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trust. Such a trust entitles the donor to a charitable deduction upon his incometax return and upon his gift-tax return of the commuted value of the income given to charity. This provides the donor with an incentive for making the charitable provision rather than making a direct gift, outright or in trust, only to his descendants.

The 1954 code makes possible such a trust for as short a period as 2 years but generally similar in other respects to the so-called 10-year trust provided the fund does not revert to the grantor.

The proposed amendment would deny the donor any charitable deduction for such a charitable income trust if, after the charitable trust period, the reversionary interest goes to the grantor's spouse, ancestors, or lineal descendants. The amendment would apply not only to the short-term trusts made possible by the 1954 code, but also to trusts where income is payable to eleemosynary institutions for 10 years or longer, thus imposing a very material limitation upon what has been generally accepted as proper tax accounting for many years.

Many institutions of higher learning have been beneficiaries of these long-term trusts, and it would be a serious matter if their creation in the future were discouraged by this proposed legislation.

I am, of course, aware that there may be many reasons unknown to me that would favor the legislation in question, and I would not presume to comment specificially upon what legislation would be desirable. However, in view of the fact that higher education in this country is desirably dependent upon gifts from individual citizens, I would hope that the present legislation could be so modified as to encourage rather than discourage the gifts such as have been made under these charitable trusts to educational institutions. Very sincerely,

GAYLORD P. HARNWELL.

CONGRESS OF THE UNITED STATES,

Hon. WILBUR D. MILLS,

HOUSE OF REPRESENTATIVES, Washington, D. C., January 6, 1958.

Chairman, House Ways and Means Committee

DEAR COLLEAGUE: I enclose letter which I have received from Mr. Corl A. Leach, editor of Journal Press, Columbia, Mo., pointing out certain inequities in the Federal revenue laws. I would appreciate your including his letter in the record of the tax revision hearings.

Sincerely yours,

Hon. MORGAN MOULDER,

New House Office Building,

Washington, D. C.

MORGAN M. MOULDER.

JOURNAL PRESS.

Columbia, Mo., December 30, 1957.

DEAR MR. MOULDER: May I point out what seems to me to be a gross inequity in the income tax laws? This refers to casualty damage and insurance in almost any field.

For instance, a man is insufficiently insured or not insured at all for auto accident insurance. Presuming he has no insurance and damages his car, he can deduct the amount of the damage from his income. But if he is more careful in his business and is fully insured and has an accident, he can deduct neither the amount of his insurance nor the amount he is reimbursed by the insurance company.

Or if a man's home is not insured and it is damaged by fire or wind, he can deduct the amount of damage from his income tax. But if he is insured he can deduct neither the amount of the damage, nor the amount of the insurance. This applies, I believe, in every situation covered by insurance. It seems to me to be grossly unfair to the man who is carrying insurance, whereas, it seems to me, he should be deserving of special consideration rather than penalized. May I suggest and urge that this be looked into, and rectified to give the provident person a break. Yours sincerely,

CORL A. LEACH.

(Thereupon, at 12:45 p. m., the committee recessed, to reconvene at 10 a. m. Monday, January 27, 1958.)

GENERAL REVENUE REVISION

(Cooperatives; Building and Loan Associations, Etc.; and General Discussions)

MONDAY, JANUARY 27, 1958

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,

Washington, D. C.

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

The CHAIRMAN. The committee will please come to order.

Our first witness this morning is Mr. Ronald Reagan. Is Mr. Reagan present? (No response.)

Our next witness is Mr. Harry J. Beernink. Mr. Beernink, will you please come forward, sir, and give your name, address, and the capacity in which you appear for the record.

STATEMENT OF HARRY J. BEERNINK, PRESIDENT, NATIONAL COUNCIL OF FARMER COOPERATIVES, WASHINGTON, D. C.; ACCOMPANIED BY LEONARD L. SILVERSTEIN, SPECIAL TAX COUNSEL; AND L. JAMES HARMANSON, JR., GENERAL COUNSEL OF THE NATIONAL COUNCIL OF FARMER COOPERATIVES

Mr. BEERNINK. Harry J. Beernink, president of the National Council of Farmer Cooperatives. My home is at Seattle, Wash.

I would like to present, Mr. Chairman, my two associates: Mr. Leonard L. Silverstein, special tax counsel, and Mr. L. James Harmanson, Jr., general counsel of the National Council of Farmer Cooperatives, of Washington, D. C.

The CHAIRMAN. If you prefer, you may be seated, Mr. Beernink, and those associated with you.

Mr.BEERNINK. Thank you.

The CHAIRMAN. Mr. Beernink, you are recognized for 30 minutes. Mr. BEERNINK. Thank you.

My name is Harry J. Beernink, Seattle, Wash., and I am president of the National Council of Farmer Cooperatives, 744 Jackson Place NW., Washington, D. C. I appreciate the oportunity of presenting the policy position of the council and supporting pertinent facts to your committee today on the tax treatment of farmer cooperatives and their patrons.

20675-58-pt. 2-43

I am general manager of the Washington Cooperative Farmers Association, with headquarters at Seattle, Wash. I am serving for the second year as president of the National Council of Farmer Cooperatives, having been reelected at the council's 29th annual meeting earlier this month at Houston, Tex.

IDENTIFICATION OF THE COUNCIL

The council is a national farm organization whose membership is made up exclusively of agricultural business associations owned and controlled by farmers. These farmer associations market practically every type of commodity grown on the Nation's farms or procure for their farmer members the major types of supplies needed for crop production, such as fertilizer, petroleum products, seed, and feed.

