FEDERAL TAXES ON RISING NATIONAL INCOME

Mr. HOLLANDER. Senator, I am not an educator, but I am an economist by profession. I would be prepared to defend the position that even if the States and localities were not in difficult fiscal straits themselves, there would be both a national interest and an economic reason why it is not only necessary but better for the Federal Government to finance a large part of the local education, simply because the Federal tax system is so designed that it can and will tap the increases in the rising national income and national product from year to year, whereas the State and local tax systems, by and large, are not so designed.

So, as Governor Freeman, of Minnesota, said here last week:

You keep piling taxes on taxes and taxes on the same real estate and it becomes impossible to finance these public services on an adequate scale purely out of the fiscal systems of the States and localities.

One of the things we believe, sir, is that there should be a really searching inquiry into the fiscal relationships between States and localities and the Federal Government, and the sources of revenue which will make it possible to provide these moneys from a progressive tax system that will expand as the national income expands. Senator ALLOTT. I agree to that.

LOW PROPERTY TAXES IN ONE STATE

I would just like to recall to your memory the one State that came in at that time and asked for Federal aid most vociferously, who admitted that they were assessing their property 12 mills upon a 20 to 25 percent property evaluation. This was their support of their schools, 10 to 12 mills on a 20 to 25 percent property evaluation.

I must state it is my position that this is not even a beginning of a local effort to take care of their children.

Mr. HOLLANDER. This is often true, Senator, but I spent a day discussing this question in Senator Smith's State with some of my friends around Newark a month or so ago.

It is my impression that both the State and the localities in New Jersey are finding it increasingly difficult to expand their revenue bases to take care of the expanding need for public services.

This is often true, as you know, Senator, because here is a community which is largely residential and has a great many children to educate, but only residential property in its tax base; and right next door is a community that is largely industrial and has a high value industrial tax base but a very small load of public services. The people who work in the plants in community B and live in community A have to educate their children from their own taxes at their own expense.

These local problems of financing become very, very difficult.

In my opinion, some equalization measures equalizing across States and across the Nation are not only necessary to get our schools functioning properly but are sound fiscal and economic policy.

Senator ALLOTT. I have no objection to State equalization.

NATIONAL EQUALIZATION

Mr. HOLLANDER. Wouldn't national equalization make the same kind of sense?

Senator ALLOTT. But we have no justification for it, as yet.

Mr. HOLLANDER. The justification, I would think, sir, is that education is a matter of national interest. If there are children poorly educated in the rural schools or in the schools of a city or State that does not maintain a good school system, they migrate all over the country and they become the citizens and the workers of other States. They become not only taxpayers but tax consumers in other States.

The extent of migration in this country alone, it seems to me, would make that a national interest, even if there were no question of the national defense or the fiscal problem.

Senator ALLOTT. You cannot have that without having the Federal Government take over the function of education.

Mr. HOLLANDER. I do not agree.

Senator ALLOTT. I cannot see any other way.

The very States who are asking for this assistance most are the people who insisted most loudly on States rights.

I would like to continue this with you, but I am going to leave, and there are some other people.

NEW JERSEY'S FINANCES

Senator SMITH. In connection with Senator Allott's comment and your statement about New Jersey, the big problem in Governor Driscoll's administration and in Governor Meyner's administration has been that the sources of tax revenue are taken by the Federal Government, and the money we ought to use for our local responsibilities goes to Washington. Therefore, we have to come down with hat in hand.

If you do that, you take away the local responsibility which is so vitally necessary.

Mr. HOLLANDER. Senator, I was not aware that any tax resources that were State and local a few years ago have been preempted by the Federal Government. On the contrary, New Jersey, in my opinion, if it had a State income tax, could, in a manner of speaking, recapture some of the money that goes off in Federal taxes because the State income taxes would be deductible.

Senator SMITH. I do not think it is appropriate to get into that discussion here, but I wanted to say that the difficulty has been the fact that we have no source of tax revenue, and there is a very strong feeling against the State income tax, as you know. This is a local political question.

