voted on the present tax proposals now, with my friend Dan Reed, or against him.

Secretary HUMPHREY. You have not done anything that affects you in any way. What you do with the excess-profits tax has nothing to do with these other things at all.

Mr. DINGELL. Yes; it does with me.

Secretary HUMPHREY. How would it?

Mr. DINGELL. Because I want these excess-profits taxes to expire. Secretary HUMPHREY. Well, they will expire December 31.

Mr. DINGELL. Yes; if we extend them to that date.

Secretary HUMPHREY. They will, and you will not be harmed in any way whatever.

Mr. DINGELL. Without any advance notice I will get word in your speech before the committee shortly after the 1st of January, then, what you think as a substitution.

Secretary HUMPHREY. Not for the excess-profits tax, because that is out.

Mr. DINGELL. It will be out then, as I say.

Secretary HUMPHREY. That is right.

Mr. DINGELL. But you will come here and might make a proposal, then, to substitute excises with a uniform general sales tax, either on the manufacturer's level or on the retail level.

Secretary HUMPHREY. I do not know what it will be.

Mr. DINGELL. That will just put you and me right on a mat, and with your added weight I do not know who is going to take the licking. I am going to try and show you I am going to be a bobcat about it. Secretary HUMPHREY. I hope we will not be in difficulty.

You can see why it perfectly reasonable and fair. I cannot answer those questions without some study and without some thought. And your crowd cannot. You have been studying this for many, many years. You have made up your mind. I have not made up my mind. You do not want me to guess ahead of time and then be in trouble.

Mr. DINGELL. I am going to try to make a convert out of you by telling you the story of sales-tax inequity comparing the bachelor to the family man.

Take as an illustration a family man who has 1 youngster and a wife, and we will say he annually buys 3 pairs of shoes. Under the Democractic administration he used to buy 6 pairs.

The CHAIRMAN. They did not wear too long.

Mr. DINGELL. Let us say he will buy each 1 pair of shoes, and that is 3 pairs of shoes. Another family with 9 kids, a wife and the breadwinner; that is 11. They buy each 2 pairs of shoes: that is 22 pairs of shoes. That takes an awful lot of excise taxes out of the guy that has the least or has the biggest load in family responsibilities.

Then take the bachelor. The son-of-a-gun gets away with just buying 2 pairs of shoes for himself-no kids and no wife. So you can see in that example, without any tearjerking on my part, that it is just a sales-tax inequity and, moreover, you are taxing a product instead of the profit made on it.

I have always gone on the theory that when you tax the profit you are sound. You tax the product, and you are all wrong. So, I have been an uncompromising opponent of all sales taxes in any form. I think they are an abomination. Of course, I feel very keenly about

my social-security efforts here since 1935. I would like to know whether somebody is going to want to reduce the benefits which we voted in this last Congress, or whether you want to go along and leave them where they are and draw on the reserve until it is gone and thus bankrupt the system.

Secretary HUMPHREY. There is no such suggestion, Mr. Dingell. There is no such suggestion at all.

Mr. DINGELL. There is nothing in the wind at all of that kind: that you are going to maintain the benefits while cutting the premium or

taxes.

Secretary HUMPHREY. No such suggestion is being made or contemplated in any way at this time.

Mr. DINGELL. I hope, despite this rather innocuous debate, I could have brought out more, but we are just too friendly with each other. We ought to use our bare knuckles. But I will wait until January and see what you have to say.

The CHAIRMAN. Mr. Simpson will inquire.

Mr. DINGELL. Thank you, Mr. Secretary.

Mr. SIMPSON. I was not sure whether John knew, Mr. Secretary, as a part of our present consideration we have a question of extending the excise taxes that are to fall off next year. He might have forgotten that. They are to be extended in this bill. Is that your wish? Secretary HUMPHREY. That is the suggestion; yes, sir.

Mr. SIMPSON. I just have a short question or two.

What is the prospective deficit for fiscal 1953 and 1954 without extending the excess-profits tax?

Secretary HUMPHREY. Well, the prospective deficit for the 1954 budget; that is what you are talking about.

Mr. SIMPSON. I mean the 1954 and 1955 budget.

Secretary HUMPHREY. Well, 1954 we will stick to for a moment. The estimated deficit for the 1954 budget is $6.6 billion, without the excess-profits tax or anything else being done. For 1955, if this bill that we ask for is passed and nothing else is done, there will be an additional loss of approximately $4 billion in tax for the following year, which would make the deficit, if nothing else was done, $10 billion for 1955.

