Lapas attēli


1. Steeply increased inheritance taxes and income taxes on the higher incomes and estates of both corporations and individuals.

2. A constitutional amendment authorizing the taxation of all Government securities. Agriculture

1. The reduction of tax burdens by a shift from taxes on farm property to taxes on incomes, inheritances, excess profits, and other similar forms of taxes.

2. Increased Federal and State subsidies to road building and education and social service for rural communities.

3. The creation of a Federal marketing agency for the purchase and marketing of agricultural products.

4. The acquisition of bona fide cooperative societies and by governmental agencies of grain elevators, stockyards, packinghouses, and warehouses, and the conduct of these services on a nonprofit basis. The encouragement of farmers' cooperative societies and of consumers' cooperatives in the cities, with a view of eliminating the middleman.

5. The socialization of Federal land banks and the extension by these banks of long-term credit to farmers at low rates of interest.

6. Social insurance against losses due to adverse weather conditions.

7. The creation of national, regional, and State land-utilization boards for the purpose of discovering the best uses of the farming land of the country in view of the joint needs of agriculture, industry, recreation, water supply, reforestation, etc., and to prepare the way for agricultural planning on a national and, ulti. mately, on a world scale.


Without attempting to assess the purposes or to criticize the legislation or agencies listed below, it is pertinent to submit these items as experiments in socialism.. Without denying that useful purposes may have been served by all or by portions of these laws at one time or another, I nevertheless submit that, judged by their relationship to the aims and goals of socialism, they were excursions into the field of socialism. Indeed, the pattern laid down by the Socialists in 1932 has been followed pretty closely by the New Dealers.

Agricultural Adjustment Act of 1933, May 12, 1933 (processing tax).
Agricultural Adjustment Act of 1938, February 16, 1938.
Bankhead-Jones Farm Tenant Act, July 22, 1937.
Banking Act of 1933, June 16, 1933.
Banking Act of 1935, August 23, 1935.
Bituminous Coal Labor Board, August 30, 1935 (invalidated, Supreme Court,

May 18, 1936).
Bonneville Power Administration, August 20, 1937.
Carriers Taxing Act of 1935, August 29, 1935.
Civilian Conservation Corps, June 28, 1937.
Commodtiy Credit Corporation, October 16, 1933.
Electric Home and Farm Authority, August 1, 1935 (incorporated, District of

Columbia). Emergency Farm Mortgage Act, May 12, 1933. Fair Labor Standards Act of 1938, June 25, 1938. Farm Credit Act of 1933, June 16, 1933 (Production Credit Corporation, Cen

tral Bank for Cooperatives, and 12 regional banks). Farm Credit Act of 1935, June 3, 1935. Farm Credit Act of 1937, August 19, 1937. Federal Crop Insurance Corporation, February 16, 1938 (title V of AAA Act

of 1938). Federal Emergency Administration of Public Works (NIRA), June 16, 1933

(subsequently Public Works Administration, July 1, 1939, Reorganization

Plan No. 1).
Federal Farm Mortgage Corporation Act, January 31, 1934.
Federal Subsistence Homesteads Corporation, December 2, 1933.
Federal Surplus Commodities Corporation, October 4, 1933.
Gold Reserve Act of 1934, January 30, 1934.
Gold Clause Act, August 27, 1935.
Guffey-Snyder Coal Stabilization Act, August 30, 1935.

Guffey-Vinson Bituminous Coal Act, April 26, 1937.
Home Owners' Loan Act of 1933, June 13, 1933.
National Housing Act, June 27, 1934.
National Industrial Recovery Act, June 16, 1933.
National Industrial Recovery Act, June 14, 1935 (skeletonized NRA).
National Labor Relations Act, July 5, 1935.
National Planning Board (of the Federal Emergency Administration of

Public Works), July 30, 1933.
National Resources Board, June 30, 1934.
National Resources Committee, June 7, 1935.
National Resources Planning Board, June 7, 1939.
National Youth Administration, June 26, 1935.
Public Utility Act of 1935, August 26, 1935.
Railroad Retirement Act of 1935, August 29, 1935.
Railroad Retirement Act of 1937, June 24, 1937.
Railroad Unemployment Insurance Act, June 25, 1938.
Reconstruction Finance Corporation extensions and amendments.
Resettlement Administration, April 30, 1935.
Revenue Act of 1934, May 10, 1934.
Revenue Act of 1935, August 30, 1935.
Revenue Act of 1936, June 22, 1936 (undistributed-profits tax).
Revenue Act of 1938, May 28, 1938.
Rural Electrification Administration, May 11, 1935.
Soil Conservation and Domestic Allotment Act, February 29, 1936.
Social Security Act, August 14, 1935.
Social Security Act amendments of 1939, August 10, 1939.
Tennessee Valley Authority, May 18, 1933.
Virgin Islands Company, April 16, 1934 (NIRA).
Tennessee Valley Associated Cooperatives, Inc., January 25, 1934 (no act

of Congress or Executive order or Federal statute specifically authorizes

creation of TVAC). Walsh-Healey Act, June 30, 1936.


