STATEMENT OF EDGAR C. CORRY, JR.,

REPRESENTING THE

AMERICAN VETERANS OF WORLD WAR II

Mr. CORRY. Mr. Chairman, for your convenience, I had passed out, I believe, copies of the statement I would like to present to this committee.

Mr. Chairman and members of the committee, my name is Edgar C. Corry, Jr. I am national commander of AMVETS, the only congressionally chartered organization composed exclusively of World War II veterans. Our national headquarters is located in the Victor Building, Washington, D. C., and we have active posts located in all of the 48 States of the Union. I wish to express my personal appreciation and that of my orgnaization for the opportunity of appearing before the committee at this important hearing.

AMVETS, at its 1947 national convention at Columbus, Ohio, adopted resolutions calling for legislative action designed to lower the cost of living to veterans and their families. During the past month, the national executive committee of AMVETS has overwhelmingly voted to support legislation repealing oleomargarine taxes as a substantial step in the direction of lowering the cost of living.

The oleomargarine tax law works an unnecessary hardship on all veterans as consumers. This law taxes yellow margarine 10 cents a pound, and its obvious purpose is to block margarine from its rightful place on the counter, because uncolored margarine, which has to be bleached to be sold in this category, is taxed by the same law only 4 cent per pound. If margarine is an impure or deleterious food, let it be banned altogether; but the Food and Drug Administration recognizes it as a pure food, and today it is staple fares on the tables of approximately 80 percent of American-and veterans'-families. The discrimination against yellow margarine is solely in the alleged interests of butter, a product which cannot begin to meet the demand, and which has been permitted by its own industry to sink a third or more below prewar levels while the Nation's milk went into more profitable -and, incidentally, nutritionally more desirable channels.

At the rate of 10 minutes per pound, and a conservative estimate of 625,000,000 pounds of margarine mixed by American housewives last year, the incredible result is 11,891 years spent at this task. Veterans' families are much too busy to be required to put artificial coloring into a pure-food product such as margarine while butter and scores of other familiar foods are artifically colored at the factory-and properly sounder the Federal pure food law.

Millions of other pounds of margarine were purchased last year at a premium of 10 cents per pound, paid to the Federal Government just because the consumer preferred to purchase her margarine ready for the table. This type of taxation resembles the British tax on tea of Revolutionary War notoriety. It has nothing to do with safeguarding the consumer; it is a direct imposition on hard-pressed family budgets, a restrictive tax on a needed food, and an outrageous Chinese Wall raised against an economic and nutritious food in time of record high prices.

The margarine tax is a serious barrier within the food trade, and constitutes a dangerous precedent for discriminatory legislation favoring one business, or product, against another. A large percentage of veterans who have gone into business for themselves are small retailers or wholesalers of food products. This law penalizes the small independent merchant as against the large outlet. It imposes a system of restrictions that impair the efficient functioning of business until they resemble in practice the socialistic controls over business in many other countries. It penalizes farm producers of the greater part of the country to the selfish benefit of a relatively few producers in the smaller part. It serves to close up opportunities for veterans in the food trade and in important agricultural enterprises. The Government's sovereign tax powers, by imposing exorbitant license fees on food stores handling margarine, are being used to penalize and discriminate against the merchant who wishes to handle this purefood product.

Most veterans today are in business, or associated with some form of business, or are planning enterprises or business careers. Their primary interest is that the traditional way of business-the opportunity to choose one's field of enterprise, to offer a new product on the basis of equal or better value at less cost-be maintained. The last war was largely fought to maintain such basic commercial freedom. To permit American enterprise to be shackled in the arbitrary interest of a single minority group or commodity, as is done in the case of antimargarine legislation, is contrary to the spirit and principles for which these boys fought. It is inconsistent with the democratic rights and privileges upon which all American freedom and businessprogress has been built.

In view of the abundance of technical testimony the committee is hearing this week on margarine and the taxes assessed thereon, I shall not attempt to advise the committee in that direction. I feel, however, that it is absurd and ridiculous that special occupational taxes should be levied on the handlers of oleomargarine, placing them in the company, in the United States Code, with handlers of adulterated and renovated butter, filled cheese, mixed flour, narcotics, marihuana, liquor, and firearms. I respectfully request the committee, and the Congress, to take favorable action toward the repeal of all Federal taxes now levied on oleomargarine.

The CHAIRMAN. Thank you very much.

