17.4 percent, from $1.55 to $1.82 per hour. Our inability to keep up with the demand for our product through adequate expansion has resulted in lost sales and an increase in the overtime work by employees from 9.3 percent of the normal workweek in 1951 to 17 percent in 1953, which tends to result in a loss of efficiency through excessive hours. To meet the problem of having skilled people available as the business grew we found it necessary to conduct a training program in our plant, and to pay the tuition of men attending the trade schools of the Lithographic Foundation for instruction in the technical aspects of their particuular trades. Most of these trainees were veterans of World War II and are now earning above average wages. This program has proved highly successful and is being continued in direct proportion to our requirements for upgrading of skills and additional personnel. It cannot be continued if our growth is impeded. Ours is a fast-moving, highly technical, and competitive industry. Equipment is expensive, and when replaced is done so at costs that greatly exceed established depreciation reserves. The duplicate of a printing press purchased new by us in 1950 for $7,142, cost $9,843 in 1952, an increase of almost 40 percent. Continued growth requires flexible thinking, receptiveness to new ideas, and capital for experimentation, research, new equipment and facilities, and the financing of expanding inventories and receivables. There is serious question in our minds, however, about the advisability of pursuing our program of growth further under present conditions, despite the almost immediate acceptance of our services and product, when it is contemplated that such expansion can take place only at the expense of our own security. We appreciate and are gravely concerned about the position of our country in the world of today. We understand only too well and are equally concerned about the country's serious fiscal problems. However, we are firm in our conviction that there is no equity to be found in extension of a law that places an additional 30 percent penalty on business for the crimes of efficiency, increasingly higher wages, greater employment, and accelerated circulation of dollars through increased sales. Freed of the excess profits tax, Low's Reproduction Service will in all probability produce more revenue for the Government and employ more people at taxes of 52 percent than it will if forced to stand still because of 70-percent rates. The CHAIRMAN. That is a very fine statement. Are there any questions? We thank you very much for your appearance and the information which you have given to the committee, Mr. Hickox. Mr. HICKOX. Thank you, Mr. Chairman. The CHAIRMAN. The committee now stands adjourned until 10 o'clock in the morning. (Whereupon, at 3:50 p. m., the hearing was adjourned, to reconvene at 10 a. m., Wednesday, June 3, 1953.) EXCESS PROFITS TAX EXTENSION WEDNESDAY, JUNE 3, 1953 HOUSE OF REPRESENTATIVES, Washington, D. C. The committee met, pursuant to recess, at 10 a. m. in the main hearing room, Hon. Daniel A. Reed (chairman) presiding. The CHAIRMAN. The Committee on Ways and Means will continue to hear testimony on the President's recommendations to extend for 6 months the excess-profits tax. At the outset, I ask unanimous consent to insert into the record some telegrams which I have just received. Without objection, they will be inserted into the record. (The telegrams referred to follow :) Congressman DANIEL REED, House Office Building: ELYRIA, OHIO, June 3, 1953. The American people expect tax reduction and this can be accomplished by real economy in all departments. This was the pledge and it is up to you to keep it. R. D. OLDFIELD, Elyria, Ohio. Hon. DANIEL A. REED, BURLINGTON, Wis., June 2, 1953. Chairman of House Ways and Means Committee, House Office Building, Washington, D. C.: We register our hope that your committee will permit the excess-profits-tax levy to expire on June 30 as scheduled. To a small company organized in 1946, such as ours, this consistory tax destroys incentive, encourages business extravagance, stunts normal cooperative growth, and brings in relatively little from big business, thus penalizing us "smalls" who carry the EPT burden. We have 80 employees, sales approximately $600,000 per annum. The normal and American opportunity to grow either through retained earnings or through attraction of new capital is deprived us while this unsound confusing and small revenueIroducing measure confronts small business. RELIABLE RUBBER & ENGR. WORKS, INC.. Hon. DANIEL A. REED, MILWAUKEE, Wis., June 2, 1953. Chairman, House Ways and Means Committee, House Office Building, Washington, D. C.: It is our sincere belief that continuance of the excess-profits tax will be a major hindrance to return of a free economy. Removal of this ill-advised tax will stimulate the capital goods business which is needed right now. R. O. MARTIN, Vice President, Mercury Engineering Corp. WICHITA, KANS., June 2, 1953. Chairman REED, House Ways and Means Committee, Washington, D. C.: Excess-profits tax should be removed as soon as possible in order that operative capital may be converted to expansion of industry, both large and small. GENE REED. The CHAIRMAN. First on our schedule of witnesses today is Mr. Paul Cain, executive director, Young American Business Conference, Dallas, Tex. Is Mr. Cain here? Will you come forward and give your name and the capacity in which you appear, for the record. Mr. CAIN. Mr. Chairman, as