very serious. The arguments for such legislation have been well developed, notably before the Senate Select Committee on Small Business under Senator Sparkman, and we need not repeat them here. We have testified at hearings before that committee both in Washington and in Boston, asking for correction of the situation. The proposed legislation appears to us to approach the problem wisely, and we urge its eventual passage. The Commission proposed in Senate Joint Resolution 113 will serve a good purpose, but we do feel if immediate steps are not taken, as proposed in the two Senate bills, much damage will have been done before a Commission report can be made and action taken on it. We have been pleased to see the speed with which both Houses of Congress have reacted to the potentially dangerous situation raised by the decisions. To us, this indicates a real awareness on the part of Congress of the problem inherent in this situation. The need for correction seems apparent. To this end, we urge early and favorable action by the committee so that the matter may come to a Senate vote as soon as possible. Respectfully yours, PHILIP J. POTTER, President. HEINZMAN SONS, Grand Island, Nebr., July 11, 1959. Subject: Interstate taxation of ordinary business income. Hon. HARRY FLOOD BYRD, Senate Office Building, Washington, D.C. DEAR SIR: As we understand it, any company that sells its stock of merchandise in States (or, in some instances, cities) other than the one in which its business is located, is in very grave danger of being assessed income taxes by those States (or cities) where they have no place of business but merely ship or deliver goods. We feel it is our duty to speak up-this is our fight-against the interstate taxation of ordinary business income, and we feel that such tax legislation would be a great hindrance in general to all business. A number of bills have come up in the Senate, such as the one by Senator Bush (Connecticut) who was the first to get a bill (S. 2213) into the Senate, and this was followed closely by Senator Sparkman (Alabama) with Senate Joint Resolution 113, namely, to "prevent State taxation of income derived exclusively from interstate commerce when the only activity within the State is sales solicitation and where no office, warehouse, stock of goods, or other place of business is maintained within the State." It is now clear that quick action by both the House and Senate is the only means of saving businessmen from having to pay income taxes to many States and other political subdivisions. We request that you seek quick hearings before the House Judiciary Committee and the Senate Finance Committee, which have the bills already introduced before them for action. We ask your support against interstate taxation of ordinary business income. Yours very truly, FRANCIS W. YILK, G. L. BROWNELL, INC., Hon. HARRY F. BYRD, Chairman, Senate Finance Committee, DEAR SENATOR BYRD: I have been informed that your Senate Finance Committee will hold hearings beginning Tuesday, July 21, on the bill filed by Senators Saltonstall (S. 2281) and similar bills filed by others which will limit the power of the States to impose income taxes on out-of-State corporations on income derived excusively from the conduct of interstate commerce within those States. We are definitely a small business but at the same time we do sell our products in several of the southeastern States and it would be a terrific hardship on us if we had to keep records and make returns to the taxing authorities of the several States in which we do business. Our Massachusetts Senator Saltonstall arranged a hearing of the Senate Small Business Committee in Boston on May 1, at which testimony was offered regarding the problems confronting Massachusetts manufacturers not only of paying 50 separate State taxes but of keeping books, making returns, storing records, and engaging legal counsel, all to meet the diverse tax laws of the different States with their times for filing returns, different tax structures, different modes for determining "net income." The Senate Small Business Committee was urged to recommend to Congress that it pass legislation stating that State taxation upon income received by a foreign corporation engaged exclusively in interstate commerce is a burden upon interstate commerce and illegal. The bill filed by Senator Saltonstall (S. 2281) is such legislation and as the head of a very small business I trust that this bill or one very similar and accomplishing the same results will be reported out by your Senate Finance Committee. Very truly yours, CARL R. BROWNELL, President. STANDARD KNITTING MILLS, INC., Re State Taxation of Interstate Commerce. Senate Office Building, Washington, D.C. MY DEAR SENATOR: Our company is deeply interested in this subject of State taxation of interstate commerce account of recent decisions by the U.S. Supreme Court. We ship goods into practically every State of the Union. Naturally we have salesmen who go into these States and solicit business. We have sales offices only in New York and in Chicago. But, under these Supreme Court decisions, every State into which we ship goods now has the right to require of us intimate details concerning our operations and can tax on such profit as we realize on goods shipped into the particular State. As a practical businessman, you, of course, realize that this would just absolutely cover us with paperwork and no doubt would lead to our shouldering a greater tax load than we now carry, and goodness knows our present burden is discouragingly heavy. I understand that your Senate Finance Committee will hold hearings on this taxation problem beginning Tuesday, July 21, and that various bills and a Senate joint resolution have been referred to your committee for consideration. We have studied several of these bills which have been offered, have also studied the Senate joint resolution, and it would seem that a very simple bill or joint resolution would take care of this problem, so we are asking with all the earnestness at our command that your committee approve the needed legislation and strongly recommend favorable action thereon by the Senate at this session of Congress. We can see ourselves hopelessly swamped if this situation is not corrected by the