Senator MURRAY. Are there any further questions of this witness? Do you wish to ask any questions?

Senator YARBOROUGH. No.

Senator MURRAY. Thank you for your testimony here this morning.

Mr. Kenfield, who testified a few moments ago, wishes to add something to his statement. It will just take a few moments. Will you come forward?

22201-58 -56

STATEMENT OF LEONARD KENFIELD—Continued

Mr. KENFIELD. Mr. Chairman, I was not aware that S. 3311 by Senator Murray was under consideration here this morning when I testified here a short while ago.

I wish the record to show at this time that the Farmers Union offers strong support for S. 3311 and heartily commends Senator Murray and his colleagues for this statesmanlike approach for the crisis in American education.

Thank you very much.

Senator MURRAY. Thank you very much.

The next witness is Mr. Ray Farabee of the United States National Student Association.

Mr. Farabee, will you come forward. You may proceed, Mr. Farabee.

STATEMENT OF RAY FARABEE, PRESIDENT, THE UNITED STATES NATIONAL STUDENT ASSOCIATION

Mr. FARABEE. Mr. Chairman and members of the committee, I, Kenneth Ray Farabee, president of the United States National Student Association, I am representing today the United States National Student Association (USNSA) which is a confederation of the democratically elected student governing bodies of 358 colleges and universities with an enrollment in excess of 1 million students in 44 States, the District of Columbia, and the Territories of Alaska and Hawaii.

We represent a majority of the undergraduate students registered in accredited 4-year institutions. Association policy is determined by the delegates of member campuses meeting in the annual national student congress. Policy and programs of USNSA are administered by the officers of the Association, elected by the congress, who take a 1-year leave from their academic work.

ASSISTANCE TO STUDENTS NECESSARY

The United States National Students Association believes that Federal assistance to college students is immediately necessary for our national defense and the fullest development of the best minds in this country.

American students, through USNSA, have consistently favored Federal scholarships and other aids, if properly established and administered, to overcome financial barriers which now prevent many qualified students from attending college.

The student, his family, and parents are the persons who most directly feel the effects of rising tuition and living costs. As enrollments grow and academic standards are raised, it becomes increasingly harder to "work your way through college."

The 650 student delegates at the 10th national student congress at the University of Michigan last August declared:

Financial obstacles often prevent the attainment of the educational goals of intellectually qualified students. According to the findings of President Truman's Committee on Higher Education, half of the top 10 percent of high school graduates do not attend college, many of them for economic reasons. Increas

ing enrollments will intensify the need for financial aid for these students. Scholarships and loans, originating with individuals, business, the State governments and/or the Federal Government, and Federal income-tax relief are means by which student economic problems may be alleviated.

CRITERIA FOR SCHOLARSHIPS

Students of the so-called silent generation have not been silent on this issue. Members of the national executive committee of USNSA which is composed of elected student representatives of 20 geographic regions in the United States, called for an immediate and realistic Federal scholarship program as late as December 1957, setting out the following criteria for its establishment:

(a) A scholarship plan of sufficient magnitude to provide substantial alleviation of existing financial barriers to college attendance; (b) Allocation on a State quota basis;

(e) Availability to all students on the basis of a single competitive. examination;

(d) Determination of the State of individual grants on the basis of financial need;

(e) Recipient selection of any accredited institution subject to admission.

(Resolution of national executive committee of USNSA, December 30, 1957, follows:)

FEDERAL AID TO EDUCATION

RESOLUTION PASSED BY THE NATIONAL EXECUTIVE COMMITTEE OF USNSA, DECEMBER 30, 1957

The United States National Student Association heartily approves of the $1 billion program of Federal-aid to education including $200 million for Federal scholarships recommended by President Eisenhower and Secretary Folsom. It urges support of this proposal to bolster education by the 2d session of the 85th Congress and educational, civic, religious, labor, and business organizations. In light of the reported 200,000 able students a year who do not continue their education past high school largely for financial reasons, USNSA feels that 10,000 scholarships a year included in the proposal are by no means adequate.

