such conditions that when you thought of a bowling alley you thought of a barroom. Something happened about 20 years ago when the duck pin and bowling alleys were put in and installed separate and apart from the old barroom; separate from the poolroom, and it be came a different kind of business entirely. Then about 10 years ago they started improving the atmosphere of these places, dressing them up; and prior to that time we saw very few women patrons. Today 40 to 50 percent of the business comes from women and you find a better class of people seeking recreation in healthful, pleasant surroundings in bowling alleys throughout this country. In the duckpin business there are approximately 7,000 alley beds in 615 or 620 establishments. Some few of those establishments have as high as 30 or 40 beds and I believe one or two of them 50 alley beds. Senator TAFT. Why do you speak of the duckpin business solely? Mr. MCKEEVER. I am speaking only for the duckpin industry and am only trying to speak for that, because I will be followed by a representative of the tenpin industry. In addition to the 7,000 duckpin beds for which I speak, there are also two or three thousand additional beds that are unrecognized, one- or two-bed establishments in a club, in connection with a grocery store or school, or something like that. In the tenpin industry, I believe, they have 35,000 beds, approximately, so that the total number of beds involved is somewhere between 45,000 and 50,000-or a little more. That means that the total amount of taxes, based on this $15 use or privilege tax, would only be $700,000 or $750,000. We pay all the other taxes that any other businessman pays. Senator TAFT. $750,000 or $7,500,000? Mr. MCKEEVER. $750,000. I want to show you how small this is. taking every bed. We pay all the other taxes and when we realize that prices on all supplies and materials, such as pins, and so forth. have already advanced 40 percent since the close of last season, and to this cost is added the 10 percent tax, embodied in another section of this tax bill, which will add an average of well over $10 annual tax per alley bed in addition to the already existing taxes and this additional $15 per alley bed tax, which actually means double taxation, we find that we will be burdened with a total tax of $25 additional tax per alley bed; in all, about $70 a bed, which is a pretty big burden on a small alley. Eighty percent of all the alleys in the duckpin industry are 4-, 6- 8-, 10-alley establishments. In the States where the duckpin industry is operating, from Vermont to Florida, there are 616 bowling establishments accounting for 7,000 beds. Of this number, 78 larger establishments account for 2.100 beds while 538 small plants account for 4,900 beds, an average over the entire territory of 7 beds per establishment. There are two or three thousand additional alley beds in other States, and of substandard equipment, but among these the trend will be to an even lesser number of beds per establishment. In breaking down the alleys in one State, for example, Virginia was taken which has 950 beds in a total of 85 establishments, 220 of these beds are in 8 establishments while the other 730 beds are divided among 77 establishments. All other States are in the same proportion with the exception of Connecticut and Florida and these States have a much greater number of 4-, 6-, and 8-alley establishments. The majority of these places are located in the smaller cities, towns, and rural communities and by virtue of their size are restricted to a definite maximum as to the amount of business they can do. In all such localities the hours of business are confined to the evening, from approximately 7 to 11 p. m., and it is a well-established fact that in the rural communities people do not bowl or participate in sports until as late an hour as in the cities. It is also a seasonal business everywhere, but more particularly in these rural sections, from September 15 to May 15, a great majority of places closing down for the summer, even in the cities. Granting that an establishment has capacity business every day in the week during these hours, for the full 8-month period of 39 weeks, allowing six games per alley per hour, which is the proven average over many years of operating, and at 15 cents per game, and many small operators are not able to get that much, it would give the operator of such plants a gross receipt of $800 to $835 annually per alley bed, and checking from many operators' statements that is a very fair average as many operators do not gross that much. Attached to the brief is a break-down of the cost of operation of the average eight-alley bed establishment. In addition to this large numbers of people are leaving these communities and going to the industrial cities where defense work is located, taking that source of revenue away from the community entirely. Selectees leaving for camp leave a further gap in the available spending money in the community, due to that withdrawal from their families of the money they had previously been receiving. The CHAIRMAN. You were taxed $10 per alley in the World War, I believe. Mr. MCKEEVER. Well, it was right after that that a great many of our alleys found it necessary to close. I don't know that it was