Code section 117(k). 124(b). 125 (c). 141.. PARTIAL LIST OF ELECTIONS TO BE MADE WITH RETURN-Continued 162 (c). 361. 437(b) 455. Election relative to - Capital gain on cutting of timber. Deduction of amortization of emergency facilities. .Filing of consolidated returns by affiliated corporations. Computation of excess profits credit on historical invested capital method. ..Exemption of personal service corporation from excess profits tax. ..Use of accrual method of accounting by taxpayers on installment sales basis for excess-profits-tax purposes. Four elections may be exercised or changed after the return has been filed, as follows: Code section 23 (aa) 51(g). 131 (a) 451. Election relative to Standard deduction-with return but election may be changed after filing of return at any time prior to the running of the statute of limitations (with certain limitations). Joint return of husband and wife-with return, but election may be changed within 3 years from due date of return (with certain liimtations). Foreign tax credit-at any time prior to the running of the statute of limitations on claim for refund. ..Capitalization of advertising expenditures for excess-profitstax purposes-6 months from due date of first return due after June 30, 1950. APPENDIX II PROPOSED AMENDMENT TO H. R. 8300 Section 391 (a) (1) should be amended to read as follows: "(1) Part II of this subchapter shall be effective only with respect to distributions made in pursuance of a plan of partial or complete liquidation adopted after March 1, 1954, and the provisions of the Internal Revenue Code of 1939 shall be applicable to distributions made in pursuance of a plan of liquidation adopted before March 1, 1954, except that the last sentence of section 112 (b) (7) (D) thereof shall be read as if, effective as to plans of liquidation adopted after December 31, 1950, the words 'on or before the due date of the return of the shareholder for the taxable year during which the corporation was liquidated' has been substituted for the words 'within thirty days after the adoption of the plan of liquidation, and" Words italicized added to language of bill as passed by the House. THE NATIONAL INDEPENDENT MEAT PACKERS ASSOCIATION, SENATE FINANCE COMMITTEE, GENTLEMEN: You have announced that you will receive written statements on the subject of tax revision. We have two points to make. First, the transportation as applied to agricultural products seems to conflict with what we understand to be the policy of our Government; namely, to give consumers more spending power. The transportation tax on live animals, meat and meat products tends to increase the cost to consumers of these basic food items. Why should it be made difficult for farmers to market readily the products of the farm? And why should it be made more expensive for people to buy food? Second, the tax on luggage should be eliminated. To place a burden on the hides used in luggage hurts not only the consumers but the producers and processors of live animals. Yours very truly, WILBUR LA ROE, JR. DRAFT OF STATEMENT BY GENE DIXON FOR THE SENATE FINANCE COMMITTEEPERCENTAGE DEPLETION FOR KYANITE I am Gene Dixon, president and treasurer of Kyanite Mining Corp. in Cullen, Va. My company and Commercialores, Inc. in Clover, S. C., are the only two producers of domestic kyanite. Kyanite is very similar in chemical composition and end use and is generally used to improve the properties of ball clay, sagger clay, china clay, and refractory and fire clay. My purpose in appearing before you is to urge you to extend to kyanite the 15 percent depletion rate which is now allowed to these minerals I have just named. Kyanite is used as a major ingredient in the production of welding rod coating, refractory fiber glass, electrical porcelains, Mullite lines of refractory, crucibles, glass tanks, and automatic glassmaking machine parts, superduty plastics, 2,800 degrees to 3,000 degrees insulators, saggers, kiln furniture, vitreous china bodies, cements and mortars, and undoubtedly in the production of aircraft jet engines, since some of the orders we receive carry priority and are marked 100 percent aircraft. Kyanite is used in the manufacture of superduty refractories. Although these refractories represent only a small percentage of the total tonnage of refractories used in the United States, they occupy a most important position in that field because of their special properties. Some of these properties are the high inelting point, the low coefficient of expansion, and the resistance to loads at high temperature, to thermal shock and to the corrosive action of certain fluxing agents. Suitable deposits of kyanite are comparatively rare in the United States, the only two deposits now being exploited commercially are in Clover, S. C., and Cullen, Va. Prior to the development of these domestic deposits, the United States was completely dependent on imported kyanite. India and Kenya, East Africa, are the only two countries to export substantial