It is not two deficits that we seek to reduce. We seek to reduce the $6.6 billion by a billion dollars which we are asking for from you gentlemen in this bill, which would reduce it to $5.6 billion, and then we hope to reduce that and expect to reduce that by cutting out expenses before we get to June so that we will be down there. Then, when the first Eisenhower budget comes in, we hope to present to you a balanced budget for the year of 1955. That can only be accomplished by very large reductions in expenditures, and you can only make those large reductions in expenditures by a very careful study and rearrangement and redoing of a lot of plans. You cannot do it just by cutting out fat. You have to cut out the fat, the waste, and you have to rearrange your plans.

Mr. SIMPSON. Where are we with respect to the cash expenditures in the forthcoming budget, 1954?

Secretary HUMPHREY. You mean if we take the money out of the funds?

Mr. SIMPSON. No, I mean have we cut the anticipated spending.

Secretary HUMPHREY. We have cut the anticipated spending $41⁄2 billion.

Mr. SIMPSON. Down to what?

Secretary HUMPHREY. $74 billion. It was $78.5 billion in the Truman budget. That has been reduced $42 billion to $74 billion.

Mr. SIMPSON. The $78 billion in the Truman budget was the expenditures?

Secretary HUMPHREY. $78.5 billion.

Mr. SIMPSON. And that you compare to the $75 billion.

Secretary HUMPHREY. $74 billion. That is $412 billion down. The forward commitments, which were $72 billion in the Truman budget, we have cut from 8 to 10 billion dollars. It is 812 right now, and I think it works out to between 8 and 10. That is what really begins to cure the difficulty. That is, cutting down on the materials that have been bought c. o. d.

Mr. SIMPSON. There is one other thing that I am sure troubles everybody on the committee. That is if I, for example, am persuaded with respect to a given company that its financial picture is very bad as a result of the excess profits tax because it was a growth company, that four or five hundred men are going to lose their jobs, how can it be expected that I could justify voting for excess-profits tax extension without relieving that company or others caught in that same boat. How can I do it?

Secretary HUMPHREY. Well, let's take Mr. Curtis' companies. You are going to put a lot of people out of work, too, if you do not act, and yet you cannot. We have to have this money. We have to raise money. Mr. SIMPSON. But you are not going to get money out of that fellow that goes out of business.

Secretary HUMPHREY. But you are not going to get money out of anybody if we keep running these deficits and running the dollar down. There is nothing more important than that. If you want to stop business and stop it completely, turn this thing into this whirlygig that we have been in. I do not believe, Mr. Simpson, that anybody can come in here and honestly show you that because he has to pay an excess-profits tax he is going to put 400 men out of work. That is baloney. He has made money. About the excess-profits tax, somebody said the other day that it took all of his income. That is not true. Nobody can take all of their income. All he will have will be more income left to him, that is all.

Mr. SIMPSON. Are you suggesting it is a good tax?

Secretary HUMPHREY. No; I am not suggesting. All I am saying is that if anybody tells you he has no income left, he is not telling you a fact. Anybody that tells you he has to put 400 men out of work if he has to pay his tax I do not believe.

Mr. SIMPSON. Suppose a man comes to you and persuades you that under an interpretation of the law intended to give relief to a corporation, a series of corporations, he is penalized to the extent of a half-million dollars, would you put something in to protect that man? Secretary HUMPHREY. Not any more than I would the other fellow. Mr. SIMPSON. I think the provision was put in the law to relieve a big group of our industry. He is not in that particular group of industry and they apply that law to him with no intention of taxing him at all and he is taxed. What would you do to relieve him?

Secretary HUMPHREY. What do you mean by that?

Mr. SIMPSON. I mean the case where the law was intended to relieve a group of our industry and this company was not in that particular group of the industry and they are interpreted to be taxed a halfmillion dollars under what was put in the law as a relief provision. Everybody else gets relief out of it but this company does not.

Secretary HUMPHREY. Why does it not? It is pretty hard to pass on a case without knowing what the facts are.

Mr. SIMPSON. I am sure you will be told and then I would like to know what to do about it.

Secretary HUMPHREY. Fine. I will be very glad, Mr. Simpson, to know the exact facts.

The CHAIRMAN. Are there any more questions?

Mr. BYRNES. Mr. Secretary, I asked you for those under $250,000 income who were paying this 11 percent of the overall revenue from the excess profits.

Secretary HUMPHREY. That is right.

Mr. BYRNES. Do you have those figures?