due to that reason many of our alleys folded up, had to go out of business, but that is the fact, they did. Now, we have gotten back on our feet to the extent that we are operating. We also invite attention to the fact that these alleys furnish employment for a certain type, particularly pin boys, and so forth, who can do little else and the average establishment uses 1 pin boy for each alley bed. This would mean an average of about 11 employees for each 8-alley plant, who would have have to find employment elsewhere if these establishments could not remain in operation. A very sizable number when taking the industry as a whole. We respectfully invite attention to the fact that bowling is considered, by practically every physician, one of the best forms of physical exercise and during the past several years hundreds of high schools have recognized this and have put bowling on the regular curriculum in their physical-culture subjects, the students receiving regular credits just as in their other studies, and the entire bowling industry has been furnishing this bowling to these students at actual cost. It would be an undue hardship to require these thousands upon thousands of youngsters to pay the additional cost which must necessarily be obtained from them if the burden of operation is made too heavy. We also wish to point out that the physical upkeep and operation of a bowling establishment is far more expensive than the 61977-41-50 average amusement establishment and that the popularity of the bowling game is primarily due to the fact that it costs the participant only the actual cost of the game, no expensive accessories to buy, such as golf clubs, tennis rackets, baseball uniforms, and so forth, or skates to rent, but if the price of the game is increased to any great extent, this appeal of a comparatively inexpensive exercise and recreation will be lost with the consequent rapidly declining business. It is worthy of note that the class of men employed in this industry would probably be on relief if they were not so engaged. I refer to pin setters. It requires no education; it requires a strong back and a pretty tough head. Senator RADCLIFFE. Are the majority of them minors? Mr. MCKEEVER. No; in my own establishment I should think that the average age would be 40. You can't work minors except with a special work permit but you will find old pin boys doing that: They call them "boys" but they are boys of 55 or 60. I think I have one or two who are beyond the age on which you have to paywhat is it, old age or Social Security? I am trying to give you a picture of the industry. Even in the large establishments, the total amount of business done would not be over $2.000 an alley bed, so if you take a 30-alley bed establishment, it would be $60,000 a year, and I think you would find the owner of that place would not be making very much. His tax would be $450 under this proposed bill, plus excises on his pins and other material. You are putting a special tax on him not being paid by any other businessman. That, we naturally feel, is unfair; but I am particularly and principally interested in the cases of the small establishments scattered throughout the country where they have 4, 6, 8, or 10 alleys; and I don't want to the committee to forget the example I gave you of the 8-alley establishment where the owner makes approximately $1.200 a year. If he only had four alleys, unless he did all the work himself, including the reconditioning of the alleys, he certainly wouldn't be making over $700 a year; and if you tax him $60 a year for special use tax for that privilege, it does look like it is soaking the little man. I have heard it said that these bowling alleys are gold mines. I have seen some of the Congressmen-I don't know whether any Members of the Senate have visited the bowling establishment operated by me-and they come in there and find it crowded. It is true we are crowded at certain times of the day, but all the rest of the day we are idle; and in the summer we operate and put air conditioning plants in our places of business. I operated at a loss last month of $1,000 in order to keep my establishment open and keep these employees. I figured it was better to operate at a loss such as that rather than to close. I just want to tell you what the situation is. I would be glad to answer any questions you may have to suggest, if there are any. I have this prepared statement. The CHAIRMAN. You want this to go in the record? Mr. MCKEEVER. Yes; I would like to have it in the record and there is attached to the back of that a sample of a balance sheet of receipts and expenditures of the average eight-alley bed establishment. (The sheet referred to follows:) A break-down of receipts and expenditures of the average 8-alley-bed establishment Granting probable maximum receipts per single alley bed- $825 Pin boys at 0.032 cents per game (in many places this cost is higher) Present tax average per bed-- $200 60 35 15 Pins used per bed per year (figured at an absolute minimum). Bowling balls (figured at present price of $44 per dozen-3 balls per Net receipts per alley bed before rent, light, heat, and help This would make a total for eight alleys----- Rent figured at $50 per month for 12 months. Help for 8 months, covering actual full operating season, $25 per week for 39 weeks___ Porter for 39 weeks at $15 per week. Light, $30 per month for only 8 months Heat, 6 months only at $15 per month. Net receipts for 8 months.. 