Such claimants would put a heavy drain upon the State funds which in some jurisdictions might bring about insolvency in those funds. In closing, we wish to assure the committee that our industry is not opposed to all reforms in the Federal-State system of unemployment compensation. Consequently, we do not oppose favorable Senate action on such a bill as H.R 15119, even though we recognize that its provisions for increasing the Federal tax would apply to employers in the graphic arts field-an industry in which even in periods of mild recession, there has been no scarcity of employment opportunities. I would like now, Mr. Chairman, to introduce Mr. Shields, who will make a further presentation on behalf of our industry. STATEMENT OF JAMES W. SHIELDS, PRESIDENT, JUDD & DETWEILER, INC. Mr. SHIELDS. Mr. Chairman and members of the committee, my name is James W. Shields. I am president of Judd & Detweiler, a member of Printing Industry of Washington, D.C., which belongs to Printing Industries of America. I have prepared some exhibits to Mr. Thrush's testimony which illustrate in rather dramatic fashion what the tax impact upon typical printing companies would be if Congress should adopt (1) the provisions of S. 1991 which increases the taxable wage base from $3,000 to $56,000 beginning in 1967 and to $6,600 in 1970, and (2) should couple with it the provisions of that bill calculated to compel the States to abandon the experience rating system. Exhibits 1 and 2 deal with my own company, one of the larger companies in the District, but still small business as that term is generally defined in Federal publications. You will notice in exhibit 1 that because our company has been able to avoid layoffs in the past 3 years, our State tax rate under the experience rating system is only one-tenth of 1 percent, and that our total payments to the Federal and State Governments is slightly less than $5,000. If the House bill should be amended merely by adopting the proposals in S. 1991 for increasing the tax base, this figure would more than double next year and in 1971 jump to about $12,000. If the District is compelled to abandon the merit rating plan, our bill for unemploy ment compensation, assuming a work force of the same size and yet no layoffs for lack of work, would be close to $64,500, approximately 13 times our current tax. Obviously this would create a severe hardship and remove any incentive for stabilizing employment. Plants with a high layoff rate and plants with none would be treated alike. Exhibit 2 is a chart also based upon our own experience showing how the existing experience ratings create an incentive. In the period 1960-62, as a result of losing a major customer, we were compelled to reduce our work force in order to remain in business. As a result under the present law our local tax rate went up to 2 percent, requiring us to pay a District of Columbia tax of about $28,000 in 1961, and almost as much in 1962. The company had to undergo a long and painful period of readjustment to regain our merit rating. We do not quarrel with this situation, however, for even though the circumstances in 1961 were beyond our control, it was not a permanent situation. But, as the committee will observe from projection on the lower part of the chart, our tax figures if S. 1991 is adopted, would be doubled over what they had been in the grim years of 1961 and 1962, even though no Judd & Detweiler personnel have to resort to the unemployment compensation rolls. The other exhibits are based on projections of the effect of S. 1991 on 11 other printing companies, some large, some small, located in eight different States, viz, Illinois, Connecticut, Kentucky, Arkansas, Indiana, Louisiana, Florida, and Kansas. Exhibits 3 and 4, from Illinois, show that in a small Chicago firm with an experience rating of fourtenths of 1 percent, now paying a tax bill of $2,300, would eventually be faced with costs of $17,500; but in a larger firm in a nearby community which enjoys the minimum rate, the tax would go from approximately $4,100 to nearly $56,000. In Connecticut, exhibit 5, the rates for a medium-size company, not having a minimum experience rating, would more than triple. In Kentucky (exhibit 6), a firm reporting its local merit rating such that no State tax is required, would find its tax bill going from $1,400 to $17,800. The same principles of geometric tax progression are illustrated in the figures for an Arkansas concern (exhibit 7), two Indiana firms (exhibits 8 and 9), two companies in New Orleans, La. (exhibits 10 and 11), and of Florida (exhibit 12) and Kansas (exhibit 13) printers. These exhibits show clearly that the passage of S. 1991 would result in serious cost dislocations in the printing industry. The favorable experience ratings prove that we generally maintain stable employment levels and that there is no justification for a tax increase of the magnitude proposed in S. 1991. For the same reasons they show why we favor the passage of H.R. 15119 which retains experience ratings. I request permission to have these exhibits inserted in the record. The CHAIRMAN. As I understand it, S. 1991 had a provision that would give the State the option to repeal the experience rating if they wanted to, but it was not mandatory. Mr. SHIELDS. Well, that is correct, as I understand the thing, what we have to look at the thing is we have to make projections that it could happen and therefore we have to look at it in that light. The CHAIRMAN. Thank you. Mr. SHIELDS. Mr. Chairman, I requested permission to have these exhibits inserted in the record. I didn't know whether you heard it. The CHAIRMAN. Yes. (The exhibits follow :) |