You can't say that I own 160 acres of royalty under my farm anymore. You own 104 acres of royalty.

I am pretty certain that-what will keep the greedy liberals from coming back and in a year or so and wanting more so they can spend more. To me this is a big step to federalize the oil industry.

Yes, Eddie Chiles, I am mad as hell.

Mr. BOREN. I don't need to tell you we all thank you for your

statement.

I will try to call the attention of the members of the committee to your remarks, and I hope that every one of them spends the time to read it.

You gave a very good factual account of how it affects you and how it affects many other people. We really appreciate you taking the time and coming to give that statement.

Mr. DOLE. I read in the Washington paper yesterday that some of our tax money is going into the CETA program for happy hour training-on how to conduct themselves during happy hour. So I guess your windfall tax is serving a great purpose.

Mr. BOREN. Our next witness is the former president of the Oklahoma Cattleman's Association. He is now vice president of the National Cattleman's Association.

He lists his address sometimes as Lawton even though he is really from Meers. We are very glad to have you here.

STATEMENT OF WAYNE DUTY ROWE, OKLAHOMA CATTLEMAN'S ASSOCIATION

Mr. Rowe. Senators, you gave me a hard act to follow.

Anyway, I am Duty Rowe from Lawton, Okla., or Meers. I am the past president of the Oklahoma Cattleman's Association and presently serving as the regional vice president of the National Cattleman's Association.

Today I am substituting for John Hughes who is president of the Oklahoma Cattleman's Association who was unable to be here due to unexpected personal business.

The Oklahoma Cattleman's Association wholeheartedly endorses Senate bill 2521. In fact we have worked real hard in helping to repeal the entire windfall tax bill which is without a doubt one of the worst laws that has ever been forced upon the citizens of this country.

Farmers and ranchers probably are the majority of mineral owners. Senate bill 2521 would greatly contribute to food production. By this I mean the total agricultural debt for the United States in January 1979 was $137 billion-in January 1980, $160 billion.

That is a 17-percent increase in 1 year.

In Oklahoma in January 1979 we had a $3.8 billion agriculture debt, and we were unable to find what it was in 1980; but I bet it has increased.

The cheap food philosophy, the undependable and ridiculous Government farm and economic policy, such as undependable exports and imports, unreasonable interest rates and never ending regulations will cause this debt load to increase much more this year.

Mineral income has got to be a stabilizing force for farmers and ranchers. You might say it acts as a subsidy for food production thus

helping those farmers and ranchers who are fortunate enough to have mineral income to weather the financial fiasco that we have had the last few years.

Farmers and ranchers, the people who feed this great Nation better and cheaper than any other country quite often at break-even or loss prices, need this supplemental income.

So we say to the Congress of the United States, let's give these people a break by passing Senate bill 2521.

I would also like to comment on one observation that I made here today and that was that when you asked the people who farmed and ranched in this audience to stand-and I can tell you this without getting in trouble because my age is closer to social security than it is young-then you asked those to stand who were recipients of social security and they were virtually the same people.

I would like to ask, where are our young farmers and ranchers? They aren't here and they aren't out there. Why aren't they?

A lot of the reasons are right-can be attributed to the statement that I gave here this morning.

I want to thank you gentlemen for spending your time to come to Oklahoma.

Mr. BOREN. Thank you very much.

I think it should be entered into the record that in that last 10 years we have lost 40 percent of our farmers and ranchers in Oklahoma in terms of numbers. Forty percent have left farming and ranching in the last decade which indicates the very grave financial hardship under which we are operating.

Statistics indicate that this year as cattle and bumper prices have gone down in the past 6 months, that we can anticipate a 25 percent drop in farm and ranch income this year.

So this tax hits us at the worst possible time considering that many of those affected are in agriculture.

We have another representative from agriculture as our next witness representing American Agricultural Movement.

STATEMENT OF HARVEY GARDNER, AMERICAN

AGRICULTURE MOVEMENT

Mr. GARDNER. Thank you very much, Senator Boren and Senator Dole.

It is indeed a pleasure to be here today on behalf of the American Agricultural Movement. I would like to thank you for this opportunity to testify before you.

