Senator SPARKMAN. Yes; they were quite aware of that, because they said this:

Apart from the tax proposals, the adoption of the recommendations presented in this report would have very little impact on the Federal budget. The loss of revenue entailed by the tax proposals is estimated at about $600 million in the first year, at about $740 million in the second year, and at somewhat reduced figures in later years.

It is doubtful, however, whether there need be any loss to the Treasury in the long run, for in the first place some of the tax proposals involve merely a deferral of taxes, and in the second place the proposed measures would tend to enlarge the national income, which is the ultimate source of all tax revenues.

So the Cabinet Committee had that fully in mind when they made these recommendations and made small businesses throughout the country feel something was going to be done for them in this session of Congress.

Mr. Secretary, insofar as I can, I would like to urge through you that something still be done.

Let me say this: I have given up any hope of any change in the tax structure, the income-tax structure, but there are other things that can be done that would not cost the Government any loss of revenue, and the one we have been talking about this morning is one of them. That is, to give to the small businesses of this country exactly the same privilege that we gave to the big business that are able to purchase new equipment in 1954, that is, rapid amortization on the purchase of used equipment.

Mr. OECHSLE. I will carry your message to the chairman.

Senator SPARKMAN. And will you do this, too: Tell him by all means to give us the green light up here on the relief in the field of inheritance taxes. It would not cost the Government any money.

And there is one other thing, and that is the right for small, closely owned corporations to be taxed as partnerships. You gave the partnerships the right to be taxed as corporations, so let us play it both ways.

Senator CAPEHART. Let me say this, that the matter of changing the tax laws is one that is up to the Senate Finance Committee.

Senator SPARKMAN. Yes, but we know what will be done if the recommendation comes in.

Senator CAPEHART. I have introduced legislation to permit the amortization of new and used equipment for I do not kow how many years, both under Republican and Democratic Presidents and Democratic-controlled Senates and Republican-controlled Senates, and so far we have not been able to get anyplace in the Finance Committee. I think one of the reasons for that, of course

Senator SPARKMAN. We have them studying it now.

Senator CAPEHART. We have a very strong man on the Finance Committee who is evidently opposed to it, because we never get anyplace with it.

Senator SPARKMAN. Let me suggest to the Senator from Indiana that he read the debates on the Senate floor when the corporation income-tax extension came up this spring.

Senator CAPEHART. You mean on Senator Fulbright's amendment? Senator SPARKMAN. Yes, on all of the amendments. We had pretty strong commitments, and I will say this with what I feel is definite

assurance, that if we can get the green light from downtown, we will pass the legislation.

Senator CAPEHART. I would like to ask unanimous consent to have printed in this record at this point the proposal that was introduced in the Senate, in order to show exactly how little tax relief was given to small business. Of course, that bill, as you well know, increased the corporation taxes from 52 percent, I think, to either 53 or 54 percent, so in reality it was really a tax increase rather than a general tax decrease.

What I am in favor of, and what I know the Senator from Alabama is in favor of, is tax relief for small business without in any way increasing the taxes of the larger corporations.

That is what I want. I think that is what he wants. I think that is what they are talking about in this report, and I think that is the thing that ought to be done.

I would be glad to introduce such legislation if I thought we had any chance of getting it through the Finance Committee. I have become so discouraged with the Finance Committee in such matters as this that this year I just did not introduce the bill that I have been introducing each year for many, many years, to permit the amortization of new and used facilities by everybody.

I think we might as well be frank and honest with each other here and say the way the general public in the country today, the Democrats and Republicans on both sides of the aisle, and the people in general, and the press and the newspapers, feel, it is certainly no year to be starting new expenditures and new programs and that sort of thing, because every time the President turns around somebody beats his brains out because of expenditures.

What we are trying to do here is to reduce the budget because the people are demanding it, rather than to add new ways of spending money and increasing the budget and thereby eliminating the possibility of a tax reduction.

It is awfully discouraging on the part of the President, and I am sure it is discouraging on the part of Senators, too, if they read their mail—and I am sure they all do.