The next witness will be Miss Anna Lord Strauss, representing the League of Women Voters.

STATEMENT OF ANNA LORD STRAUSS, PRESIDENT, LEAGUE OF WOMEN VOTERS OF THE UNITED STATES

Miss STRAUSS. The League of Women Voters urges your approval of legislation providing for the repeal of the Federal taxes and license fees on the manufacture, distribution, and sale of margarine. As an organization of citizens interested in good government, the league has long favored such legislation. It is our opinion that the law creating these taxes and fees is unjust and discriminatory.

The legislation which discriminates against the sale of margarine was enacted in the form of a tax measure. It taxes the sale of colored margarine 10 cents a pound and the sale of uncolored margarine one

half cent a pound. These taxes, plus the fees paid by the manufacturers, wholesalers, and retailers who deal in this product, raised only $7,609,786.91 in the calendar year, 1947. Our total tax collections for that period amounted to about $39,000,000,000. The margarine tax thus represented two-hundredths of 1 percent of the money collected by the Bureau of Internal Revenue. The money is such an insignificant portion of the Federal tax revenues that its continuance for that purpose is not justified. The issue resolves itself then to the real effect of this legislation.

The effect is to provide a major hindrance to the sale of a nutritious, low-cost product. By this legislation we are protecting one industry, the dairy industry, from the competition offered by producers of another product. As citizens who believe the welfare of the country is fostered by vigorous free competition, this interference with trade is objectionable to us. We would like to see both the taxes and fees removed so that no barrier to the free flow of trade exists in this respect.

Our organization aims to stimulate citizen participation in governIn doing this, we advocate legislation that the members have designated as of particular interest. We worked hard and long to achieve the enactment of an adequate Federal food, drug, and cosmetic law which passed in 1938. This law provides an adequate safeguard against the sale of harmful foods in interstate commerce. We therefore think that the reasoning that people should be protected from deception in the sale of margarine is no longer applicable. Some will say that the Federal food, drug, and cosmetic law applies only to products shipped across State lines and that adequate protection would not exist against the sale of inferior products within the States. It should be pointed out that every State but one, New Mexico, has a State food and drug law, many of which are modeled after our Federal one. Should State legislation be inadequate, it is up to the citizens of those States where this is the case to see that their State legislatures take the necessary steps to improve it.

Although the league has long favored the repeal of margarine tax and fee legislation, we feel it is particularly appropriate that it be done at this time. In this period of high-cost living, a major concern of citizens is how to keep the family budget down. One of the staples in food purchases is fat. Figures on the amount of margarine consumed in recent months show that more and more people are purchasing margarine to fill their need. During the last 6 months of 1946, 276,000,000 pounds were purchased. In the first 6 months of 1947, purchases amounted to 316,000,000, but it was 397,000,000 during the July to December, 1947 period-when the cost of living became increasingly burdensome. Due to the substantial tax on the sale of colored margarine, however, many citizens have had to buy it uncolored. The resulting irritation over home coloring to suit an accustomed family taste has caused increased resentment over this Government tax.

Because of the reasons I have outlined, the League of Women Voters sincerely hopes that your committee will recognize the importance of this legislation and that you will give a bill for the repeal of the margarine taxes and fees your prompt approval.

The CHAIRMAN. Thank you very much.

Mr. ANDRESEN. Miss Strauss, may I ask one question to clear up a matter in my mind? Do you favor the Corbett bill which permits. the removal of the tax on oleo made out of cocoanut oil?

Miss STRAUSS. We have not gone into the specific measures that should be undertaken to bring this about. Ours is the general principle that a citizens' organization has in bringing this end into being and we leave it to your committee, which is much better able, after having heard all the testimony, to decide it so it will be in the public interest.

Mr. ANDRESEN. You have no objection to margarine being made out of cocoanut oil?

Miss STRAUSS. We would not want to see anything done which would be contrary to the reciprocal trade program, but we have taken no position on cocoanut oil as such.

The CHAIRMAN. We thank you very much, Miss Strauss.

The next witness will be Miss Jean L. Whitehill, representing the Consumers Union. We will bear Miss Whitehill for 2 minutes.

STATEMENT OF MISS JEAN L. WHITEHILL, REPRESENTING CONSUMERS UNION

Miss WHITEHILL. Mr. Chairman and members of the committee, my name is Jean L. Whitehill, and I am presenting a statement in behalf of Consumers Union, a nonprofit consumer technical organization of more than 150,000 consumers throughout the United States. Consumers Union strongly urges this committee to recommend outright repeal of all taxes on margarine at every level from manufacturer to retailer.