Maybe I ought to tell you that I have testified before several committees of Congress and I would certainly hope that some day we can. come before your committee and testify when we don't have a crisis at hand.

Senator Dole, I know we are going to keep this nonpartisan, and I know that you have temporarily removed yourself from the race for President, but I would like to say that there are many of us in this State and across this Nation think that what this country needs more than anything else is for a President to come from somewhere east of the Rockies and west of the Mississippi River.

The legislation commonly known as the windfall profit tax is one of the most disastrous and counterproductive pieces of legislation that has been enacted in recent years.

By taking vitally needed funds out of the private sector and placing them at the disposal of the inefficient Federal bureaucracy, this bill virtually assures our country's further dependence on imported oil and higher fuel prices for consumers.

Furthermore, it is not the multinational oil companies that bear the burden of the tax but it is the royalty owners and the independent producers who are scattered across the 9 or 10 major oil-producing States.

These people, far from being the rich oil barons that some of the eastern press and misguided politicians portray them, actually represent a diverse cross-section of the country. They are farmers; they are merchants; they are laborers; they are management; they are schoolteachers; they are druggists; they are young; they are old; they are rich; and they are poor; but most of all, they are people.

They are not just some kind of entry in a computer. They represent the risk takers and entrepreneurs who are essential for our free enterprise system to function and be productive.

Quite frankly, the net result of the windfall profit tax is quite simply the confiscation of private property and the unfair penalizing of a productive minority by a short sighted administration and an illadvised Congress.

In the first place the bill is misleading because as you have indicated so much it is not a tax on profits at all rather a tax on revenue which constitutes an excise tax.

The U.S. Constitution stipulates that excise taxes are to be assessed equally and geographically; therefore, the constitutionality of this legislation is highly questionable since it is not so distributed. When this tax was initially suggested by the administration the stated purpose was to insure that a substantial amount of the increased profits, not gross revenue, would be plowed back into oil exploration. I am sad to say that on that misconception most American people supported this provision because they thought it would provide incentive for oil producers to increase their exploration activity.

This would result in a discovery of new domestic oil reserves. It would also increase oil production-would have been the net result. This type of program, producers and consumers alike, could have received well deserved benefits. Our Nation's dangerous dependence upon foreign oil would have been reduced and the upward spiral of petroleum prices would have been slowed due to the increase in supply.

Senator Boren, as you are aware there are a lot of farmers in this room this morning. There is no one in the world that knows more what it will do to prices to have an increase in the supply.

As time wore on the windfall profits tax became a revenue-raising measure and the plow back provision was all but forgotten.

While the name windfall profits continued to be used, it became an unfair excise tax which has absolutely nothing to do with profit.

The administration and some of the Members of Congress began to develop programs to be funded out of the resulting tax revenue; how

ever, precious little was pledged for the development of new energy programs.

In fact, it is projected that over the next 10 years this tax will bring in something like $227 billion. Less than 15 percent of that money is earmarked for new energy.

Over the next 10 years it is projected that $200 billion will be spent on programs that will not develop or produce one drop of oil or one Btu of additional energy.

This money is not coming from OPEC countries. It is not coming from the major oil companies, but it is coming out of the pockets of royalty owners and independent oil producers in States like Okla

homa and Kansas and Texas.

The results of this tax are devastating to the many royalty owners who receive very minimal income from their production.

In many instances, Senators, these folks have spent a lifetime paying for their land and paying for the mineral rights that go with that land. Now in one quick action their Government has literally taken from them the private property which they have accumulated.

This impact is going to be felt in every small town and every major city in the oil-producing States. There will be less money to spend, fewer jobs available, less incentive for folks to forge ahead in the private sector.

This is wrong. In my opinion it is downright un-American.

The royalty owners have no way to recoup the revenue lost as a result of the windfall profits tax. They are at the mercy of their Government. Quite frankly, their Government has let them down.

Farmers and royalty owners deserve better than this. They deserve to be treated fairly and equitably with their Government; however, laws such as this one does just the opposite.

The American Agricultural Movement of Oklahoma has said on many occasions and as you well know the family farm system in this Nation is in serious financial trouble.