Senator SPARKMAN. Let me say, if the Senator really wants to put the Fulbright amendment in the record

Senator CAPEHART. I do not care, except I just wanted him to know that while it gave a little relief, it was very little, and it did increase the taxes of larger corporations. It gets back to this, gentlemen, and I will use the term "so-called small business."

What is a so-called small business? Who is a small-business man and who is a big-business man?

I would say Studebaker is a small-business man when it comes to manufacturing automobiles. I would say that they were big business in comparison to a retailer on Main Street in South Bend, Ind., where they are located.

So you just cannot define, in my opinion, what a small-business man is. A small-business man may be small today, and 10 years from now he is big, but he goes through that process, and thank God he does, and I am for it. It is just an awfully hard thing to define. I have always used the term "so-called small business," and when I say that I do not mean I am against small business. Í say that because: What is a small-business man? Who is a small-business man?

What is a small business? What is it? Who is he? Is he a little retailer on Main Street? Is he a small wholesaler? Who is he?

Senator SPARKMAN. Of course, the Small Business Administration has made a definition.

Senator CAPEHART. Yes, but it does not mean anything to me.
Senator SPARK MAN. Under our direction, by the way.

Senator CAPEHART. But it does not mean anything to me because they say anybody that employs 500 people or less is small business. Senator SPARKMAN. Well, no, not exactly.

Senator CAPEHART. They have other criteria that are about the

same.

Senator SPARKMAN. I want the record to be straight on this. You referred to the Fulbright amendment. It is true that most of the debate centered around the Fulbright amendment, and the test vote was more or less made on that. But the program that I was advocating was much broader than the one, single amendment. That amendment related only to graduated income tax. I had four other bills relating to

Senator CAPEHART. Were they reported out of the Finance Committee?

Senator SPARKMAN. None of them were reported out of the Finance Committee, but the Finance Committee did take them under study and has them under study.

Senator CAPEHART. If they have to do with amortization, I am for them.

Senator SPARKMAN. So I feel rather strongly that if the administration will just do what they indicated in here they would do with reference to those three bills that I mentioned specifically here, they will get approval.

Senator CAPEHART. Let me say this, in all kindness and just to have a little fun, that your party controls the House and Senate.

Senator SPARKMAN. I have heard that before.

Senator CAPEHART. If you would just introduce the legislation and all of you vote for it, it would pass.

Senator SPARKMAN. But my friend knows what effect the recommendations of the budget have on us. Sometimes I get rather provoked at our slavishness to the Bureau of the Budget.

Senator CAPEHART. Let me say that it is almost impossible to get all the Democrats or all the Republicans to vote alike on any given subject. At least, I have found that true in 13 years.

Senator SPARKMAN. Well, thank you very much, Mr. Oechsle. We appreciate your appearance and your listening to all this debate up here.

Mr. OECHSLE. It has been very interesting.

Senator SPARKMAN. Mr. Floete. Franklin G. Floete, Administrator of the General Services Administration.

We are glad to have you here, sir.

our

If you have a prepared statement, you just proceed as you see fit. For the record, will you identify the gentleman accompanying you? Mr. FLOETE. This is Mr. Paul Barron. He is Director of one of divisions, and particularly interested in small-business activities. And this is Lloyd Dunkle, head of our National Buying Commission, who also participates in all of these various actions. Senator SPARKMAN. Fine.

STATEMENT OF FRANKLIN G. FLOETE, ADMINISTRATOR, ACCOMPANIED BY PAUL BARRON AND LLOYD L. DUNKLE, JR., GENERAL SERVICES ADMINISTRATION

Mr. FLOETE. To conserve your time, perhaps I could submit the statement for the record and not read it in detail.

Senator SPARKMAN. That would be fine. We would be very glad to have you do that, and the statement will be printed in full at the end of your remarks.

Mr. FLOETE. Mr. Chairman, and gentlemen of the committee, GSA, for a number of years, has operated business service centers throughout the United States wherever we have regional offices. We have 13 in operation at the present time.

