We are impressed with bill S. 2213, submitted by our Senator Prescott Bush, to limit the power of the States to impose income taxes on income derived exclusively from the conduct of interstate commerce. We sincerely hope that you and the members of your committee wil give this bill favorable consideration and that it will be reported out as soon as possible in order that action by the Senate and the House may be taken in this current session of Congress. Sincerely yours, FRANKLIN S. HARRIS, Secretary of the Industrial Association of the Lower Naugatuck Valley. DIXIE LUMBER CO., INC., Hagerstown, Md., July 13, 1959. HON. HARRY FLOOD BYRD, Washington, D.C. MY DEAR SENATOR: As a wholesaler of lumber and lumber products, we are very much distressed by the recent Supreme Court decision which would allow State taxation of income derived exclusively from interstate commerce when the only activity within the State in question is sales solicitation and where no office, warehouse, stock or goods, or other place of business is maintained within that State. We would be vulnerable to any State imposition of taxes as herein outlined and very heartily support and endorse the bills which have been already introduced in the Senate to prevent the levying of such State taxes; namely, S. 2213 and Senate Joint Resolution 113. Your active support of these measures is earnestly solicited, and we urge that prompt action be taken to insure passage of these bills, which we understand have been referred to the Senate Finance Committee, before your impending adjournment. We thank you for your consideration of our remarks. DIXIE LUMBER CO., INC., Vice President. New York, N.Y., July 15, 1959. Hon. HARRY FLOOD BYRD, Chairman, Senate Finance Committee, Washington, D.C.: On behalf of approximately 500 members of Association of Food Distributors, Inc., of New York, we urge you to support S. 2213, introduced by Senators Bush of Connecticut, Keating of New York, and Butler of Maryland, in an effort to counteract effects of recent U.S. Supreme Court decision that permits States to levy taxes on interstate commerce of our members and, in fact, on every business in the country, large and small, that sells merchandise beyond the lines of the State in which it is located. ASSOCIATION OF FOOD DISTRIBUTORS, INC., Senator HARRY FLOOD BYRD, BAINBRIDGE, KIMPTON & HAUPT, INC., DEAR SENATOR BYRD: Respectfully, but just as earnestly, we appeal to you for as early action as is possible, through the Congress, to protect the interests of a large number of business enterprises, many of them-though not all-classed as small interests now seriously threatened. Before the Supreme Court decisions of February 24, 1959, it was understood that business concerns doing business in more than one State were not subject to State taxation on sales and profits unless they owned factories, warehouses, or inventories in the State involved. Since February 24 the danger is, as you well understand, that any State may tax income from business done by sales representatives regardless of whether local factories, warehouses, or inventories are owned by the companies to be taxed. Speaking primarily for our own company, now in its 115th year of business, but speaking also for the wholesaling industry in general with its thousands of companies, the danger mentioned will be devasting for any company doing interstate business and probably totally destructive of many companies unable to bear the added burdens involved. The burdens of State taxation on business heretofore considered interstate commerce, protected by the commerce clause of the Federal Constitution, would be at least twofold: 1. The increase in taxes on companies whose business is necessarily conducted on a narrow profit margin basis would, in itself, be formidable and, in many cases, completely devastating. 2. The task of recording and properly reporting sales and profits for the many States involved will inevitably lead to such an increase in clerical and other costs as will pose a problem beyond solution. On the several bills aimed at removing the present threat of disaster, we do not in this letter comment specifically. us. It is the objective of these various bills that is of such enormous concern to To you, who we believe are fully aware of the current business threat, we ask you for early action and for much needed aid. Very sincerely yours, Hon. HARRY FLOOD BYRD, BAINBRIDGE, KIMPTON & HAUPT, INC., Senate Office Building, Washington, D.C. THE OHIO BRASS CO., Mansfield, Ohio, July 14, 1959. DEAR SENATOR BYRD: Small business is extremely happy to learn that the Senate Finance Committee will hold hearings beginning Tuesday, July 21, on S. 2213 to limit the power of the States to impose income taxes on income derived exclusively from the conduct of interstate commerce. We in industry compliment Senator Bush for the foresight in introducing S. 2213 and we equally compliment the farsightedness of the Congressmen who have introduced similar legislation under this subject. State taxation of interstate commerce has been a problem prior to the decision of the U.S. Supreme Court, and we who are doing business between the States are very much disturbed over the far-reaching effects of the Supreme Court's decision. As a matter of fact, if the States can tax interstate commerce it is quite likely that cities can also tax interstate sales. In other words, the commerce clause of the Constitution has year by year suffered erosion and now is practically meaningless. Is it possible that we could go as far as having import duties between States thereby destroying another clause of our Constitution? In the legislation that has been introduced we find that the presence of an office in a State constitutes doing instrastate business. Many of us feel that this assumption is