quantities of the material. During the last few years, however, exports from both of these countries have been dwindling seriously both in quality and quantity, and the importance of domestic kyanite correspondingly increased. The Munitions Board has included kyanite among the minerals listed as strategic and critical, and it is one of the materials which has been stockpiled when available. On two occasions it has been placed under allocation. In 1951, the National Production Authority organized a Kyanite and Mullite Industry Advisory Committee. It is imperative that the producers of this mineral have advantage of percentage depletion in order to continue to supply our nation with its ever-increasing demand for this most important, strategic, and critical material and to encourage continued exploration and search for additional suitable deposits. Furthermore, the percentage depletion allowance should be extended to kyanite as a matter of justice. Kyanite is used in competition with, and along with, many other minerals already enjoying percentage depletion, such as bauxite, graphite, vermiculmite, bentonite, feldspar, tale, pyrophyllite, and ball, sagger, china, refractory, and fire clay. It is very similar in chemical content to bauxite, ball, sagger, china, refractory, and fire clay, all of which are, as is kyanite, combinations of aluminum oxide and silicon dioxide. All of these silicate materials are used as refractory products in the steel, glass, chemical, and other industries. Kyanite is in fact considered and used as a “refractory clay" by the ceramic industry. For this reason, application was made to the Bureau of Internal Revenue last year to determine whether kyanite could be classified as refractory and fire clay for the purpose of the percentage depletion allowance. While conceding that on the basis of use Kyanite should be included in the general classification of refractory and fire clay, the Bureau ruled that it could not be so included because mineralogically kyanite is not clay. Thus we are denied equal treatment with producers of competitive materials almost identical to ours only because, to quote from the Bureau's ruling, "Kyanite is a natural metamorphic mineral with a definite composition, while clay is a residual or sedimentary mix ture of minerals, although both are basically aluminum silicates and may be used for the same purpose in some cases * * *." Our hazards of mining our deposits are generally much more complex and involved than that of mining bauxite and other minerals now receiving the 15 percent depletion allowance. We, therefore, ask that kyanite be accorded equal treatment and that it be included in the list of minerals entitled to 15-percent depletion allowance. CRYSTAL PALACE ROLLER RINK, INC., Senator EUGENE D. MILLIKIN, Chairman, Senate Finance Committee, Washington, D. C. DEAR SENATOR MILLIKIN: Allow me to commend and thank you for your, and the Finance Committee's, championing the cause of tax-burdened children inasinuch as the swimming-pool and skating-rink industry is concerned; as recorded in the Congressional Record of Wednesday, March 24, 1954, in your presentation of H. R. 8224 to the Senate (p. 3536, 1st col., 2d last par.). Believe me, Senator Millikin, we are grateful. In all of our presentations to the House Ways and Means Committee and to Mr. Gemmill of the Treasury Department, we stressed the fact that our industry pledged itself as far as possible to revert the tax reduction back to these children. I have attached hereto a photograph of a poster which I posted in my place of business last Wednesday, March 31, 1954; and can assure you of cooperation in the greater portion of our industry throughout the Nation. Even though H. R. 8224 (excise-tax-reduction bill) has given the majority of our industry tax relief, I find that in H. R. 8300 (Internal Revenue Code of 1954) again the inequity has been inserted on page 445, under chapter 33, subchapter (a), section 4233, exemptions, paragraph 4: "MUNICIPAL SWIMMING POOLS, ETC.-Any admissions to swimming pools, bathing beaches, skating rinks, or other places providing facilities for physical exercise, operated by any State or political subdivision thereof or by the United States or any agency or instrumentality thereof-if the proceeds therefrom inure exclusively to the benefit of the State, political subdivision, United States, agency, or instrumentality. For the purposes of this subsection the term "State" includes Alaska, Hawaii, and the District of Columbia * * *” The inequity still remains, and since those that are still taxed are dealing just as much with children and helping to curb juvenile delinquency as those of our industry that have been freed from the tax burden, and the amount of revenue loss to the Government would be negligible (approximately $200,000), this inequity should be erased. It is plain that an advantage is being taken of these children who have a tax imposed upon them by the Federal Government for the privilege