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It was in the light of the background information there elicited that Mr. Hartman and Mr. Sanders approached the constitutional issue.

These gentleman have concluded that the Congress does have power under the commerce clause and other principles enunciated in their opinion to enact the measure presently before you. We feel that both of these men are eminently qualified authorities in the fields of constitutional and State taxation law and we assure you that this measure, if enacted in its present form, will successfully withstand attack as to its constitutionality.

We have also sought and obtained the views of four noted and qualified authorities in the fields of taxation, economics, and transportation as to the appropriateness, adequacy, desirability, and need for this legislation.

These experts are Mr. James W. Martin of Kentucky, Dr. Harold M. Groves of Wisconsin, General John P. Doyle of Texas, and Mr. Broley E. Travis of California.

Each man was supplied with copies of H.R. 4972, the report of the subcommittee hearing, and the Hartman-Sanders opinion relating to the constitutionality of the measure.

Mr. Martin, who is generally conceded to be the dean of the tax fraternity is a professor emeritus at the University of Kentucky. He is highly regarded in the field of valuation of railroad and public utility properties, having served as valuation consultant both for railroads and the States of Kentucky, Virginia, Arizona, and Georgia as well as cities in those States. He is a past president of a number of organizations, including the Tax Foundation, Tax Institute of America, Associated Bureaus of Business and Economic Research, and the National Tax Association. More expended biographical data appears at the conclusion of the letter opinion appended hereto.

Dr. Groves, no less an authority taxwise, also brings to bear on the issue a comprehensive knowledge of economics and public finance. He is a professor of economics at the University of Wisconsin, has served Government in both appointive and elective capacities, has written extensively of finance and taxation, and served a term as president of the National Tax Association. Extended biographical data is attached.

Major General Doyle, who prior to his retirement served as Director of Transportation of the U.S. Air Force, occupies the McDonald Chair of Transportation at Texas A. & M. and served as Director of a Special Study Group on Transportation Policies in the United States for the Interstate and Foreign Commerce Committee of the Senate, which reported on the subject in January of 1961. Full biographical information appears immediately after his letter which is attached hereto, as exhibit 3.

Mr. Travis is presently a consulting valuation engineer in Sacramento, Calif. He is a former chief valuation engineer for the California State Board of Equalization. In addition, he has assisted the States of Oregon, Colorado, New York, Utah, and Idaho in their railroad assessment work. He has been employed as an expert by railroads in the preparation of valuation and equalization cases in Missouri, Illinois, South Dakota, and Iowa, since his retirement from his position with the State of California in 1962. More detailed biographical data appears as a part of Mr. Travis' statement.

Though unable to have Mr. Martin, Dr. Groves, or General Doyle present to appear before you, we were fortunate in being able to present Mr. Travis who is here and will appear later.

The National Association of Tax Administrators by executive committee action on January 18, 1961, accorded formal recognition to the discriminatory tax practices directed against railroads in the matter of their property assessments at State and local level. This committee recommended that the president of the association appoint a committee to "deal with all aspects of the problem, including the several proposals to restrict the taxing jurisdiction of the States as to property used in interstate commerce by railroads."

The executive committee also expressed the hope that the States found to be guilty of the offenseive practice of discriminating against railroads would see the error of their ways and mend them in a gradual and (presumably) painless fashion.

The president of the National Association of Tax Administrators acted on the recommendation of his executive committee and appointed the committee. How

ever, the committee had made no report by 1963 and so far as I have been advised has never made a public report.

As a practical matter the whole approach of this organization amounts to a confession of error coupled with a request for a postponement of judgment.

In 1964 and when measures identical to those now pending were before this committee, Government agencies having a possible interest were invited to express their views. The results are quite revealing:

First: No agency denied that railroads were in fact the victims of discriminatory action of the type claimed.

Second: No agency opposed the equalization objective.

The laws of practically all the States, if carefully adhered to, would rarely, if ever, produce a discriminatory assessment. In contrast to State assessment laws, the State provisions for testing assessments in courts or obtaining relief from the taxes that result from these assessments are not nearly as free from criticism. For the most part, these procedural relief statutes are vague and confusing and have little to commend them in the way of uniformity of either design or application. In this area, it seems clear that the proposed measure, offering as it does, a clear, direct and simple remedy designed for uniform, application by the Federal courts is highly desirable.

It should be kept in mind at all times that the measure here under consideration addresses itself only to supplying a procedure by which discriminatory taxes may be corrected. It is only available to the taxpayer capable of bringing himself within its terms. It is not self-operative and neither imposes any duty nor confers any right on the Federal Government to administer State taxes. The offensive taxes must be proven to be such by competent evidence and in a court of law. Absent such a proceeding and proof by a complaining taxpayer, the bill here proposed would have no effect whatever on any act of any State regarding any tax at any time.

To avoid unduly lengthening this statement and at the same time make readily available full information concerning this measure and certain questions that might be asked regarding it, I suggest that the committee by reference include as a part of the record of this hearing, my statement, my answers to questions propounded by the chairman of the subcommittee all in connection with the subcommittee hearing on July 28, 1964, and the documents listed below and submitted at that time:

(1) The Doyle Report: that is, "National Transportation Policy," a report prepared by the Special Study Group of Transportation Policies in the United States for the Senate Committee on Interstate and Foreign Commerce, 87th Congress, 1st session (preliminary draft, 1961).

