Senator DOLE. Clyde, I think you should be commended. How long did it take you to get out here?

Mr. ROBBINS. I left session yesterday afternoon at 4. I stopped by home and picked up my brother and we drove all night. I got here at noon today.

Senator DOLE. Thank you. If anybody has any relatives in that area, they might write to them because that's a commitment to drive all night to indicate his concern for the problem affecting his district. Our next witness is Peggy Arensman. Peggy, I'll let you explain your organization because it's a very effective group, called WIFE. STATEMENT OF PEGGY ARENSMAN, WOMEN INVOLVED IN

FARM ECONOMICS

Mrs. ARENSMAN. Thank you. I have people who ask me if I'm bragging if I'm married, and actually I am, but we are a group of farm women, Women Involved in Farm Economics, and we're mainly a lobbying group and a self-education group.

My name is Peggy Arensman. I am the Kansas president of Women Involved in Farm Economics, commonly called WIFE. My husband and I are a wheat, alfalfa, and cattle farm close to Kinsley, Kans. You will note that I wear red. This is to denote that I am producing in the red. It isn't funny, folks.

Farmers have been locked into a large financial loss for years now. Some of us thought that we might feed our children from our oil checks.

When we purchased our land, our abstracts read that we had obtained the mineral rights. We had paid for them. But with just the signature of the President and the vote of our Congressmen and Senators, our paid representatives, once again, we lost what we paid for and needed for the support of our children. The windfall profit tax was nothing more than legal robbery. Every business and industry has a budget, and if hard pressed are forced to curtail their spending until they work themselves out of their difficulties. This is exactly what our Federal Government must do. Not levy more taxes upon the citizens. When all forms of taxes are added up, a family of four making $20,000 now pays 47 percent of his income in taxes. This is exclusive of the windfall profit tax.

The most basic needs of life are air, water, and food. The production of food in the quantities we have become accustomed to is dependent upon our oil supply. We in the food industry are most dependent upon our independent drillers, for they furnish 90 percent of our country's domestic industry.

When Carter was running for the Presidency in 1976, he promised us no increase in taxes. What did we get? The greatest increase ever levied, the windfall profit tax-$229 billion worth of taxes in 10 years. With the cheap food policy, this adds injury to insult for us farmers. Much governing the industry just does not make sense for a strong America or a strong oil industry. When policy is made for our Nation, our Government must put America first. For the most part, if policy benefits private business, it benefits America. Healthy business helps strengthen America. For instance, profits for independent producers

are plowed back into wells which produce more domestic oil. This generates new jobs, new taxes, and keeps the full monetary amount in this

country.

Windfall profit taxes are on domestic oil, not foreign oil. Therefore, it works backward by making foreign producers have a competitive edge over domestic producers.

Our double price standard for oil, domestic and foreign, should be reversed so that foreign oil gets the smaller price. This would benefit so many Americans. America can only help the rest of the world by keeping itself strong.

Our operation had been receiving $800 to $900 a month oil checks. This last check was in the $300 range. This was the only way we thought we might provide for our children, as our farm enterprise has had such large loss. Now, this too had been legally stolen from us.

The United States is sending the private producers the message, your investment, your management ability, and your labor are worth nothing. This is a dangerous message. Our country was built on the independent competitive businessman.

Senator Dole and Senator Boren, we need your help in repealing the windfall profit tax for the benefit of all of us.

I thank you for the opportunity of testifying before you today. Senator BOREN. I'm glad to have heard your testimony, and I think you hit on a couple of points that certainly are important. To start out, this kind of a situation, this is the first time in the history that they've ever led to a windfall profit tax when someone is not making a profit. I think that's the start of it. The word profit only appeared in the title of that bill. It didn't appear anywhere else in the bill.

As we well know, it's not a tax on profit, it's an excise tax. As you pointed out, we have it all in reverse. If we want to produce more energy here at home and consume less energy from overseas, why is it that we discourage production here by a tax and literally encourage the companies in the oil operations overseas where they're not taxed?