They were designed primarily to assist in a general way the activities of small business.

In addition to that, GSA has for some years, under the law and under regulations issued by GSA, purchased as much as we could from small business. For instance, in the first 6 months of this fiscal year, we purchased approximately 57 percent, or a total of $140 million that went to small business.

We have also followed the general practices of business set-asides and of giving small business preference on tied low bids.

Recently we have very much increased the degree of control that we exercise over these activities. Mr. Barron is the head of the Division of Procurement and Business Services which has been set up as a separate organization, since we recognize the great importance of this activity. Therefore, the direction will be more intensive than it has been, and we assume that our small-business purchases will gradually increase.

I think the most important thing the GSA has done recently that may be of interest to the committee is the creation of a task force to study all procurement practices. This was recommended by the President's Cabinet Committee on Small Business, and we were assigned the responsibility for making this study by the President's letter of September 26.

The object, of course, is to secure uniformity and to do away with many inequities that now exist. I think this is of great importance not only to small business, but to all business. Unquestionably it will help small business proportionately more than large, because it will do away with needless inconsistencies, simplify the procedures, and remove the inequities.

That study is well underway. It is organized directly under Mr. Barron. There are representatives from each of the large procurement agencies, including Defense, which, of course, is the largest procuring agency in Government.

We are very hopeful that many important steps can be taken. For instance, on page 7, we refer to some of these: Simplication of regulations relating to packing, marking, and packaging requirements; inability to obtain Government contract specifications in sufficient time for bidding purposes; need for a uniform Government procedure for small business setasides; further studies concerning the remedial legislation which we feel is needed throughout this field.

We have prepared such a bill and have submitted it to the Bureau of the Budget, and it is now being cleared in the normal manner.

Another very important subject on which we are now working is a codification of the various manuals to replace the great number that are now in existence.

That in a very brief way summarizes the important work of this task force. It is being worked out in a very harmonious manner so we have complete cooperation from all of the various agencies, and we are certain that it will result in many changes that will be beneficial to all business.

Our relations with the SBA have been close. We have worked in harmony with them. Mr. Barnes, the Administrator of the Small Business Administration, is a member of the review committee that directs and decides controversial questions.

The other members of that smaller group are myself, Administrator of GSA; and Mr. McGuire who is Defense Department Supply and Logistics Assistant Secretary.

Senator SPARKMAN. Mr. Floete, I would like to say this to you and for the benefit of the record here, that our Select Committee on Small Business has had a great deal of work with you and your agency, and we have had the finest of cooperation. You have done many things that really have set patterns for other Government agencies to follow, and I want to acknowledge it for the record.

Mr. FLOETE. Thank you, sir.

Senator SPARKMAN. We appreciate it greatly.

Mr. FLOETE. Well, I really think there are great possibilities in this organization we have just set up. We were responsible for issuing last December 31 a regulation as to progress payments that was also recommended by the Cabinet Committee. We do not think it is perfect; we are still working on it, and we hope shortly to have a revised edition that will improve the first one. But it was a step in the right direction.

We are very much interested in this. I am a small-business man from the start, have never been anything else.

Senator SPARKMAN. I can almost say "so-called."

Senator CAPEHART. I think the record ought to show he comes from Iowa. I do not know whether he came from a so-called large farm or a so-called small farm, but there again it is a matter of what you have. I think the term "small" or "big" depends entirely upon what you are comparing it with. If you are comparing a 1,500-acre farm in Indiana with a 160-acre farm, it is a big farm. If you are comparing it with a 15,000-acre ranch out in one of the Western States, then, of course, it is a small business-at least it is small in acreage. It might produce more dollars, more income-a 15-acre farm in Indiana-because 15,000 acres in New Mexico is usually for grazing. Let me ask you this. Of course, the only contact you have with small business is that of buying from them, is it not?

Mr. FLOETE. Outside of this task force, the job that was assigned to us by the President; and that relates to procurement of all types, contracting and personal property.

Senator CAPHART. You are a big help to small business, as head of GSA, by making more purchases from the small-business man.