executive director of the Young American Business Conference, I wish to present Thomas L. Amis, who is chairman of the Young American Business Conference. I will yield my time to him to deliver the testimony I was scheduled to deliver. The CHAIRMAN. You may proceed, Mr. Amis. STATEMENT OF THOMAS L. AMIS, CHAIRMAN, YOUNG AMERICAN BUSINESS CONFERENCE, ACCOMPANIED BY PAUL CAIN, EXECUTIVE DIRECTOR, YOUNG AMERICAN BUSINESS CONFERENCE, DALLAS, TEX. Mr. AмIS. Mr. Chairman, my name is Thomas L. Amis. I am president of Wamix, Inc., of Dallas, Tex. We manufacture readymixed concrete. We are, I hope and think, playing a significant part in the tremendous industrial development of the Southwest, which has given American industry its newest and brightest frontier. My company, which is 4 years old, was started on the customary shoestring, with 7 employees. Today we give employment to 70. Needless to say, we have our tax problems, and they are acute. I am national chairman of a group of small companies called the Young American Business Conference-an unpaid chairmanship, I might add. Through the work and research of this organization, I am able to present some data which will perhaps be more valuable to our committee's work than a discussion of my own personal problems. I will give, for the record, a brief explanation of the Young American Business Conference; as a group effort by small, new companies for survival, this movement was started 2 years ago by 3 small Texas manufacturers, of whom I was one. We were convinced that the excess-profits tax law was having an effect on small business never intended by Congress. We were also aware that the tax-writing committees of Congress had no means of learning all about these effects until the tax had been in force for a year or two, and that many small companies simply would not survive that long under the tax structure enacted in 1950. As a matter of simple selfpreservation, we sought to create an instrumentality which could gather and collate information about the effects of the tax, and present it in orderly fashion to those in Washington who are responsible for our tax laws. Accordingly, we organized ourselves into an informal conference, and retained the Eldean-Cain organization of Dallas and New York to direct the organization and assist in the preparation of the factual data we sought. In a couple of months we had the interest and participation of a hundred companies, from coast to coast, all having 3 things in common: Smallness, newness, and tax troubles. By gathering specific data on specific hardship cases, and projecting the effects of the law in terms of inhibited expansion and decreased employment, we were able to define and prove the inequities of the excess-profits tax law to small, new companies. This data was submitted in 1951 to the Senate Finance Committee and the House Ways and Means Committee. The Senate Finance Committee and the House-Senate conference amended the House-passed bill of 1951 to give certain relief to small, new companies along the lines which we had sought. Notable among these relief provisions were the granting of the "growth formula" to new companies, and a graduated excess-profits tax ceiling for small, new companies during their first 5 years. Note I do not say that our efforts alone caused the Senate committee to grant this relief. We did not set ourselves up as a pressure group, nor did we operate like one. We sought, as I said before, to become an instrumentality by which the true facts could be communicated immediately to the tax makers, having full faith that most of them, at least, would stand ready to correct unintended inequities. We believe our instrumentality for communication was effective, and more than one member of both the House and Senate committees lauded our efforts as being a genuine service to them in bringing to their attention facts which simply wouldn't have reached them any other way. I hope, therefore, that the additional information which our group has been able to develop since Congress adjourned in 1951 will be of value in the present problem of studying an extension of this tax. Our approach to small business tax problems is divided into two phases: excess-profits taxes and the so-called normal and surtax structure. Before taking up each of these phases, let me make a basic statement of principle. The present approach to corporate and business tax rates is wrong. Paul Cain and I have sat in committee hearings in the gallery at congressional sessions where tax bills were being written, and the approach has always been to predetermine the amount of money required by some fantastic budget, and then write a tax bill designed to extract that amount of revenue from the taxpayers, with no consideration whatsoever to the economic feasibility of either the extent of the tax or the method. Offhand, that might seem like a logical way to do it, but it isn't; no more logical than for a housewife to say to her husband: "John, I need $60 this week. I know you only earn $100 a week, and I know you will have $20 held out in taxes, $5 deducted for the bank loan, $10 due to the grocery, and $15 due on the furniture, leaving you only $50. You still bring me that $60, or else." That gives John three choices: He can skip some of his payments, and lose his furniture and his grocery line of credit, he can borrow from the loan sharks, thus hastening his ultimate disaster, or he can just quit his job, desert his wife, and go fishing. Small business has about the same choice today. |