I had a leading Japanese banker-and they understand economics pretty well-he said I thought you people wanted to produce more energy at home and consume less from overseas. I said that's right. He said I'm very puzzled. You say that we orientals are inscrutable. I think you're inscrutable. If you want to produce more at home and consume less from abroad, why do you tax your production at home and indirectly subsidize your consumption from overseas. I couldn't answer that.

But, we have to do something, which you put your finger on, and that is for the first time in the history of the world, we can look at the history of any country. We have countries before that have had tariffs, that have paid their own people more to produce something than we paid people in other countries. They protected their domestic interest. But never in the history of the world has any country had a policy that paid people more in another country to produce a product than we paid our own people, and we've managed to make economic history by doing this and that's exactly what we're doing.

Mrs. ARENSMAN. That's why we're called dumb Americans.

68-742 0 - 80 - 12

Senator BOREN. Thank you.

Senator DOLE. Peggy, I appreciate your testimony very much. It's straight out, to the point.

Mrs. ARENSMAN. Thank you, sir.

Senator DOLE. No punches pulled and hopefully that is the kind of testimony that will encourage my colleagues and help them understand this problem.

Again, I think we have to keep pointing out the facts. I do not suggest it was the media's fault, but I would guess that 90 percent of the network news on the windfall profit tax portrayed the tax as a tax on big oil. One heard at morning, at noon, and at night about how we were going to tax big oil. There was a feeling in the Congress-we watch the news programs too-that only big oil was affected by the tax. I think that you have indicated through your statement that there are a lot of people, average Americans, who are working and trying to educate their children, and who are now losing 35 percent of their income. These people have literally had a property right taken away from them without even a hearing. I do not remember any royalty owners appearing before the committee. We did not think we were going to tax most royalty owners when it left the Senate. Senator Boren was opposed to that. I was opposed to that. Most Senators were opposed to that, but then they added $50 billion in additional taxes in the conference. I appreciate your testimony and I thank you for coming.

Mrs. ARENSMAN. Thank you very much, sir.

Senator DOLE. Mr. Frazier, Steve Frazier, the Cowley Landowner Association, represents about 400 landowners.

Mr. FRAZIER. People.

Senator DOLE. People, excuse me.

STATEMENT OF STEPHAN FRAZIER, COWLEY COUNTY

LANDOWNERS ASSOCIATION

Mr. FRAZIER. Thanks for letting me testify before you today. You know, your Eastern colleagues have hit us over the head with a grain embargo and a windfall profit tax, all in the same year. We must be the poor relatives out here.

I am a farmer, live 4 miles north of Winfield. In case you don't know where that is, that's southeast of Wichita about 35 miles. Our operation is primarily wheat and cattle. I've been in agriculture the past 20 years. Prior to that I was an exploration geologist for Standard Oil of California for 14 years. We have a small royalty income.

I speak on behalf of the Cowley County Landowners Association. I am a director of this organization which has approximately 450 members, mostly rural landowners. The purpose of the organization is to promote and protect landowner interests. Several of our members have royalty incomes. Most of these are small. Windfall profit tax adversely affects these people.

In 1977, Cowley County produced over 2 million barrels of oil. This is certainly not Saudi Arabia, but it does help the energy shortage as well as provide jobs and royalty income for many of our residents.

Small independents produce most of this oil. Though I represent the landowners, the producer is equally important because without the producer there is no royalty.

This tax hurts the oil business in our country for the following reasons: The royalty from the royalty owner's standpoint and the royalty owner is generally the landowner, the tax reduced the royalty owner's income by at least 30 percent. I'll read a letter from a lady here in Winfield. This is to whom it may concern. It says in 1922, my father borrowed money to buy a farm. He struggled through the depression years. Fortunately he had a profession to back his farming. Small oil was discovered on the place, which has been the salvation of the holding. Now my sister-in-law, who is in her eighties, and I, nearing 80, are co-owners. She is in a nursing home in Tulsa, Okla. with terrific expenses. I have been more fortunate in that I am able to care for myself. We are both retired schoolteachers.