384 431 3, 528 $600 975 585 240 90 2,490 1, 038 Granting the operator will keep open 3 of the 4 remaining months, without help of any kind as he would have very little regular or so-called rush business, he may be able to net a total of $75 per month for these 3 months- 250 1,288 Making a total net income (for a man with a family) --From this net income must now be taken the 10-percent tax on pins and balls as in the present bill which will amount to $7.90 per bed, a total of $63.20 for the eight alleys and if the $15 is also added, making another addition of $120 for eight alleys a total of $183.20 will have to be taken, in taxes, from the $1,288 which will leave a net income of $1,104.90, for a full year's business. And all this provided costs, labor, and so forth, do not advance above the present level. NOTE.-Nothing is deducted in the above statement for depreciation nor is any allowance made for interest on the owner's investment. The cost of the average bowling alley bed being $1,250 per bed. It should also be mentioned that rent figured in the above is very low and will vary greatly in the many towns and communities as will the item of help to a certain degree. There is one last thing I would like to suggest to the committee: It is, if you could reduce that $15 proposed tax to $5, we would want to go along and pay that $5 per alley, but we do think it is a discriminatory tax and it is a little unfair that we should be required to pay any tax which the next-door merchant is not asked to pay. STATEMENT OF CHARLES V. FALKENBERG, CHICAGO, ILL., LEGAL COUNSEL, BOWLING PROPRIETORS' ASSOCIATION OF AMERICA, INC. Mr. FALKENBERG. I appear here on behalf of the Bowling Proprietors' Association of America, Inc., an association of 1,500 operators of tenpin bowling alleys. That is the alley using 16-pound balls and 3-pound 10-ounce pins. In the United States at present there are, according to the figures of the American Bowling Congress, which I have asked permission of the chair to insert in the record, 5,005 establishments, sanctioned establishments operating. There are 35,550 bowling alleys or beds in these establishments; the average number of alleys in each establishment in the 48 States is 7.1 alleys per establishment. We are affected by two provisions of the tax bill: Section 555 relates to coin-operated amusement and gaming devices and amends the Internal Revenue Code and provides: (a) Every person who maintains for use, or permits the use of, on any place or premises occupied by him, a coin-operated amusement or gaming device, shall pay a special tax of $25 per year in respect of such device, and shall pay an additional special tax of $25 per year for each additional such device so maintained or the use of which is so permitted. and we are willing to pay that tax. Senator TAFT. That is on what? Slot machines? Mr. FALKENBERG. That is the amusement tax on games where you put in a nickel and try your luck at registering a high count or score but receive no prize or reward therefor. If one such device is replaced by another, such other device shall not be considered an additional devise. (e) Applicability of administrative provisions. An operator of a place of premises who maintains for use or permits the use of any coin-operated device shall be considered for the purposes of subchapter B to be engaged in a trade or business in respect of each such device. To this tax we do not object. Section 556 relates to bowling alleys and billiard and pool tables, and it is provided in paragraph (a) thereof as follows: Rate.-Every person who operates a bowling alley, billiard room, or pool room shall pay a special tax of $15 per year for each bowling alley, billiard table, or pool table. Every building or place where balls are thrown or where games of billiards or pool are played, except in private homes, shall be regarded as a bowling alley, billiard room, or pool room, respectively. A Summary of Bowling Alley Establishments in the United States, as compiled by the American Bowling Congress, Inc., in May 1939. and in January 1941, appears on page 3 of the A. B. C.'s official publication, Bowling, volume 7, No. 11, issued January 16, 1941, and is attached to this statement as exhibit A. It shows that in January 1941 there were 5.005 tenpin bowling alley establishments in the United States, with a total of 35,550 certified alley beds or lanes, and with an average of 7.1 beds or lanes in these establishments. The Bowling Proprietors' Association and the quoted summary of the A. B. C. are interested in and refer only to tenpin bowling alley establishments, as distinguished from duckpin establishments, who are represented before this committee by the National Duckpin Bowling Congress. It is the studied opinion of the officers and directors of our association that at the present time the proposed tax of $15 for each alley and for each table is excessive and in many instances might prove confiscatory, and that for the reasons hereinafter set forth the tax should be reduced so that the operator would pay not more than $5 per alley and $5 per table. |