of participating in the sports of skating and swimming where that sport happens to be the one of their choice. In no other participating sport does this imposition exist. And this also is imposed upon them only if they decide to patronize a privately owned, instead of municipally owned and operated, enterprise. I am attaching an editorial from our monthly magazine, The Skating News of April 1954, which I think you will find interesting. Again I ask you, Senator Millikin, to please consider removing this tax burden from the children and at the same time erase the gross inequity as far as private enterprise is concerned, in the Finance Committee study of H. R. 8300. This can be done simply by using the wording of H. R. 3421, a copy of which I have also attached. I feel that the committee will be quite busy with the hearings, and therefore will not take any of its time for oral testimony unless it would be desired. However, I would like to file a statement for the record. Thanking you for your indulgence in so long a letter, but I think you feel we have a just cause. Very truly yours, ARTHUR E. LITZENBERGER, Chairman, Legislative Committee, R. S. R. O. A. of America, and Participating Sports Association of America. [H. R. 3421, 83d Cong., 1st sess.] A BILL To amend section 1701 (d) of the Internal Revenue Code to provide that the tax on admissions shall not apply in the case of admissions to privately operated swimming pools, skating rinks, and other places providing facilities for physical exercise Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 1701 (d) of the Internal Revenue Code (relating to exemptions from the admissions tax in the case of municipal swimming pools, etc.) is hereby amended to read as follows: "(d) SWIMMING POOLS, ETC.-Any admissions to swimming pools, bathing beaches, skating rinks, or other places providing facilities for physical exercies; or". SEC. 2. The amendment made by this Act shall apply only with respect to amounts paid on or after the first day of the first month which begins more than ten days after the date of enactment of this Act for admission on or after such first day. WASHINGTON, D. C., April 7, 1954. Tax testimony Senator EUGENE D. MILLIKIN, Senate Office Building, Washington, D. C. DEAR SENATOR MILLIKEN: I herewith enclose testimony which I wish to present for your hearing at the present time on the new proposed tax system. Because of the number of people testifying, I was not granted permission to give this in person; so I request that it be printed in full in the findings. Many thanks. Sincerely, ISABEL C. MOORE. TESTIMONY PRESENTED TO SENATE FINANCE COMMITTEE ON LOGICAL AND EQUITABLE TAX STRUCTURE FOR THE UNITED STATES BY (MRS. W. W.) ISABEL C. MOORE, DISTRICT OF COLUMBIA A great deal of time and money has been spent overhauling the present tax system which hasn't been changed since the turn of the century, and the proposed new plan is just as antiquated, illogical, impractical, and complicated, as the present one. Like many apparently difficult problems, this one is extremely simple and could be solved in a short time, with no extra expense at all. But in our present stepped-up technological age, many people cannot comprehend the fact that anything can be done simply, and so cause themselves and millions of others great labor, hardship, and expense, unnecessarily. With the great advances in knowledge and efficiency that the world has accomplished, our cumbersome method of acquiring taxes for public funds is unintelligent beyond all understanding. It is an excellent example of horse-and-buggy thinking in an atomic age. It is time we shook off some of the procedures of the past that don't make sense, and one of the most effective mediums through which such reforms can be accomplished, is legislators of enlightenment and vision, so I urge the Congress of the United States to give this testimony its most intelligent and conscientious consideration, and have the fortitude to take the steps which any such radical change always makes difficult, and win the unending gratitude of the people. The first steps to take in solving any problem is to: (1) Face facts; (2) analyze them; (3) then begin at the beginning and do something. The first fact to face is there is no such thing as taxing one classification of people to the exclusion of others. Money, to perform its function, must circulate among all people, so taxes placed on any group eventually affects all others. The money rich corporations have, comes from the average people who buy their products and invest their money in them; and then it flows back to the people in wages, taxes, and welfare grants. The second most important fact is that all tax money comes out of the same place the pockets of the people, and goes into the same place-local and National Government, so it is most impractical to cause people to spend countless hours and dollars in figuring, and the Government likewise in administering and enforcing, multiple taxes. In the