Our first check, April, after the windfall profit excise tax, reads something like this: Owner's gross value $404.82, owner's net value $203.83. That means that $140.99 was withheld. Approximately 36 percent. Doesn't this seem out of all proportion for people in our circumstances? And, this is signed, Faith M. Hanna, 1916 Booth Street, Winfield, Kans.

There are a lot of royalty owners in this kind of circumstance. Now, we were speaking about how this hurt the royalty owners. It hurts the energy business. It hurts the oil in Cowley County because the landowner is not as likely to lease because of his reduced income, and he may demand a bigger royalty share and this just means less production. There are just many people who depend on royalty interest for their primary or supplemental income. The producer is also hurt in that it takes funds, a large percentage of which would be used for additional drilling.

I was talking to a small independent the other day and he said the windfall profit tax has taken $5,000 a month from me, and that sounds like a lot of money, but he said that is my drilling money and when the wells in that area are completed at about $100,000, you know that isn't as much money as it sounds like.

This tax will cause a lot of stripper wells to be plugged. You can see attachment four from an independent operator in which he's plugging five wells because of this tax.

There's another factor involved in this. Investors who share the expenses of many wells drilled in the county are not as willing to or won't provide money for drilling. Land is more difficult to lease, and this is another factor which I believe is true. An independent who buys a major oil company's production, generally stripper production, has to pay the windfall profit tax like the major companies. This will cause many wells to be plugged in itself.

From a county standpoint we estimate the tax will take approximately $19 million from the county. Very few of these dollars sent to Washington will come back to our county. Much of this tax money would have been spent on the streets of our town.

And, from the county's standpoint, the windfall profit tax takes a bigger share of the producer's capital. This leaves less to find more. oil in other sources of energy. Across the next two decades, we'll have to develop other sources of energy. I think any scientist will tell you

that. Who is really better equipped to do this than the people in the energy business in the United States. This takes enormous amounts of capital. This money sent to Washington as an excess profits tax will mostly be used to grease the skids of the bureaucratic runaway that we're experiencing now.

We say let us alone, let free enterprise work. Let supply and demand run its course. Free Americans allowed to make a pront will find our future energy needs.

We all know the Washington bureaucrats can't do as good a job. Free enterprise with operating capital is the bottom line to a good future.

I thank you a lot for letting me testify.

[The attachments to Mr. Frazier's statement follows:]

ATTACHMENT No. 1

To Whom It May Concern: In 1922 my father borrowed money to buy a farm. He struggled through the depression years-fortunately he had a profession to back his farming.

Small oil was discovered on the place, which has been the salvation of the holding. Now my sister-in-law who is in her eighties, and I, nearing eighty are co-owners. She is in a nursing home in Tulsa, Oklahoma with terrific expenses. I have been more fortunate in that I am still able to care for myself. We are both retired school teachers.

Our first check, April, after the windfall profits excise tax reads something like this: Owners gross value, $404.82; owners net value, $263.83. That means that $140.99 was with held. Approximately 36 percent. Doesn't this seem out of all proportion for people in our circumstances?

Windfall Profits Tax took 20.40 away. She had to take money from her Southwestern Bell pension to pay the utility bill.

This information is witnessed for Mrs. F. M. Brewer by her son, H. J. Brewer, Jr., 321 West 9th, Winfield, Kansas 67156.

witness.

ATTACHMENT NO. 3

WINFIELD, KANS., May 21, 1980.

JOHN H. NATION,

Petroleum Enterprises,

Winfield, Kans.

DEAR MR. NATION: I have reviewed your proposal to lease some of the property. that I own. Due to the fact that the last payment that I received for the royalty interest was cut so drastically by the Windfall Profits Tax, I am not interested in leasing any land at this time. I wish to thank you for your consideration in this proposal.

Sincerely,

KENNETH WAITE.