sales, doing some engineering perhaps in designing the layout and performing similar services?

These are but a few of the questions that immediately present themselves to us and, I am sure, to thousands of other small- and medium-sized manufacturers in the United States. Essentially, this question is peculiar to small- and mediumsized businesses. The large national manufacturers have had the problem for years, have the accounting and legal staffs to cope with the many questions that have arisen, and apparently have been able to reach satisfactory conclusions with the various States in which they operate. The small- and medium-sized manufacturers, on the contrary, must of necessity have limited legal and accounting staffs and are in no position to cope with the multitudinous problems resulting from these two cases.

The solution to our problem is not easy. One approach would be to await further development-perhaps by further litigation-but this involves costly delays and, certainly, litigation is not an inexpensive way to meet the problem. A second alternative would be to hope that the various States will be able, through their taxing authorities, to work out a common solution. In view of the divergent interests of the States (as for example, between the manufacturing State and the consuming State) and the desperate need for revenues by the various States, we think this an entirely impractical solution. The third alternative, then, is to ask for congressional intervention under the commerce clause to draw a line or to prepare a solid basis upon which we can act and plan. Certainly, we should not deprive a State of needed revenues when it offers services and protection to a business enterprise. On the other hand, we must not harass small- and medium-sized businesses by forcing compliance with State taxing laws which, in many cases, would exact a far greater cost in the recordkeeping and reporting requirements than in the actual tax itself. It seems to us, therefore, that the logical, just, and reasonable place for Congress to draw the line is at the point of the law where the Supreme Court, in these two cases, left it.

We believe that the Congress should provide that a State may levy a nondiscriminatory and fairly apportioned income tax upon profits arising out of sales within the taxing State only when the vendor maintains a sales office, warehouse or other place of business within the State; and that in the absence of that factor, the vendor should not be subjected to State income taxation. We must strike a balance between the conflicting interests, keeping always in mind the reason for the inclusion in our Constitution of the commerce clause; namely, as stated by Mr. Justice Frankfurter, that "whatever disadvantages may accrue to the separate States from making of the United States a free trade territory are far outweighed by the advantages not only to the United States as a Nation, but to the component States." It is our belief that the suggested line would recognize the law as it presently exists, form a basis from which we could plan our future operations, and offers a practical solution with which we can live. We particularly urge speedy action by the Congress on this question. We commend the sponsors of the legislation before you and solicit early action by this committee and the Senate so that the issue may be presented to the House at this session and legislation enacted. If this line is to be drawn, it should be drawn now, to minimize the confusion now existing and before the various States feel required to greatly enlarge their tax departments to cope with the tremendous increase in filings and enforcement activity that otherwise must be anticipated.

We appreciate the opportunity afforded us to present the view of our association on this matter.

The CHAIRMAN. The next witness is Mr. Robert H. North, International Association of Ice Cream Manufacturers.

STATEMENT OF ROBERT H. NORTH, EXECUTIVE SECRETARY, INTERNATIONAL ASSOCIATION OF ICE CREAM MANUFACTURERS

Mr. NORTH. Mr. Chairman, in view of the time situation, I would like to have permission to file my statement, and I would also like to insert in the record

The CHAIRMAN. Without objection.

Mr. NORTH. A wire from the National Fruit and Syrup Manufacturers Association supporting our brief in toto.

What we are asking of this committee, in the hope that it will come about, is some type of exclusionary bill such as the Bush bill or the other bills, which will provide that order-taking, delivery, and collection will be exempt from this kind of taxation.

I think the biggest difficulty in all of our industries, including the dairy industry and the suppliers and equippers to it, is the fact that there is a great feeling of uncertainty. We cannot anticipate our tax liabilities, and we urge the Congress in this session to do something to clarify the matter.

We feel that if there is going to be an extensive study of the whole interstate tax problem, it can be done later. We hope something can be done at this session to meet the situation to forestall the possibility that more States will adopt laws and attempt to levy taxes on even minimal business activity.

Thank you very much.

The CHAIRMAN. Thank you, sir.

Mr. North's prepared statement and the telegram referred to follow :)

STATEMENT OF INTERNATIONAL ASSOCIATION OF ICE CREAM MANUFACTURERS My name is Robert H. North. I am executive secretary of the International Association of Ice Cream Manufacturers. Our officers are located at 1105 Barr Building, Washington, D.C.

Our organization represents over 80 percent of the ice cream gallonage of the United States. We have 1,640 ice cream manufacturer members.

Additionally, we represent 230 companies that are suppliers and equippers to the ice cream industry. These companies produce and sell nationally to the ice cream companies equipment, ingredients, flavoring, sweeteners, packaging materials, point of sale materials, advertising materials, refrigeration devices, trucks, and motor transport.