A pertinent comment by Prof. Joseph A. Schumpeter, of Harvard University, the well-known economist, is the following:

"When discussing the English case, we have noticed that under modern conditions, to an extent undreamed of by nineteenth-century Socialists, it is possible to extract from the bourgeois stratum, by taxation and wage policies, the bulk of what in Marxist terminology is called surplus value. (The reader will, of, course, observe that the proposition asserts nothing about the effects of such a policy upon the size and long-run rate of increase of the national income. In particular, it does not exclude the possibility that labor might receive less real income, in total amount and in the long run, if incomes were completely equalized than it would receive if the whole of the Marxist surplus value accrued to the "capitalist” stratum.)

"To an extent which is not generally appreciated, the New Deal was able to appropriate the upper income brackets even before the war. One indication will have to suffice, one that shows no more than the effects of the increases in the (personal) income and surtax and then only up to 1936 : In 1929, when total income paid out was estimated at 80.6 billion dollars, the brackets above $50,000 (taxable income) retained 5.2 billions after income and surtax; in 1936, when the total of income paid out was estimated at 64.2 billion dollars, not quite 1.2 billions.

Irrespective of the war, a tremendous transfer of wealth has actually been effected, a transfer that quantitatively is comparable with that effected by Lenin.”

May I say again to Senator Lucas and Senator Barkley, who propounded questions concerning my statement on socialism, that you can have socialism as it is now being practiced in England, or you can have capitalism as it was practiced here some years ago. It is certain you cannot have both with any degree of

We have been endeavoring to enjoy all of the benefits to be derived from the capitalistic system, while at the same time trying to practice a form of





2 Joseph A. Schumpeter, Capitalism, Socialism, and Democracy (Harper & Bros., New York, 1947), p. 381.

socialism without telling our people the truth as to the direction in which they were being led.

We are now beginning to reap the harvest from the seeds of socialism which have been sown from 1933 down to the present date. The consistent attack upon the managerial class and the high-income group has all but abolished any savings in the country which could be invested in common-stock equities. The CIO program which was adopted by President Roosevelt, which called for a limitation of $25,000 upon all incomes, is just one example of the extent to which the radicals of the past 15 years have gone in their attack upon the capitalistic institutions of the country. As pointed out by Chairman Milliken, the incometax laws have been used as punitive instruments against those who have invested their savings in productive enterprises which have given mass employment to millions and have spread inumerable benefits upon millions of our people.

I might cite many examples which would substantiate the statement of Senator Millikin. Suffice to say, the soak-the-rich policy of the Roosevelt administration was designed to put the burden upon as few of the taxpayers as possible and to relieve from any burden whatsoever as many of the voters as was possible.

At the same time we were running the Federal Government at a huge deficit and telling our people that the cost of government would be borne by the rich. Most people now realize how great was this deception. The surest and most effective way of destroying the capitalistic system and to assure duplication in this country of the tragedy that has befallen England is to continue to knock the confidence out of the investor's mind in the safety and security of American business enterprise.

That will cause him to continue to hoard his savings and to invest them in sterile, fixed-interest-bearing obligations, or in annuities, in an attempt to safeguard his future security.

My earnest plea therefore to you, Senator Lucas, is that we all go back to the fundamentals of our forefathers and start again to rebuild this greatest of all experiments in modern history, the profit-and-loss system of the United States of America.

(The following was submitted by Don G. Mitchell, National Association of Manufacturers, in response to questions on p. 230 :)

The National Association of Manufacturers in October 1947 approved a $31,000,000,000 Federal budget. The fund would be apportioned in the following manner: [Millions of dollars]

Proposed maximum Function:

expenditure National defense_

9, 100 Veterans' services and benefits.

6, 500 Social welfare, health, and security

1, 600 Housing and community facilities.

100 Education and general research.

60 Agriculture and agricultural resources.

670 Natural resources not primarily agricultural.

725 Transportation and communication.

1, 069 Finance, commerce, and industry

60 Labor

90 General government-

1,000 Interest on the public debt

5, 075 Refund of receipts.

1,000 Contingencies, including international affairs and finance_

4, 000


30, 979 For the purposes of this survey, the total in the above table is rounded off to $31,000,000,000.

Since the approval of this budget, developments have taken place which lead Mr. Mitchell to believe that the amount should be increased to $33,000,000,000.

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(The following statements were submitted for the record :)


Chicago, 4, Ill., March 1, 1948. Hon. EUGENE D. MILLIKIN, Chairman, Senate Finance Committee, Senate Office Building,

Washington, D. C. DEAR SENATOR MILLIKINS: The committee on taxation of the ninth national session of the Conference of American Small Business Organizations, assembled in Washington, D. C., Febraury 2-4, 1948, submitted its resolution which was debated in open forum and finally approved by small-business delegates from 39 States of the Union, including delegates at large appointed by Governors of 17 States to represent the small-business men of their States.