Secretary HUMPHREY. No; they are being prepared and will be brought up to you.

Mr. KEAN. Can we have that sent to all members of the committee? Secretary HUMPHREY. Yes; we will have that sent to everybody. We will get it just as quickly as we can.

The CHAIRMAN. Mr. Secretary, I believe you stated in your direct remarks the other day, perhaps in response to a question, that you would be opposed to any relief provisions included in this bill; is that right?

Secretary HUMPHREY. I think that is right, Mr. Reed.

The CHAIRMAN. I think you responded to Mr. Cooper to that effect. Secretary HUMPHREY. I think that is right. I think you start amending it and changing it; you would be doing the same thing you would be doing otherwise. I think to start out doing piecemeal is a good thing for the few people you give relief to, it is a very unfair thing for the hundreds of people that you hurt.

The CHAIRMAN. Mr. Secretary, for the record and no reflection on you-perhaps it will turn out to be a matter of real distinction—but I believe you are the only Secretary of the Treasury in the history of the country that has asked for an excess-profits tax during a period when we were not in an all-out war. Secretary of the Treasury Glass in his report for the fiscal year ending June 30, 1919, after the end of World War I, made the following statement:

The Treasury's objections to the excess-profits tax, even as a war expedient *** have been repeatedly voiced before the committees of the Congress. Still more objectionable is the operation of the excess-profits tax in peacetime. It encourages wasteful expenditures, puts a premium on overcapitalization, and a penalty on brains, energy, and enterprise, discourages new ventures, and confirms old ventures in their monopolies.

Secretary Houston in his report for the fiscal year ended June 30, 1920, urged the repeal of the excess-profits tax.

The reason for the repeal of the excess-profits tax should be convincing even to those who, on grounds of theory or general political philosophy, are in favor of taxes of this nature. The tax does not attain in practice the theoretical end at which it aims. It discriminates against conservatively financed corporations and in favor

of those whose capitalization is exaggerated; indeed, many overcapitalized corporations escape with unduly small contributions. It is exceedingly complex in its aplication and difficult to administer, despite the fact that it is limited to one class of business concerns, corporations.

Secretary Mellon in his letter to Hon. Joseph W. Fordney, chairman, Committee on Ways and Means, said:

The excess-profits tax is artificial and troublesome. Taxes of this extreme character are clogs upon productive business.

Secretary Vinson in the hearings before the Committee on Finance in the Revenue Act of 1945 said:

Since the basic objective of the tax reduction at this time is to achieve and maintain a high level of employment and national income, our primary concern must be the removal of obstacles to the rapid reconversion and steady expansion of business enterprise. I consider the excess-profits tax to be a particularly important obstacle to business expansion, and I suggest its outright repeal effective January 1, 1946, instead of retention until January 1, 1947, as provided in the House bill.

The excess-profits tax was necessary during the war, not so much as a source of revenue-although the yield has been large-but rather as a control measure to prevent war profiteering. It is the fixed policy of this administration that every war control over American business and American life shall be dropped as soon as conditions make it possible to do so. A long list of controls has already been dropped and many more are going day by day.

So that notwithstanding all of that testimony of these former Secretaries of the Treasury, you still are here to urge us to adopt this immoral, iniquitous-and I do not know how many other adjectives I might use-law that has been brought out here?

Secretary HUMPHREY. Mr. Chairman, if we were considering this anew, and you did not already have the law, you could list me with those distinguished predecessors. But so long as we have the law, for the reason I have told you many times, whether I am famous or infamous, there is one thing you can always depend on, I will be here telling you what I believe is right, regardless of what happens to me. The CHAIRMAN. Mr. Secretary, I think I express the sentiment of the committe when I say to you you have made a very fine appearance, you and your associates. We have been glad to have you here. Of course, we respect your opinion and your point of view, as I know you must respect our sincerity in our point of view.

Secretary HUMPHREY. That is correct.

The CHAIRMAN. If there are no more questions, we will proceed to the next witness.

Secretary HUMPHREY. I am very much obliged to you and I thank you all for being so patient.

The CHAIRMAN. Mr. Secretary, would you please be kind enough to notify Mr. Folsom that we would like to have him appear here for some questions?

Secretary HUMPHREY. Have him tomorrow?

The CHAIRMAN. That will be fine.

Secretary HUMPHREY. Yes, sir.

The CHAIRMAN. I have received three letters from American businessmen expressing concern over the possibility of an extension of the excess-profits tax beyond its present expiration date of June 30. Without objection, I would like to insert them in the record at this point.