Congress before it adjourns. Your assurance of sympathetic consideration of our request and of your determination to bring about prompt action on the subject will be most encouraging to us. If there are any members of your Finance Committee to whom you would like us to write, please give us their names and we shall be happy to write immediately. I cannot close this letter without stating that we are tremendously encouraged by the action of the President in vetoing legislation set up by the free spenders. Am sure that the President's action is most gratifying to you whom we consider the leader in Congress in support of Federal economy and the principle of living within our means. Sincerely, E. J. MCMILLAN, Chairman. THE TERRY STEAM TURBINE Co., Subject: State Taxation of Interstate Commerce S. 2213. Hon. HARRY FLOOD BYRD, DEAR SIR: We understand that the Finance Committee will hold hearings beginning Tuesday, July 21, on the subject bill. We feel that this bill is of great importance to small business throughout the country. We are horrified at the blow which will be dealt small business by the recent decision of the Supreme Court in the Stockham Valve and Northwestern States Portland Cement cases. This serious situation can only be remedied by immediate and decisive action by Congress clearly defining that interstate commerce shall not be subject to State taxation. The Court has developed a new concept of law in which the distinctions between interstate and intrastate commerce are no longer of consequence. This we strongly feel to be in error. Congress has exclusive power, under the commerce clause, to regulate interstate commerce. Until the Stockham Valve decision, the Supreme Court has held that direct taxation of exclusively interstate commerce is a substantial regulation of it. Therefore, in the absence of congressional consent, the States have not been permitted in the past and, we respectfully submit, should not now be permitted to directly tax such busi ness. While the double taxation which will result from this decision will be unfair and discouraging to all business, it will be particularly hard on the little company. I understand that 35 States now have laws which can be enforced on interstate commerce under this decision. Undoubtedly the remaining States and many cities will follow with new tax laws, and already three states (Idaho, Utah, and Tennessee) have amended their laws to take advantage of this decision. A small company simply cannot afford to keep all the required records, keep track of the laws and changes in laws, and file returns in each of the 50 States and perhaps 250 cities. I think you can appreciate that to keep track of 300 different sets of laws and the filing of 300 different sets of forms could very easily require the establishment of a tax department with a full-time lawyer, a full time CPA, and several clerks. Such an added expense would be very onerous for a company our size (200 employees). It could be ruinous for a company of 25 employees. I am sure there are thousands and thousands of these tiny companies who make sales in most of the 50 States and who can only live by freely doing so. We are a small company competing actively in one product with two of the largest manufacturing companies in the country, each of whom has hundreds of products. We do all our manufacturing in Hartford and all orders are accepted here and shipped f.o.b. Hartford. Our large competitors have plants, warehouses, and offices all over the country so they are already familiar with the laws and problems applying to intrastate business in each State. Furthermore, they are able to spread the costs of filing returns, etc., over hundreds of products. We will find it difficult and perhaps impossible to compete if we are not allowed to ship freely in interstate commerce as we have in the past. We strongly urge you to show your interest in the economic strength of our country and particularly your concern for the small business by giving your support to this urgent and important legislation. Very truly yours, A. LINDSAY THOMSON, President. THE HENRY G. THOMPSON & SON, Co., Subject: State taxation of interstate commerce. Senator HARRY F. BYRD, Chairman, Senate Finance Committee, Senate Office Building, Washington, D.C. DEAR SENATOR BYRD: We were very pleased to hear that the Senate Finance Committee will hold hearings beginning Tuesday, July 21, on bill S. 2213 intro duced by our Connecticut 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 hope your committee will give this bill favorable consideration because it is of great importance to us and to all manufacturers, but especially the small- and medium-size manufacturers doing an interstate business. We have previously written to Senator Bush and our other Connecticut Senator Thomas J. Dodd explaining our situation and soliciting their assistance in obtaining relief. For your information we are a small manufacturer of metal-cutting blades which are used everywhere but not in large quantities generally. For that reason our $4 million in sales annually are spread all over the world. We sell in every State in the Union including Alaska and to indicate the volume in each State and the magnitude of a reporting job may we advise that 13.68 percent of our sales are in Connecticut, 10.75 percent in New York State, and lesser percentages in all the other States down to New Hampshire 0.02 percent and New Mexico 0.01 percent. In other words, we sell a little in every State. This must be true of many other manufacturers. What a terrific job we would have if all or most of these States required us to file an income tax return and pay taxes on these interstate sales. At the present time we maintain a warehouse in California and a warehouse in Illinois and because of that activity we do report to these two States and pay State taxes, in addition to our own State of Connecticut. Otherwise, we do not report to any of the other States. Action by Congress, which we are told clearly has authority under the commerce clause, would seem to be the only hope for relief from this situation brought about by the recent Supreme Court ruling. We urge you, therefore, to give prompt and careful consideration to this matter in committee and endeavor to have legislation