some thirty-odd national organizations, each representing a

phase of the self-employed, was called in Washington, in consequence of which the American Thrift Assembly was formulated.

We are an association, incorporated under the laws of the District of Columbia, of more than two score organizations national in character, each again representing a phase of the self-employed, and more than 100 other organizations are affiliated with us. Typical member national organizations include the American Bar Association, American Dental Association, American Institute of Accountants, American Institute of Architects, American Medical Association, American Optometric Association, National Association of Real Estate Boards, National Association of Tax Accountants, National Small Businessmen's Association, and National Society of Professional Engineers. By presenting three witnesses this morning I think we are saving the time of the committee, because each of these organizations otherwise would be desirous of appearing.

In the presentation of this matter this morning I would like to say to the committee that I have been ably assisted by my colleague at the bar, Mr. Ralph E. Becker, of Washington, D. C., who is known to most of you, and by his capable associate, Mr. Murray Callahan.

In order to point up the problem, if I may take just 2 minutes of the committee's time, we have prepared a brief statement in a somewhat narrative form which we have, perhaps facetiously, called keeping up with the Joneses, in which we attempt to indicate a comparison between Mr. Smith and Mr. Jones, each of whom has had the same training, in consequence of which each has become a pharmacist. Mr. Jones is employed by a pharmaceutical company. Mr. Smith has his own place of business. Each is 45 years of age, married, and with two children. At the end of the calendar year the gross annual income of both Mr. Jones and Mr. Smith is $6,000. Each has similar deductions and exemptions amounting to $3,000, resulting in a taxable income for both of $3,000, each paying a like tax of $600, leaving each $5,400 in expendable dollars for the year, but because he is employed by a pharmaceutical company Mr. Jones has an additional untaxed compensation in the amount of an employer contribution of $1,146.03 to a pension fund, in consequence of which 20 years later at 65 Mr. Jones will be entitled to a pension at the rate of $150 a month, so that in comparing the net actual annual compensation of both we find that because of his relationship to his employer Mr. Jones has $6,546.03.

If Mr. Smith wanted to keep up with Mr. Jones by buying an annuity to provide himself with a pension of $150 a month for life, it would be necessary for him to pay a gross first-year premium of $1,146.03 which would reduce his net expendable income from $5,400 to $4,253.97 or, in the alternative, he would have to increase his gross annual income from $6,000 to $7,404.03.

It is this problem, and in the hope of encouraging the old American concept of courage that it takes to battle life alone, it is an attempt to make it possible for the seven or eight million unemployed who are to chart their own course that we are supporting today, H. R. 9 and H. R. 10 introduced by your colleagues Mr. Jenkins and Mr. Keogh.

In support of this proposition I would like first to present to the committee Mr. Roger F. Murray, the associate dean and adjunct professor of finance of the Graduate School of Business of Columbia University.

Dr. Murray.

The CHAIRMAN. Mr. Donohue, I noticed you did not complete your paper. Would you like all of it to appear in the record?

Mr. DONOHUE. If I might, Mr. Chairman.

The CHAIRMAN. Without objection, it will appear in the record, and, Dr. Murray, you are recognized.

(Mr. Donohue's prepared paper follows:)

STATEMENT SUBMITTED BY F. JOSEPH DONOHUE

Mr. Chairman, my name is F. Joseph Donohue and I am appearing before this committee in my capacity as chairman of the board of directors of the American Thrift Assembly for Ten Million Self-Employed. The American Thrift Assembly came into being at the instigation of the American Bar Association during the presidence of David Maxwell of Philadelphia. In appreciation of the fact that the many self-employed individuals have great areas of common interest, the American Thrift Assembly soon numbered among its members all of the major associations comprised of self-employed. In the interest of economy of time I will mention but a few of the organizations represented by the American Thrift Assembly: the American Medical Association, the American Dental Association, the American Institute of Certified Public Accountants, the National Society of Professional Engineers, the National Association of Real Estate Boards, the National Livestock Tax Committee, and many many others.

The American Thrift Assembly has not only served to consolidate the talents and energies of all self-employed and to avoid duplication of effort among them, but has also coordinated the views of all self-employed on the subject of this legislation. In practical terms this latter accomplishment means that you gentlemen will be subjected to only one hour of testimony rather than the several days which might have been required if each organization we represent appeared on their own behalf. I am also pleased to say that you may rest assured the testimony that we present here today is truly representative of the views and opinions of the millions of people for whom we appear.

On behalf of the millions for whom we speak I trust that this committee will give its most serious and deliberative consideration to the inequity under which the self-employed now labors. The legislation now before you, which is commonly known as the Jenkins-Keogh bill, will in our opinion remove the present legislative discrimination which now prevent the self-employed from providing for his old age security on the same basis as the employed individual. I am sure that you are all in agreement that there is no logical reason for segregating the working class in private enterprise on the sole basis of his type of employment. The adoption of this legislation is obviously in the best interests of our national welfare and security and in the spirit of traidtional American fair play and equal treatment under the law.

Before introducing our witnesses I would like to pay tribute to the work of my cohort and fellow lawyer our general counsel, Mr. Ralph E. Becker and his able associate Mr. Murray Callahan. While I know that Mr. Becker is no stranger to this committee I want to express the appreciation of all whom we represent for his outstanding work in the preparation of the case which we are about to present. I might add, with only a twinge of selfish remorse, that Mr. Becker like the rest of us on this committeee have given of our time and talents without compensation.

Mr. MURRAY. Mr. Chairman and gentlemen, I believe you are all thoroughly aware of the primary purpose of H. R. 9 and H. R. 10, known as the Self-employed Individual Retirement Act. It is designed primarily to reduce a glaring inequity which operates against a person working for himself. This inequity arises in the making of provision for retirement income. Some 14 million people employed in private industry are seeing pension benefits accumulated for them through qualified plans under which their employers are quite properly permitted to deduct contributions from corporate net income subject to the Federal income tax.