The U.S. Department of Agriculture concurs that most farmers have to have outside income to survive. In Oklahoma a substantial amount of that income is from oil royalties.

It makes no sense whatsoever for the administration and the Congress to admit that farmers need nonfarm income to survive and then to proceed to confiscate that income.

In closing my remarks I would simply say that food and energy are vital to our Nation's growth and survival. We have been blessed with an abundance of both not because of Government wisdom or Government interference but because of individual initiative.

If our free enterprise system is allowed to work and all segments of our economy are treated equally, we will have plenty of energy. We will have plenty of food.

The windfall profits tax is a big step in the wrong direction. It has started us down the path to more Government interference and bureaucratic hassle.

This legislation needs to be abolished or at least changed so the royalty owners and independent producers are exempt.

We appreciate your legislation, and we stand committed to help you in any way we can.

Thank you.

Mr. BOREN. Thank you very much for a good statement.

[The full statement of Mr. Gardner is as follows:]

STATEMENT OF HARVEY C. GARDNER

Mr. Chairman, I commend you and the Finance Committee for scheduling this hearing. It is especially gratifying to have Senators from two of the finest States in the Union, namely Oklahoma and Kansas, take the lead in trying to correct a major mistake.

H.R. 3919, commonly known as the Crude Oil Windfall Profits Tax, is one of the most disastrous and counter-productive pieces of legislation enacted in recent years. By taking vitally needed funds out of the private sector and placing them at the disposal of an inefficient federal bureaucracy, this bill virtually assures our country's increased dependence upon imported oil and higher fuel prices for consumers. Furthermore, it is not the multi-national oil companies that will bear the major burden of this tax, but rather the royalty owners and independent oil producers scattered across the nine or ten major oil producing states. These people, far from being the rich oil barons as portrayed by the eastern press and misguided politicians, actually represent a diverse cross-section of our country.

They are farmers, merchants, laborers and management, school teachers, druggists, young and old, rich and poor, but most of them are people and not faceless entries in a computer. They represent the risk takers and entrepreneurs who are essential for our free enterprise system to function and be productive. The net result of the Windfall Profits Tax is quite simply the confiscation of private property and the unfair penalizing of a productive minority by a short-sighted Administration and ill-advised Congress.

In the first place, the name of the bill is misleading because it is not a tax on profits at all, but rather a tax on revenue which constitutes an excise tax. The United States Constitution stipulates that excise taxes are to be assessed equally and geographically; therefore, the constitutionality of H.R. 3919 is highly questionable since it is not so distributed. For example, North Slope Alaskan Oil and oil interests owned by certain Indian tribes are exempt from the tax.

When this tax was initially suggested by the Administration, the stated purpose was to insure that a substantial amount of the increased profits, not gross revenues, would be plowed back into oil exploration. Most of the American people supported this concept because it would have provided an incentive for oil producers to have increased their exploration activities. This would have resulted in the discovery of new domestic oil reserves with increased U.S. oil production being the net result. With this type of program, producers and consumers alike could have received well-deserved benefits. Our nation's dangerous dependence on foreign oil would have been reduced and the up spiral of petroleum prices would have been slowed due to the increase in supply. Many of the people in this room are farmers and no one knows better than us what an increase in supply will do to prices.

As time wore on, the Windfall Profits Tax became a revenue raising measure and the plow back provision was all but forgotten. While the name windfall profits continued to be used, H.R. 3919 became an unfair excise tax which has absolutely nothing to do with profit. The Administration and some members of the Congress began to develop programs that could be funded out of the resulting tax revenues; however, precious little was pledged for the development of new energy programs. In fact, while it is projected that over the next 10 years this tax will bring over 227 billion dollars into federal coffers, only 15 percent of this money is earmarked for new energy programs.

Over the next 10 years approximately 200 billion dollars will be spent on programs that will not develop nor produce one drop of oil or one BTU of additional energy. This money is not coming from the OPEC countries, is not coming from the major oil companies but is coming out of the pockets of royalty owners and independent oil producers in states like Oklahoma, Kansas and Texas. The results of this tax are devastating to the many royalty owners who receive very minimal income from their production. In many instances these folks have spent a lifetime paying for their land and the mineral rights which go with it. Now, in one quick