I have attached to my statement a list of the current direct membership of the council, listed by divisions, reflecting their major commodity activity. Considering all of the separate local, county, or State cooperatives affiliated with these direct council members, we estimate currently about 5,000 separate associations are represented in the council membership, serving approximately 2,500,000 farm families. Many of these farmer associations, their members, and employees are known to members of your committee.

Mr. Chairman, may this list be made a part of the record?

The CHAIRMAN. Without objection, it may be made a part of the

record.

(The list referred to is as follows:)

DIRECT MEMBERS OF NATIONAL COUNCIL OF FARMER COOPERATIVES

CITRIUS AND SUBTROPICAL FRUITS DIVISION

Calavo Growers of California, Box 3486, Terminal Annex, Los Angles 54, Calif. Florida Citrus Exchange, Post Office Box 2349, Tampa, Fla.

Sunkist Growers, Inc., Box 2706, Terminal Annex, Los Angeles 54, Calif.

Texsun Citrus Exchange, Weslaco, Tex.

Waverly Growers Cooperative, Waverly, Fla.

COTTON DIVISION

American Cotton Cooperative Association, Room 1018, Falls Building, Memphis 3, Tenn.

Calcot, Ltd., Post Office Box 3217, H Street Annex, Bakersfield, Calif.

DAIRY DIVISION

Dairymen's League Co-Operative Association, Inc., 100 Park Avenue, New York 17, N. Y.

Lehigh Valley Cooperative Farmers, Allentown, Pa.

DECIDUOUS FRUITS DIVISION

Apple Growers Association, Hood River, Oreg.

California Fruit Exchange, Post Office Box 2038, Sacramento, Calif.

FRUIT AND VEGETABLE BARGAINING ASSOCIATIONS DIVISION

California Canning Peach Association, 244 California Street, San Francisco 11, Calif.

California Canning Pear Association, 64 Pine Street, San Francisco 11, Calif. California Freestone Peach Association, Post Office Box 436, Modesto, Calif. California Tomato Growers Association, Inc., 145 South American Street, Stockton 2, Calif.

GENERAL SERVICE DIVISION

Cooperative G. L. F. Exchange, Inc., Ithaca, N. Y.

Indiana Farm Bureau Cooperative Association, Inc., 47 South Pennsylvania Street, Indianapolis 9, Ind.

Mississippi Federated Cooperatives (AAL), Post Office Box 449, Jackson, Miss. Missouri Farmers Association, Inc. Columbia, Mo.

Southern States Cooperative, Inc., Post Office Box 1656, Richmond 13, Va.

GRAIN AND SEED DIVISION

American Rice Growers Cooperative Association, Post Office Drawer 877, Lake Charles, La.

California Lima Bean Growers Association, Post Office Box 512, Oxnard, Calif. Farmers Grain Dealers Association of Iowa, 1101 Walnut Street, Des Moines 9, Iowa.

Farmers Rice Growers Cooperative Association, 1005 Russ Building, San Francisco 4, Calif.

Morrow County Grain Growers, Inc., Lexington, Oreg.

Ohio Farmers Grain and Supply Association, Fostoria, Ohio.
Pendleton Grain Growers, Inc., Box 279, Pendleton, Oreg.

Rice Growers Association of California, Post Office Box 958, Sacramento 4, Calif.

GRAPE PRODUCTS DIVISION

Allied Grape Growers, Post Office Box 329, Madera, Calif.

National Grape Cooperative Association, Inc., Westfield, N. Y.

LIVESTOCK DIVISION

National Live Stock Producers Association, 139 North Clark Street, Chciago 2, Ill.

MISCELLANEOUS DIVISION

Asociacion Azucarera Cooperativa Lafayette, Arroyo, P. R.

Cooperativa Azucarera Los Canos, Post Office Box 38, Arecibo, P. R.
Cooperativa Cafeteros de Puerto Rico, Post Office Box 1511, Ponce, P. R.
Sioux Honey Association, 509 Plymouth Street, Sioux City 6, Iowa.

MISCELLANEOUS FRUITS AND VEGETABLES DIVISION

American National Foods, Inc., 30 Church Street, New York 7, N. Y.
Mushroom Growers Association of Pennsylvania, Kennett Square, Pa.

NUT DIVISION

California Almond Growers Exchange, Post Office Box 1768, Sacramento 8, Calif. Diamond Walnut Growers, Inc., Post Office Box 1727, Stockton 6, Calif. Northwest Nut Growers, 1601 North Columbia Boulevard, Portland 17, Oreg.

OIL-SEED PROCESSING DIVISION

Mid-West Cooperative Oil Mill, Post Office Box 398, Hamlin, Tex.
Plains Cooperative Oil Mill, Post Office Box 509, Lubbock, Tex.

Producers Cooperative Oil Mill, Post Office Box 1886, Oklahoma City 1, Okla.
Ranchers Cotton Oil, Post Office Box 248, Fresno, Calif.

POTATO DIVISION

Hastings Potato Growers Association, Hastings, Fla.

Idaho Potato Growers, Inc., Post Office Box 978, Idaho Falls, Idaho.

Maine Potato Growers, Inc., Post Office Drawer 271, Presque Isle, Maine.

POULTRY DIVISION

Idaho Egg Producers, Caldwell, Idaho

Norbest Turkey Growers Association, Post Office Box 1529, Salt Lake City, Utah. Oregon Egg Producers, 306 Southeast Ash Street, Portland 14, Oreg.

Poultry Producers of Central California, 2700 Merced Street, San Leandro, Calif.

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