USNSA reaffirms the declaration of the delegates to its 10th national student congress representing 1 million college and university students:

"USNSA urges support of any program of Federal, State, or private aid to students regardless of race, color, religion, creed, national origin, political belief, or sex, which would provide opportunity to qualified students to attend institutions commensurate with their ability."

An adequate Federal program must include:

1. A scholarship plan based on the following criteria:

(a) Sufficient magnitude to provide substantial alleviation of existing financial barriers to college attendance;

(b) Allocation on a State quota basis;

(c) Availability to all students on the basis of a single competitive examination;

(d) Determination of the size of individual grants on the basis of financial need;

(e) Recipient selection of any accredited institution subject to admission. 2. A tax credit policy developed along the following lines:

(a) Benefits to go to students or persons incurring the major portion of the student's educational expenses;

(b) Such benefits to be awarded in the form of a percentage of educational expenses incurrred deductible from income-tax liability.

USNSA further reemphasizes the following policies adopted by the 10th national student congress relating to further needs of education. It recognizes

that the President's proposed program provides for major steps toward the solution of several of these problems and welcomes the national attention that it focuses on all of them:

1. "*** USNSA urges that every possible step be taken to increase the salaries of teachers to a level commensurate with their preparation for their positions and their importance to our society *** USNSA advocates the introduction of programs which will increase the number of exceptionally qualified undergraduate and graduate students in the teaching role."

2. "Regardless of the number of individuals seeking education, USNSA believes that education at all levels should be available to all according to their ability to gain significantly from the educational experience."

3. "USNSA encourages the adoption of practices in institutions of secondary education which would develop high school graduates' ability to profit most effectively from their college experience."

4. "USNSA urges that all possible efforts be made to raise the academic standard in institutions not now eligible for accreditation, so that these institutions can carry their share of the enrollment load."

5. USNSA recognizes the need for Federal aid for educational facilities which includes the following provisions:

(a) "The Federal Government would provide the appropriations only and would not in any manner have control of policy."

(b) "The Federal Government would administer the program in such a manner that those institutions which are more in need of facilities * * * would receive an amount greater in proportion to those schools now providing such opportunities."

(c) "The Federal Government would provide finances to States in accordance with the desire of the States to maintain education. * * * Increased expenditures would entitled the State to further considerations for building capital from the Federal Government."

USNSA recognizes that Federal scholarships are not the sole solution to the present problems in higher education and encourages that other forms of Federal aid to education be given equal emphasis.

STUDENT NEEDS AND RESPONSIBILITIES IN AMERICAN EDUCATION

A statement prepared by Ray Farabee, president of the United States National Student Association, on leave from the University of Texas

What is the role of the student in this period of widespread concern about American education? First, the student must become the center of a more adequate educational program that better meets his individual needs and the demands of a new age. Second, the student must assume a greater responsibility in his own education. Third, the student and his college must receive support from private and government sources which insure both opportunity and quality of education.

THE STUDENT IS THE CENTER OF EDUCATION

Amid talk and proposals for American education is the student-often a forgotten man, save for criticism of his failure to conform to preconceived concepts of "what a student should be." Education suddenly demands the spotlight of attention, unfortunately by shock and crises rather than leadership or rational conclusion. Let us hope that considerations of education will now go beyond the cliche and convention-that the student and his intellectual development will become the primary concern-and that our development of educational policy will be more than temporary solutions which fail to consider the basic and ongoing problem: the development of our most valuable resource the human mind.

Technological influences on our society require a greater knowledge of science by all college students. This does not mean that we should abandon our traditional concepts of liberal education in order to mass produce engineers, but it means that our colleges must produce a better-educated citizenry for world leadership in the sciences as well as in the humanities.