(2) U.S. Bureau of the Census, U.S. Census of Governments: 1957, volume V, "Taxable Property Values in the United States."

(3) U.S. Bureau of the Census, Census of Governments: 1962, volume II, "Taxable Property Values."

(4) Report of the Advisory Commission on Intergovernmental Relations on "The Role of the States in Strengthening the Property Tax," volumes 1 and 2, June 1963.

I thank the chairman and members of the committee for this opportunity to appear before you. If there are any questions which you desire to ask, I shall be happy to try to answer them. If there is any additional information on this subject which you wish us to furnish now or in the future, we will do our very best to oblige you.

In closing, we submit that the duty of the Congress to protect interstate commerce from the undue burden of discriminatory taxes and, by so acting, to preserve our transportation systems in furtherance of the national transportation policy, is clear and compelling.

The following exhibits are appended and asked to be made a part of this statement:

Exhibit 1. Letter of Mr. Joseph W. Martin of January 10, 1966. (Also background material on education and experience.)

Exhibit 2. Biographical material of Dr. Harold M. Groves.

Exhibit 3. Letter of Maj. Gen. John P. Doyle of February 7, 1966. (Also background material.)

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NOTE. Since 1964 certain of the States listed above (notably North Dakota and Montana) have taken action to bring the level of railroad assessments closer to the level of assessments of other property. However, the reverse is true in other States.

EXHIBIT No. 1

LEXINGTON, KY., January 10, 1966.

Mr. JAMES N. OGDEN,

Vice President and General Counsel,
Gulf, Mobile & Ohio Railroad Co.,

Mobile, Ala.

DEAR MR. OGDEN: H.R. 4972, 89th Congress, 1st session, and identical measures in this and earlier Congresses, are designed, among other things, to accord the Federal district courts jurisdiction to provide judicial review within carefully defined limitations of cases involving carriers in interstate commerce who allege discriminatory property tax assessment. To secure the review the taxpayer would no longer have to show that he lacks a legal remedy under State law.

There are States as to which no such legislation is needed because (a) the State does not apply the ad valorem property tax to some or all such carriers, (b) the assessing officers avoid the discriminatory practices, or (c) the State courts under appropriate legal procedures protect taxpayers who would otherwise become victims of discrimination. However, there are certain States in which the statutes ostensibly provide timely and comprehensive judicial review but in which experience demonstrates that practically there is no prompt or adequate legal remedy for grossly inequitable and unconstitutional discrimination. (It has been my lot to be involved as a consultant or witness in some such States-sometimes with the State government, sometimes with taxpayers—and, hence to know the facts firsthand as well as through usual professional channels.) The States in which the legislation is not needed would, of course, be unaffected by the legislation.

In brief, there is a clear need for legislation such as that contemplated in the cited bills if interstate carriers are to have the due process and equal protection of the laws which the 14th amendment to the U.S. Constitution seeks to provide and which must be available if gravely unreasonable differential burdens on interstate commerce are to be removed.

The proposed legislation carefully avoids any impingement on the character of American federalism. It would not-as would some proposals to attain related objectives-impose on State administration of property tax assessment particular decisions made under congressional authority by the Internal Revenue Service or by some other Federal agency. Indeed, it would neither restrict the scope of State legislation nor interfere in any way whatever with the legal operation of any State administrative agency. Nor would it delay-as do Federal or State injunction proceedings at present-collection of the parts of State and local taxes which are clearly legal. Its only application would judicially implement a Federal constitutional provision about 100 years old but never yet fully applied in a number of States to interstate transportation property tax assessment cases. The proposed legislation is, thus, peculiarly appropriate to the task of applying the Constitution of the United States to the comparatively small number of cases to which there is now no practically adequate means of application and doing so without any possible offense on rational grounds to persons who wish to maintain the legally established operating atonomy of each State.

In this sense the proposed legislation is wise in what it does do if one merely assumes that it makes sense to apply the equal-protection doctrine to interstate carriers as well as to other taxpayers who otherwise become the victims of grossly inequitable discrimination; and it is equally wise in what it avoids doing, that is, altering the ground rules for the respective areas of adminstrative responsibility of State and of Federal Government. In the latter relationship the builtin restriction in the scope of the proposed bill would assure that the measure will aid, rather than impede, the drives now in process in a number of States toward better property tax administration.

There is one comment which rests on a different footing. The pleas of the persons who would avoid enactment of the proposed legislation until other "alternatives" are tried ignore the history of property taxation in relation to the 14th amendment. For about 90 years (the Supreme Court decided famous State Railroad cases in 1875) the problem has been attacked repeatedly, variously, and insistently. And, except for technical advances made in the light of research, the nonrevolutionary "alternatives" now proposed have been before the States in some form for more than 50 years. For reasons already made clear in the initial paragraphs of this letter, the legislation now proposed cannot logically be expected to interfere with or even slow the application of any proposed “alternatives." Moreover, if one may except the drastic remedies which would replace State with Federal tax assessment administration to some degree, this legislation would deal with a weakness which the publicized “alternatives" do not even purport to attack.