adopted before the adjournment of this Congress. Your kind consideration will be very much appreciated. Yours very truly, Senator HARRY F. BYRD, Chairman, Senate Finance Committee, Senate Office Building, Washington, D.C. J. T. BARRETT, Treasurer. H. H. SCOTT, INC., Maynard, Mass., June 20, 1959. DEAR SENATOR BYRD: As a small businessman with fewer than 300 employees, I wish to request most urgently that the Senate Finance Committee approve our Senator Saltonstall's bill, S. 2281, or similar bills which will limit the power of the States to impose income taxes on out-of-State corporations. The Supreme Court decision regarding the Stockham Valves case is is so ludicrous and absurd that I think it would be laughable if it were not so deadly serious a matter, and particularly to small business. As small businessmen and entrepreneurs, we are risking our lifetime savings and efforts for the opportunity to compete with large companies, for the opportunity to grow in spite of the sometimes overwhelming handicaps imposed on us by Government taxation and demands for accounting in almost every imaginable field. The effects of States imposing income taxes on out-of-State corporations would be serious enough for large corporations, but it is extremely serious to small companies such as ourselves, and there are far more small ones than there are large ones. There is such a thing as "the straw that broke the camel's back," and this ridiculous Supreme Court decision is a mighty big straw. Such uninformed and mistaken judicial decisions are constantly eroding away the spirit of free enterprise which made this country great. I sincerely hope that Congress will legislate corrective action. Sincerely yours, V. H. POMPER, Vice President. P.S.-The Supreme Court's decision is so uninformed that I cannot but feel it is to a considerable extent the fault of business and industry that the Justices could be so uninformed. I should like to present for your consideration a reprint of a short article in Industry magazine which gives my ideas on the true goals and philosophy of business in our society. I do not believe that profits are the goals of business, although they do form a necessary part of achieving the goals, of serving the human beings associated with business. [Reprinted from June 1959 issue of Industry, official publication of Associated Industries of Massachusetts] UNIQUE COMPANY PHILOSOPHY KEY TO SUCCESS OF ELECTRONICS FIRM Progressive approach to the role of the company in society wins recognition for H. H. Scott, Inc., of Maryland, whose growing business stresses nonmaterial as well as material rewards, and casts new light on the manager's function (By V. H. Pomper,' vice president, H. H. Scott, Inc.) A company's basic goal is to grow and prosper through leadership in all activities. This goal can be achieved only by management of high competence and integrity which best balances: (a) Leadership in creating and satisfying customers. (b) Leadership in releasing each employee's full potential with maximum individual recognition and reward. (c) Leadership in safeguarding and improving the stockholders' investment. (d) Leadership in fulfilling obligations to the external community including general public and suppliers. The best single measure of success on reaching this goal is to earn profit levels at least sufficient to insure company survival, both by covering inevitable business risks and losses, and by providing the means which make continued company growth possible. THE COMPANY The company is an organization. Organizations are formed to serve the people associated with them, to help these people live and grow, not vice versa. The purpose of a company, then, is the fullest development of all its people in all ways, physical, mental, spiritual, and material. Organization of a company makes possible division of work, or specialization, so people may concentrate on what they can do the best and enjoy the most. Organization permits accumulation of resources so that machines may be obtained for more routine and heavy labor, freeing people for more skilled and rewarding effort. People's higher capacities include imagination and creativity, exercising judgment and decision, fulfilling responsibilities, simplifying by introducing system and order, and improvement by self-development. These are unique activities using human abilities at their highest level, and with greatest satisfaction and material reward to the users. By banding together in group activities people cooperate to overcome increasingly complex environments and to achieve personal goals. Such goals include gaining a sense of purpose through achieving company goals, gaining opportunity to develop and advance, earning recognition and praise through achievement, winning security through status of position and pay, securing a sense of belonging or identity in the group through group activities, and having a voice in making the policy to be carried out. By working together, people supplement their weaknesses by the strengths of others, and they develop their strengths by applying them to challenging problems. In viewing the company and its people, all people must be considered, including customers, employees, stockholders, suppliers, and the general public. GROWTH Continuous growth and change are essential if the company is to continue fulfilling its goals and purposes, if its people are to be guided toward their fullest achievement and development, if they are to gain reward and recognition and satisfaction of their spiritual, physical, intellectual, and material needs. Only by itself growing and changing can the company keep pace with the rapid, drastic growth and change in technology, science, and society. Scientific or technical change is always followed by social change and to survive the organization must remain flexible enough to adapt rapidly to such change. 1 The author was the recipient of the junior chamber of commerce award as one of the 10 Greater Boston outstanding young men of 1958. The awards are conferred for achievements, leadership, service in business or profession, and contribution to the community. Nominees must be between the ages of 21 and 35. The material used in this article is an official part of the company policy of H. H. Scott Co. |