incorrect. In support I am attaching a letter which we submitted to the department of revenue, Commonwealth of Pennsylvania, who declared our operation completely interstate. The Supreme Court's decision obviously reverses this. We are confident that our position is not unique but rather that it is common to many businesses, and we strongly urge you to further define the meaning of an office and the presence of the office being intrastate or interstate. We salute the astuteness of the committees of the Senate and the House in submitting this legislation on a bipartisan basis to the Congress, and we assure you that we will be ready and willing to be of any assistance in bringing this important legislation to a successful conclusion during this session of the Congress. Sincerely, EPHRIAM H. BROWN. SEPTEMBER 23, 1957. Subject: Corporation income tax settlements, years 1954, 1955, 1956; your file JUD: SEG: L 2218-16. Mr. STEPHEN E. GOMBAR, Commonwealth of Pennsylvania, Department of Revenue, Harrisburg, Pa. DEAR SIR: In compliance with your request of September 4, with reference to the above subject and file, we wish to make the following detailed description of activities and property ownership within Pennsylvania for the 3 years under consideration. 1. We neither sell nor deliver tangible personal property within the State of Pennsylvania and carry no stock of merchandise within the State. 2. We do not render services for which we receive remuneration from persons within the State. 3. We do no accounting and we have no bank accounts within the State. 4. Our district managers in Pittsburgh and Philadelphia are not authorized to execute or perform contracts. The Pittsburgh and Philadelphia offices are maintained as a convenience for our district managers in those districts as a place for records of engineering data and for telephone and stenographic services. The duties of these employees consist of supplying engineering and technical data for which no charge is made. 5. Shipments are made from without the State and title to such merchandise passes outside of the State. 6. All orders are priced and subject to acceptance at the home office of the company in Mansfield, Ohio. 7. All prices are subject to change without notice, such pricing being determined at the home office in Mansfield, Ohio. 8. Terms of sale are subject to the complete control of the home office in Mansfield, Ohio. 9. Credit to be extended is wholly within the province of the home office in Mansfield, Ohio. 10. All billings and collections are made from the home office in Mansfield, Ohio. 11. We have no assets other than office furniture in the branch offices. We own four automobiles which are domiciled in Pennsylvania, but in each case these cars spend a considerable amount of time outside of the State of Pennsylvania and in the course of solicitation and providing engineering data to the utilities and mines. The foregoing description of our activities in Pennsylvania has been in effect for a great many years, no changes have been made during the years under review and, as a matter of fact, the same set of circumstances exist in the years following those under discussion. We have never and do not now conduct intrastate business. If you have any questions or wish any further comments for clarification, please let us know. If there are no comments or questions, we will look forward to a reply to the statement which we have submitted. Very truly yours, EPHRAIM H. BROWN. THE TREATY Co., Greenville, Ohio, July 20, 1959. Hon. HARRY F. BYRD, Washington, D.C. SIR: American small business is presently faced with the most dangerous threat in many years. This threat stems from the recent Supreme Court decision in the Stockham Valves and Northwestern Cement cases. Here the Court affirmed the right to the States to tax the income of out-of-State companies doing solely interstate business in those States. Many States have laws imposing such taxes, and three States have already amended their tax laws to take advantage of these decisions. Faced with the prospect of steadily mounting budgets, other States will be tempted to follow suit. The burden of complying with the tax laws of all the States where a company merely sends in a salesman will be oppressive to business generally. 43695-59--11 Particularly for some companies it could mean failure or seriously curtailed activity. No one denies the obligation of business to pay its fair share of the State taxload. But obviously a more reasonable approach must be found if interstate business is to continue to grow and prosper. I understand that there have been several bills introduced in both the Senate and House of Representatives to correct this situation. As chairman of the Senate Finance Committee, I vigorously request your immediate support toward bringing action before the Senate during the present session of Congress. Thanks for your consideration. Yours very truly, Hon. HARRY FLOOD BYRD, Senate Office Building, Washington, D.C. R. E. BREADEN, President. DETROIT, MICH., July 20, 1959. DEAR SENATOR BYRD: As general counsel for the Ex-Cell-O Corp., which is shipping into nearly every State of the Union, I wish to respectfully urge you to support legislation that will prohibit State taxation of interstate commerce. It is my understanding that you will have this matter under consideration by the Senate Finance Committee starting Tuesday, July 21. The constantly increasing cost of supplying information, the filing of forms and questionnaires for Government inquiries is adding substantially to the cost of American products. This, together with the spiral of wage inflation, will eventually result in a depression, in my opinion, that will make the thirties seem like a picnic. We have already priced ourselves out of the foreign markets. In a desperate effort