In the case of margarine, a prohibitive tax is levied on the product when it is colored, although there has been no proof, and no effort to prove that the colored product is injurious. It actually employs the same kind of coloring matter that is used in many food products, notably candies, baked goods, and butter, none of which is taxed. No one has proposed that color be permitted to be added without its being so stated clearly on the label. Such label statements should continue to be required on margarine as well as on other artificially colored foods.

As for uncolored margarine, the tax is equally unjust. If uncolored margarine is either inferior or unfit as food, or presents any health hazard, it should not be marketed. To tax it is not to afford protection to the consumer, whose protection lies in the authority of the Food and Drug Administration. If uncolored margarine is a good and pure food, and conforms to the standards of identity of the Food and Drug Administration, to tax it is capricious.

The taxes and license fees on margarine strike a blow at the living standards of millions of American families in the lowest-income groups, and at these families only.

Consumers Union's technical staff carried out several studies of margarine to check its fitness for regular use in the kitchen. The projects have included both chemical analyses and use tests. The results, including an as yet unpublished survey, are summarized herewith.

In tests for fat content, all margarine tested met or exceeded minimum requirements of the Food and Drug Administration standard of

identity. All brands tested also met the requirements that moisture content be no higher than 16 percent.

In tests for keeping quality, even those 4 brands which showed a tendency to go rancid faster than the 16 others tested still remained sweet longer than the brands of butter subjected to comparable tests. Softening points of all brands were determined to find whether the margarine would become unsuitable for table use in summer or in a warm kitchen.

The CHAIRMAN. I am sorry, Miss Whitehill, your 2 minutes have expired.

Miss WHITEHILL. Mr. Chairman, may I ask that my testimony be incorporated in full into the record?

The CHAIRMAN. Yes. Without objection, we will be glad to insert it all in the record at this point.

We thank you very much for your testimony.

(Complete statement of Miss Whitehill is as follows:)

STATEMENT ON REPEAL OF TAXES ON MARGARINE BY CONSUMERS UNION OF UNITED STATES, INC., NEW YORK 3, N. Y.

My name is Jean L. Whitehill, and I am presenting a statement in behalf of Consumers Union, a nonprofit consumer technical organization of more than 150,000 consumers throughout the United States. Consumers Union strongly urges this committee to recommend outright repeal of all taxes on margarine at every level from manufacturer to retailer.

It is the contention of Consumers Union that the present taxes on margarine are unfair, discriminatory, and prohibitive. Their collection results in but negligible revenue, and works great hardship on low-income groups by restricting the availability of margarine. Since only one-half of the Nation's retail grocers have Federal licenses to sell uncolored margarine, its distribution is severely limited. With only 1 percent of the grocery stores being licensed to sell colored margarine, the possibility of purchasing it is almost nonexistent.

In the case of margarine, a prohibitive tax is levied on the product when it is colored, although there has been no proof, and no effort to prove that the colored product is injurious. It actually employs the same kind of coloring matter that is used in many food products, notably candies, baked goods, and butter, none of which is taxed.

No one has proposed that color be permitted to be added without its being so stated clearly on the label. Such label statements should continue to be required on margarine as well as on other artificially colored foods.

The question of permitting margarine to be colored should be related to the public health and not to the taxing power. The decision as to the prorpiety and safety of coloring margarine should be in the hands of the Food and Drug Adminis tration and not in those of the taxing authority. The Food and Drug Administration has not prohibited the use of proper coloring matter; therefore its use should not be penalized in one instance alone.

As for uncolored margarine, the tax is equally unjust. If uncolored margarine is either inferior or unfit as food, or presents any health hazard, it should not be marketed. To tax it is not to afford protection to the consumer, whose protection lies in the authority of the Food and Drug Administration. If uncolored margarine is a good and pure food, and conforms to the standards of identity of the Food and Drug Administration, to tax it is capricious.

The taxes and license fees on margarine strike a blow at the living standards of millions of American families in the lowest-income groups, and at these families only. There is probably no other tax directed so clearly against lower-income families.

Consumers Union's technical staff carried out several studies of margarine to check its fitness for regular use in the kitchen. The projects have included both chemical analyses and use tests. The results, including an as yet unpublished survey, are summarized herewith.

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