past when people were less bright, spreading taxes over many things might have fooled some, but it deceives no one now. The third fact is that one tax on income will ultimately be adopted, as it is the only one that makes sense, so people might as well get the benefits now. The fourth and most important fact is that the only logical, equitable, and economical method of obtaining public funds is to have a single, uniform, tax on income with practical exemptions, which would be many less than there are now, and a reasonable floor that would insure a decent living wage intact. A part of this should be used locally and the rest nationally. The percentage of this tax should be the same, regardless of the source or amount of income. A larger percentage of larger incomes penalizes industriousness and thrift, stultifies business expansion, dangerously reduces funds needed to be set aside for future emergency and loss; it causes cheating and graft, with its accompanying large expense of law enforcement; it causes waste through unnecessary spending for bonuses, entertaining, gifts, etc., to prevent paying taxes. If people are allowed to keep money from high incomes, it is not lost to the country, but is usually put to good use through investment, business development, promotion of human welfare, etc. Adequate laws should prevent excessive profits from occurring in the first place. This money comes primarily from the general public, not corporations; and money should not be drained out of the pockets of people, especially in lower income brackets, and then taken over by the Government and spent or wasted on people, sometimes all over the world, who did nothing to earn it. This single tax on income plan would have to be assisted with Government subsidies to prevent loss in businesses, until our economy becomes adjusted to it. This could be done by having businesses and industries sell products at the new prices established under the new tax setup, and then collect from the Government the loss they sustained through prices they had paid for products under the old tax plan. Advantages of single tax on income system: (1) Ability to pay should be the first principle of taxation. People only have so much money to spend. If it is eaten up under a system of uncontrolled, multiple taxes, their purchasing power is reduced, and sometimes public assistance has to be given them, requiring more taxes to pay for it. (2) It is efficient, eliminating the enormous waste of money, time, and manpower and the exasperation, the present complicated system of endless taxes takes to administer, and by individuals in figuring. This saving of money would mean a substantial reduction in tax money needed; and manpower saved could be diverted into other understaffed fields. (3) This would be a safeguard against oxertaxing anyone to the point of hardship, such as forcing people, especially in old age when income is greatly reduced, to lose their homes when they cannot pay real-estate taxes; and through sales taxes which are a hardship on large families with low incomes. (4) A single, uniform tax would prevent many duplications and inequities now existing. Present exorbitant inheritance tax is legalized theft. To take a very large part of the earnings of a lifetime, gotten together by hard work and sacrifice, usually for the security of families, and on which income taxes have already been paid, is unjust and dishonest beyond expression. (5) Inequitable rates for taxes on real-estate, manufactured goods, etc., could no longer exist. These cause business upsets, by diverting trade into adjoining States which have lower taxes, instead of taxes going into the States providing public services to their residents. It would prevent the moving of businesses from one location to another, with its consequent upheaval, unemployment, and hardships. It would prevent cutthroat competition. Bootlegging would be reduced as absence of taxes on liquor would cause less people to get dangerously unsupervised untaxed liquor. (6) Present large losses of taxes to the Government through graft, fraud, and error, would be reduced, as a single tax would provide less opportunity. (7) This system would eliminate one of the occupational hazards legislators have to bear from pressure groups, who are constantly besieging them to give their industries favorable tax consideration. Millions are spent for this, which, as always, the public pays for, in higher prices of products. The present system brings about a most undemocratic procedure in a country where everyone is supposed to have equal rights, and legislators are often helpless to do much about it, as they are required to carry out the wishes of their constituents. (8) Multiple taxation is a vicious cycle. The more people are taxed, the more they have to be taxed, as one tax piles up on another, increasing prices for Government, businesses, and individuals, which increases the need for higher wages and more taxes to pay higher prices. 45994-54-pt. 1—16 |