to salvage some of their world trade, many American companies have been compelled to establish manufacturing facilities in foreign countries. Every one of these foreign plants means fewer jobs for American workers. It seems to me that we have reached the point where we must review any further efforts to harass and impede the progress of American industry and certainly the attempt of various States to further burden industry with more costs, by State taxation of interstate commerce, should be prohibited by the Congress. I do hope that you will support the proposed legislation now before your committee to accomplish this purpose. Sincerely yours, Senator HARRY F. BYRD, Senate Office Building, Washington, D.C. MILES H. KNOWLES. THE HOME GUANO CO., DEAR MR. BYRD: We are addressing you in the interest of several bills which have been introduced in Congress and the Senate on which hearings will start soon concerning the Supreme Court ruling that the several States can tax interstate commerce even though the concerns doing business in more than one State do not have an office nor do they have a warehouse, but only solicit orders in the second State or others, and ship or have shipped into the second State any business which they may receive. We think Senate bills S. 2213 by Senator Bush, S. 2281 by Senator Saltonstall, all provide remedy for this unfair possible taxation we may have. We are in the southeast corner of Alabama within 20 miles of the Georgia line and 18 miles from the Florida line. Naturally we do some business in both Georgia and Florida as well as Alabama since we are right in the southeast corner of Alabama. Since we have no warehouses and no offices located in the States of Georgia and Florida but simply solicit orders in the ordinary way we think it is very unfair that Florida and Georgia should expect to tax us for the interstate business that we do in their States. This, of course, has never been done before and will continue to overolad businesses, especially smaller ones like ourselves, with taxes which are already high and numerous and in our opinion will cause tremendous confusion and higher costs for the consumer in all lines of business to have to pay an additional tax. We are already suffering from inflation and such taxes as the above will just add impetus to the inflation problem. Inflation must be stopped and soon. It is a deadly threat. We certainly hope that you and your committee as Senators will facilitate all possible the above bills in the Senate and vote for them when they come on the floor so as to correct the recent ruling by the Supreme Court on this matter of interstate taxation by the States. Thanking you for your consideration, M. L. HANAHAN, Jr. EASTWOOD-NEALLEY CORP., Hon. HARRY F. BYRD, Chairman, Senate Finance Committee, Senate Office Building, Washington, D.C. MY DEAR SENATOR BYRD: We are informed that the Senate Finance Committee will begin hearing testimony on July 21 on various proposals introduced by the Senate to modify the U.S. Supreme Court ruling in the Northwestern and Stockham cases on State taxation on interstate commerce. Our company employs slightly less than 400 people and, being closely held, we do not publicize our financial reports. Small as we are, however, we do sell our product in about 32 States of the Union but we have no warehouse, office, or place of business of any kind in any other State than New Jersey, where our only office and plant are located. We have received a communication from another State requesting us to file a tax return with that State for every year in which we have sold our products in that State. We are informed by our accountants and counsel that there are quite a few other States having similar laws which may also take such action with respect to our sales within their boundaries. If we are liable for such taxes, the financial burden alone will be a crushing one for our company. However, gathering the necessary information, preparing and filing the returns would also constitute tasks of such magnitude that our present organization would have to be substantially supplemented in order to accomplish such a task. We do not seek to avoid paying our fair share of taxes anywhere and have always endeavored to file whatever governmental reports are required and to pay our fair share at all times. However, the present disorder, apparently created by the above mentioned Supreme Court decision, can create a rather chaotic situation and may also result in unfair, unequal, and burdensome taxes. Under the circumstances we hope very much that appropriate legislation can be adopted in time to prevent serious harm, particularly to medium-size and small concerns who do not have multiple places of business and who do not have staffs equipped to deal with multiple State tax reporting and paying. At the very least, we fervently hope that Congress will act at once to preserve the status quo while this situation is studied by the Congress so that long-range legislation may be provided. We shall be greatly interested in whatever assistance your committee and the Congress will provide in this situation. Thank you. Sincerely yours, JOHN G. MACKECHNIE, President. SMALLER BUSINESS ASSOCIATION OF NEW ENGLAND, INC., Hon. HARRY FLOOD BYRD, Chairman, Senate Finance Committee, DEAR SENATOR BYRD: This association of small-business enterprisers wishes to go on record before the Senate Finance Committee as being in favor of the legislative steps proposed to correct the interstate tax problem. This legislation, we understand, is now before that committee for hearing. Specifically, we refer to Senate Joint Resolution 113, S. 2213, and S. 2281. Without such legislation, the possible effect of the February Supreme Court decisions on all business-but particularly small- and medium-sized business-is |