This committee on taxation is, in addition to its function as part of the conference, a standing subcommittee of the Small Business Advisory Committee for the Department of the Treasury, the membership of which was named under the provisions of Senate Concurrent Resolution 14, by trade associations, Chambers of commerce, and other business groups, and represents over-all small business.

This resolution is herewith respectfully submitted to the Senate Finance Committee with the request that it be made a part of your hearings on this subject. This resolution is therefore the deliberated expression of opinion of representatives of the small-business men of America on Federal taxation. Cordially and sincerely,

FRED A. VIRKUS, Chairman.


To the Conference of American Small Business Organizations:

Your committee on taxation of the ninth national session of the Conference of American Small Business Organizations, assembled in Washington, D. C., February 2, 3, and 4, 1948, submits the following resolution and respectfully requests that it be officially placed before the Ways and Means Committee of the House of Representatives, the Finance Committee of the Senate and the Bureau of Internal Revenue as the deliberated opinion on taxation of representatives of small-business men of America.


The magnitude of the present tax burden makes it imperative that the tax structure be designed to produce maximum revenue, with the minimum adverse effect on the national economy and with minimum injustices.


Carry-back and carry-forward

(1) The committee endorses the increase of the loss carry-forward provision to 7 years. Individual tax

(2) The tax rates on personal incomes should be lowered substantially, with a maximum rate of 50 percent.

The phraseology of the present Federal tax laws, and the regulations issued thereon are so technical that they can be understood only by experts. This causes litigation, penalties, and increases of cost of preparing returns. The tax laws and forms should be further simplified.

The income of married couples, in all States, should be equalized by permitting them, for Federal income-tax purposes, to divide their income from all sources, also exemptions and deductions, equally. Corporation tax

(3) The tax rate on corporation income between the rate levied at $25,000 and the rate levied at $51,000 should be graduated, thereby removing the penalty on the second $25,000.

(4) The present double taxation of corporate earnings should be eliminated. (a) Earnings of all corporations should be taxed at the corporate level.

(b) A tax credit should be allowed all recipients o fdividends, patronage refunds, and credits received out of current corporate annual earnings or savings. (5) In all questions of application of section 102 the burden of proof should be on the Treasury Department.


Whereas the various Federal retailers' excise taxes were imposed as wartime measures to curtail the production and use of the items taxed; and

Whereas the emergency created by the war has ended; and

Whereas the various Federal retailers' excise taxes impose a hardship on many thousand retail establishments selling items subject to said tax by requiring these small businesses to collect the tax and perform much burdensome detail work in keeping records regarding the tax; and

Whereas producers and sellers of items subject to the Federal retailers' excise taxes suffer a competitive disadvantage due to sales resistance by consumers to items subject to said tax, and as a result said retailers' excise taxes are burdensome in their application: Now, therefore, the following program on Federal excise taxes is submitted :

(a) The Eightieth Congress should repeal all wartime Federal retailers' excise taxes on luggage, furs, handbags, toilet preparations, and jewelry.

(0) As soon as Government fiscal requirements permit, the Congress should repeal the Federal excise taxes on all items except alcoholic beverages, tobacco, and gasoline.


Resolved, That Congress eliminate confiscatory gift and estate taxes now producing considerably less than 2 percent of the total Federal revenue, which are now forcing the liquidation and sale of small businesses by the thousands, or as a measure of temporary relief should increase exemption, substantially reduce rates, and lengthen the period in which the assesesed tax may be paid without holding up the distribution of the estate, payments to be deductible in the computation of income.

We recommend further that the community-property principle apply on estate and gift taxes.


The Congress of the United States shall require strict construction in the interpretation of all Federal tax laws.

The Bureau of Internal Revenue shall be prohibited from interpreting and extending granted enforcement powers.

The United States Commissioner of Internal Revenue shall be prohibited from issuing noncompliance orders concerning all tax cases.



The American Farm Bureau Federation, with a membership of over 1,275,000 farm families in 45 States and Puerto Rico, represents approximately 542 million farm people. On December 18, 1947, our voting delegates, meeting in Chicago, Ill., adopted the following resolution pertaining to Federal taxation :

“The American Farm Bureau Federation reaffirms its 1946 resolution on taxation. We believe that a sound national tax policy is one of the primary essentials to the maintenance of the private-enterprise system, which is the foundation of our democracy.

“We believe that now, during a period of inflation, is not the time for any material reduction in income-tax rates. We believe, however, in order to deal equitably with all citizens of like taxpaying ability, that for Federal income-tax purposes the privileges now extended to married couples in States with communityproperty laws should be extended to give all citizens equitable treatment in all Federal individual taxes.

“Every effort should be made to eliminate all nonessential Government expenditures and to reduce all expenditures to the minimum necessary for good government, essential world aid, and adequate national defense. We believe that, under present conditions, all remaining revenue should be used to reduce our national debt. Maintenance of revenue and reduction of expenses are essential to the stabilization of our economy under present conditions.

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