THE FACTS

Many of the ice cream manufacturers, particularly the small- and mediumsized plants, have one manufacturing plant from which they distribute ice cream and related products. A considerable number are crossing State borders and doing business in other States. Most of these companies do not have distributing depots or warehouses in the States other than their State of domicile, but only take orders and sell ice cream to their retail accounts. Some of the larger companies may have several plants located in different regions, from which they are making an interstate distribution of ice cream and related products. The interstate complexion comes about because the ice cream manufacturers now have refrigerated transport of all sizes and can move their products for hundreds of miles over our modern highway system.

Our suppliers and equippers for the most part are single-plant operations. They have one central office and factory that fabricates material, supplies, and equipment, from which they are distributed nationally. Such distribution is made in response to sales created by a force of traveling salesmen. These sales representatives usually cover regions comprising several States.

Because of the decisions of the Supreme Court, most of these companies are now facing exposure and possible taxation on their interstate business. The greatest difficulty encountered is anticipating whether or not they will be liable for taxes on their present methods of doing business.

Our industries are low-margin operations, and the increased administrative cost of filing multiple returns and additional recordkeeping alone will be a hardship.

The possible retroactive tax liability presents a serious problem to them and might well mean financial ruin.

CONCLUSION

We urge the enactment of uniform legislation which would at least serve to define doing business in the State so as to exempt companies from liability for taxes on interstate income when only order taking, delivery, and collection is involved.

We believe that the matter should be resolved now before there is further uncertainty as to tax liability in even more of the States. Unless the problem is resolved there will ensue extensive efforts to collect taxes on even the minimum interstate business activity. There will be an increase in State laws to tax interstate business. There will be additional litigation and a risk for business that they should not be forced to take.

The matter, in our opinion, should be corrected in this session of the Congress by the exclusion of minimum business activities which might otherwise subject our members to taxation.

ROBERT H. NORTH,

NEW YORK, N.Y., July 17, 1959.

Executive Secretary, International Association of Ice Cream Manufacturers, Washington, D.C.:

Our association, comprised of about 80 manufacturer members and their suppliers who manufacture and sell nationally fruits, sirups, and sundae toppings to the ice cream trade and food outlets, subscribes to the views contained in your statement to be made before the Senate Finance Committee on July 21. We would appreciate your informing the committee that we favor enactment of the legislation controlling the States rights of taxation on interstate business. NATIONAL FRUIT & SYRUP MANUFACTURERS ASSOCIATION, ROBERT M. RUBENSTEIN, Executive Director.

The CHAIRMAN. The next witness is Mr. John Geipe, of the Movers Conference of America. Proceed, sir.

STATEMENT OF JOHN W. GEIPE, MEMBER, ADVISORY BOARD, MOVERS CONFERENCE OF AMERICA, AND PRESIDENT, MOVERS' & WAREHOUSEMEN'S ASSOCIATION OF AMERICA

Mr. GEIPE. Thank you, Senator.

My name is John W. Geipe. I am the president of J. Norman Geipe Van Lines, Inc., of Baltimore, Md., a member of the advisory board of the Movers Conference of America, and the president of the Movers' and Warehousemen's Association of America.

My appearance here on behalf of the Movers Conference of America, national association of the moving industry, is in support generally of the objectives of the legislation before the committee, but with some exceptions concerning the immediate needs of the members of the industry for which I speak.

The most important thing that I can do during the few minutes allotted me is to indicate to you how a moving service is accomplished, how extensive an interstate mover's operations must be through a large number of States, and yet the financial inability of movers to sustain the accounting and legal requirements for compliance with the tax regulations of numerous States.

First, I would like to point out that one out of every five people move each year, and that we consider ourselves an important element and contributor to the American economy and way of life.

I have been in the moving business since my earliest recollections. My father started the business in 1916. My firm has authority from the Interstate Commerce Commission to provide a moving service throughout 32 States. Fuel taxes and many other types of highway

use taxes are paid to each of the States through which we operate. Additional taxes are paid to the Federal Government, including a highway-use tax, fuel taxes, tire taxes, and other automotive excises. My firm grossed $301,813 last year. My operating ratio was 98.2. My firm, although among the comparatively few moving firms grossing more than $200,000 annually, is in most other respects typical of hundreds of other moving firms in the business. Only a handful of the 2,800 interstate movers have nationwide operating authority, but most have extensive authority to operate in numerous States. This is one of the significant characteristics of the moving business. Another is that no regular routes or fixed schedules are observed by movers. We pick up a family's belongings and take them to that family's destination, anticipating that other shipments will be picked up and delivered along the way. This may require a certain amount of zigzagging through a number of States, but it is the most economical way of providing a personal service of this type.

Some of us operate with agents in various of the States. I do not. Those having agents are largely cooperative organizations, the purpose of the agents being to supply return loads for each other. The agents are autonomous business enterprises, paying taxes to the States in which they are domiciled and established.

The nature of the business requires a high degree of cooperation between carriers, or between the movers' agents in the larger agency systems. Operations through, into, or out of individual States may be sporadic and occasional, but nonetheless required.