It seems clear that the Congress, in the interest of the reasonable protection of interstate commerce from grossly inadequate property tax discrimination and to assure an American fair deal, should enact legislation to guarantee the application of the constitutional prohibition against grossly discriminatory tax assessments which victimize carriers that transport goods or persons among the States. Only by such positive action can that commerce have the full protection of the laws which the commerce clause of the Constitution charges the national lawmakers with protecting.

Sincerely yours,

JAMES W. MARTIN.

NOTES ON EDUCATION AND EXPERIENCE OF JAMES W. MARTIN TO JANUARY 1, 1966

Education: College, East Texas State Teachers', June 1920. Graduate, Peabody-Vanderbilt, June 1920-June 1921; Chicago, June 1922-June 1924; summer

1928.

Experience: Alabama Technical Institute and College for Women, 1921-22; University of Chicago and Northwestern University (part time), 1922-24; Peabody College, summer 1924; Emory University, 1924-28; University of Kentucky, professor, 1928-48, distinguished professor, 1948-64, emeritus, 1964 to date; director, bureau of business research, 1928-64. Meantime, simultaneously or while on partial or complete leave, assistant to chairman, National Tax Association Committee on Highway Finance, 1921-22; chairman, Committee on Motor Vehicle and Related Taxes, National Tax Association, 1929-34; director of tax study for Georgia Chamber of Commerce, 1923–24; research director, Interstate Commission on Conflicting Taxation (Council of State Governments),

1934-35; member of President's Committee on Relation of District of Columbia to United States, 1935; chief of staff of Governor's Reorganization Commission (Kentucky), 1935-36; commissioner of revenue and chairman, Tax Commission, Kentucky, 1936-39; consultant during World War II period to Treasury De partment, Civil Aeronautics Board, and Division of Governments, U.S. Bureau of the Census; later consultant or lecturer (also staff director), Virginia Public Service Tax Study Committee on Railroad and Other Public Utility Taxation; Turkish Ministry of Finance on Administration of the Ministry; city of Louisville, and numerous other cities of Georgia, Kentucky, Tennessee, and Virginia; various agencies of Commonwealth of Kentucky, and of 12 or 15 other States; Southern Regional Education Board, 18 or 20 American universities and 1 foreign university; and served as Kentucky commissioner of finance (1955-57) and of highways (1937-38). Aside from 3 times valuing railroads and other Kentucky public service property as an official, Martin devoted special attention to this subject in (a) preparation of valuation testimony as to 5 valuation cases-mostly railroads-involving assessment or condemnation in which testimony was not submitted because of settlement or other reason and 15 cases in which in 9 States testimony was submitted before a State valuation agency or a State or Federal court; (b) consultant to railroad associations of 3 States involving counsel as to valuation of all railroads in 2 cases and testimony before a legislative interim committee in the third, preparation for Kentucky Department of Revenue of a general study of methods of valuation of operating public utility (including statistical derivation of capitalization rates) in early 1950's and as to railroads again in the late 1950's (a third study involving all public service enterprises is now in process); (c) revalution of all Kentucky public service corporations for department of revenue, 1964-65; (d) current consultation with Arizona, Georgia, and Kentucky as to public service valuation; and (e) contribution of a dozen or 15 monographs and technical journal articles to scholarly literature (along with 3 unpublished reports aggregating monographic proportions to tax officials in Arizona and Kentucky). In all, Martin has prepared for publication about 400 monographs and articles (the latter includin papers in American and foreign government, legal, and economics journals). He was awarded an honorary LL.D. by the University of Kentucky in 1965. Martin is past president of the Kentucky Academy of Social Sciences, Southern Economic Association, Tax Foundation, Tax Institute of America, Associated Bureaus of Business & Economic Research, and National Tax Association. He is now an honorary member of the last and of the National Association of State Budget Officers.

EXHIBIT NO. 2

Dr. Harold M. Groves is a native of Wisconsin. He is a graduate of the University of Wisconsin where he received his bachelor of philosophy degree in 1919, his master's in 1921, and his doctor of philosophy degree in 1927, and had a year of law at Harvard Law School. A professor of public finance, he was appointed to the University of Wisconsin staff in 1937 where he has remained except for an occasional mission in public affairs. During the early thirties he was successively State assemblyman, State tax commissioner, and State senator. In 1940 he served as chief of staff for the U.S. Treasury's study of intergovernmental fiscal relations. In 1944-46, he was on the staff of the Committee for Economic Development which published his study entitled "Postwar Taxation and Economic Progress." In 1948-50, he was chairman of the National Tax Association Committee on Corporate Income Taxation.

He has been on the board of directors of the National Bureau of Economic Research since the midthirties and was chairman of the board from 1961 to 1963. He was vice president of the American Economic Association for a term in the late forties and has been president of the Mid-West Economic Association. One of his many books, "Financing Government," is now in its sixth edition. He served as president of the National Tax Association in 1963-64.

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