This results in a high degree of exposure to the many conflicting tax laws of a great many States. Further, our business is highly seasonal, as any of you who have had occasion to move in the summertime may know, and the amount of money involved in the business is limited. Our ability to support complex and extensive legal and accounting requirements accordingly is limited.

Movers have had ample experience with allocation formulas and know the number and magnitude of the problems which develop even when there is sincere interest in their universal application and consistent administration.

We believe with respect to the legislation before your committee that agencies of the kind which I have described, representing autonomous business enterprises subject to all of the taxing authority of the States of their domicile, should be distinguished and precluded from the type of agencies intended to bring an interstate business within the taxing authority of such States.

We also believe that an interstate mover which picks up, delivers, and traverses a State exclusively in connection with its interstate business, should not be subjected to the taxing jurisdiction of a State other than that of its domicile or principal place of business.

We respectfully submit that this be done.

I have here a supplemental statement which I would like to submit to your committee."

The CHAIRMAN. Thank you very much, sir. You wish the other statement placed in the record?

Mr. GEIPE. Yes, sir; I do.

The CHAIRMAN. Without objection. (The statement referred to follows:)

SUPPLEMENTAL STATEMENT BY JOHN W. GEIPE ON BEHALF OF THE MOVERS CONFERENCE OF AMERICA

The company which I head operates in 32 States. Thus I feel qualified to speak on the complicated problems of widespread interstate operations in the household goods moving field and the additional burdens imposed upon movers by the ever-multiplying demands of the States.

A detailed statement was presented to the Select Committee on Small Business at its hearing in Boston on May 1, 1958 (p. 284 of the printed hearings, pt. 2), in which we indicated the possible effect on movers of the specific provisions of the U.S. Supreme Court's decisions of February 25. We will not attempt in this statement, therefore, to review the Court's decisions but only to call attention to the effect of the proposed legislation.

The outstanding characteristic of the mover is his widespread operation in many States. Some of the larger moving companies operate in all of the States. The difficulties of the mover appear to increase in more than direct proportion as the number of States in which he operates increases.

Movers operate over irregular routes, going down this road one day and down another road another day, as they transport the household effects of the families of America to new homes when the breadwinners take new jobs or are transferred to other job locations by their employers. I might say here that the ultimate cost of moving is footed by these families and that as the load placed upon the shoulders of the mover grows heavier, so does the price paid by the American family compelled to go to another home.

By the nature of his business, the mover's work is sporadic with respect to any one place. He may never come back to the same home again, may not even return to the same village or town for months. Essentially, his role is pickup and delivery, the loading of a van at one location and the dropping off of its contents at another, one State or 10 States removed from the first location. The financial resources of most movers are exceedingly limited. The bulk of the movers are in the category of smaller small business. Of 2,800 movers certified by the Interstate Commerce Commission, only 18 enjoyed gross revenues of more than $2 million in 1958. And these, generally among the more administratively efficient, with data processing machines at their disposal, had an average operation ratio of 97.9 percent, which means that they had expenses of 97.9 cents for every dollar that they took in. Only 120 movers last year grossed more than $200,000. The rest of the movers-some 2,700 of themgrossed less than $200,000 each.

Such little fellows obviously cannot support the weight of the manifold expenses entailed by the multitudinous State tax laws. How can they retain legal counsel in each of the States in which they operate? Certainly, no one tax counsel can handle their affairs in a dozen or more States. How can they meet the costs of accounting and bookkeeping and reporting and filing on such slim revenues? They are required to assume the auditing expenses when the States make audits of their books. Their experience under the present requirements has convinced them of the impossibility of meeting still more requirements. That this is no idle statement is evidenced by the fact that 1 by 1, 10 by 10, the mover is disappearing. The rate of attrition is more than alarming. In 1948 there were 4,600 movers certified by the Interstate Commerce Commission. In 1958, the number had dwindled to 2,800, an average annual mortality of 180. The fatal tide still flows.

Ad valorem taxes, fuel use taxes, licensing proration, weight-distance taxesthese are some of the taxes, in addition to Federal income taxes and State income taxes in the State of principal place of business, which movers must pay as the price of doing any business at all. Rich indeed has been their experience in an attempting to breast this flood.

It was to gain some measure of relief from intolerable encumbrances that the household goods moving industry turned to the Congress with the Huddleston bill, H.R. 5175. This legislation would eliminate duplication by the States of certain regulations already promulgated by the Interstate Commerce Commission. It would, for instance, eliminate the necessity of filing a mover's ICC authority with State regulatory commissions, a requirement in 23 States. It would eliminate the necessity of displaying any identification device on or inside the vehicles of movers, a requirement in 36 States. It would eliminate the need to file insurance certificates or endorsements with the State commissions when properly filed with the ICC, a requirement in 32 States.