bill will have your earnest consideration, and that it may be eliminated before the revenue bill is reported to the Senate. The CHAIRMAN. Are there any questions by any members of the committee of Dr. Compton? If not, Doctor, thank you very much for your appearance. Dr. COMPTON. Thank you. The CHAIRMAN. Mr. Thomas Young, of Salt Lake City. STATEMENT OF THOMAS YOUNG, SALT LAKE CITY, UTAH, REPRESENTING THE NATIONAL SIGN ASSOCIATION, INC. The CHAIRMAN. You appear on the tax on the electric signs? Mr. YOUNG. Yes, sir. The CHAIRMAN. Í believe your appearance is for the National Sign Association, Inc., is that correct? Mr. YOUNG. That is right. The CHAIRMAN. All right, sir, Mr. Young. Mr. YOUNG. Mr. Chairman and gentlemen, I am president and manager of the Young Electric Sign Co., in Salt Lake, and also president of the National Sign Association. As president of the National Sign Association, I speak in behalf of an industry comprised of some 3,500 small manufacturers, who are performing a service primarily adapted to the needs of the local merchant and businessman. We are opposed to the imposition of an excise tax on advertising in any form, since such a tax will place a handicap on the expansion of business necessary to produce the means required to meet the defense program. The reasons why this tax should not be imposed on neon and electric signs, however, are of a special and important nature. First, I wish to state our industry realizes, as do all others, that a state of emergency exists and that taxes must be levied in order to carry out the defense program. We are not opposed to paying our full share of any equitable tax, even to the full extent of our profits, if necessary, but we are opposed to the suggested tax under consideration, which will inflict an unjust burden on the development and proper use of our medium and inhibit the effort of the small businessman in adjusting himself to conditions he is now facing. For a large percentage of small businessmen, our medium is the chief form of advertising used, and for many the only form used. Please remember that most neon and electric signs are installed on the merchant's place of business, and are the means by which the merchant can best identify his place of business, and thereby sell his merchandise. For the great majority, the neon and electric sign represents the only means of forming a contact between prospect and himself the only means of securing business. Usually his trade is drawn from a relatively small area, and in more cases than may be realized, the sign is the first and only contact available to those passing in his vicinity. For this reason no other medium of advertising is available for his use. All other media of wider circulation would represent an economic waste, which makes their use not only impractical but impossible. Handicap the small businessman (and by this the large majority of all business establishments) with this tax, and you make it difficult to readily readjust his business to the present program, and may even cause conditions that will force him out of the enterprise in which he is engaged. Not less severe is the effect on our own industry, which gives employment to more than 50,000 persons, most of whom are highly skilled in their specific trades, and so specialized as to make them unsuited to any demands of the defense industry. In the present trade their wages and working conditions are above the average for industry. Signs are custom-built and, therefore, require a much higher percentage of labor to the finished product than those products produced by quantity methods. Our plants do not have the type of equipment or machinery required for defense products. Our margin of profit is small, and any appreciable diminution of business wili result in loss of employment, elimination of profits, and consequent loss of expected revenue. It is our belief that the total amount of revenue which could be collected would be small, and that the cost of its collection from so many firms would net a very much smaller net income to the Government. There is, perhaps, a smaller volume of business in new signs produced than might be expected. Because signs are, by their very nature and purpose, placed in positions of visible recognition, the amount and quantity is always overestimated by the general observer. The total revenue of the sign industry in all its ramifications reaches a figure much less than that of an oil company in one of our States. The work being custom-built, is distributed between an estimated 3,500 firms, the greatest majority of which employ few individuals. The companies reaching a volume of $100,000 in a year or over, will not exceed more than 40 to 50 in number, and according to a Government census report, only 1,386 even enjoy a business of over $5.000 a year. Because this tax would impose a hardship on thousands of small businessmen, would throw many specialized men out of employment, and would not net an important gross revenue, we register our earnest opposition. These objections are in addition to the fact that the very theory of an excise tax on advertising will be a tax on business development. Senator CONNALLY. Do you know of any tax that is not? Mr. YOUNG. How is that? Senator CONNALLY. You say it is a tax on business development. Do you know any tax that is not a burden on business in some way? Mr. YOUNG. I do not, Senator. Senator CLARK. No tax really encourages the development of business. Mr. YOUNG. Let me say at this moment, however, that while I am speaking of a struggling business, I am practically speaking with 25 years or so behind my record. As I appear here before you gentlemen my mind goes back to the struggling existence of this industry in the days when we were manufacturing what was known as bulb-type signs, and how difficult it was for the industry to get its product on the market by reason of the high cost of operation, and then, after the war days, the last war days, the inception of gaseous-tube signs came into being, and the general acceptance of the public was somewhat retarded by reason of engineering and by reason of its being of a highly specialized nature, and it too some time before this medium was generally accepted. The neon sign, as my report indicated, is a beautiful thing to look at. Many people take the position that in looking at a neon sign, because of its beauty and enhancement of color, every time it holds the eye there is a profit made. Since the adoption of the neon tube and the neon sign into the life of the American business many developments have been made in the use of fluorescence. It is an accepted thing. Our people in business want it. It is inexpensive to operate and it has done considerable to enhance the communities and cities and highways where these signs are erected, and for that reason it is a spectacular business and is something that should be considered as being of importance in all its ramifications. Senator TAFT. You do not think it differs from all the rest of the outdoor advertising, do you? I mean, you cannot distinguish between the different kinds of outdoor advertising? Mr. YOUNG. Outdoor advertising, in a measure, is relatively connected with this business. Neon tubes are used in connection with outdoor advertising on signboards. Senator TAFT. Are you objecting to a tax on any electric signs? Mr. YOUNG. Or a manufacturers' sales tax. The fact that it is a highly specialized product in labor, and the increasing demands of labor from time to time, by reason of increased cost of living, warrant the consideration of this matter. In addition to that, we are confronted throughout the United States. with the everrising taxes of cities. Communities and municipalities are constantly raising taxes on the electric sign, and in order to climax my remarks, I would like to make this impression, that if the statistics are followed, you will find that the small manufacturers, the neon sign manufacturer, is not in the position to even own his own buildings. Many are compelled to lease their property and rent from month to month. Are there any questions that I could answer? The CHAIRMAN. Are there any questions from any member of the committee? If not, thank you very much. One We were not able to reach some of the witnesses on Friday. was Mr. Edward O'Neal, president of the American Farm Bureau Federation. Mr. O'Neal, will you come around, please, sir? We have not finished today's list but then, since you were on the list on Friday, and were not reached, I understand you are free this afternoon to go ahead. STATEMENT OF EDWARD A. O'NEAL, CHICAGO, ILL., PRESIDENT, AMERICAN FARM BUREAU FEDERATION Mr. O'NEAL. Thank you, Senator. I am sorry that I had to lose my place Friday afternoon, but I am afraid I was too frank. I thought it would take 35 minutes. The CHAIRMAN. You were too honest. Mr. O'NEAL. Too honest at one time, and honesty does not pay. 61977-41- -31 Senator BARKLEY. Is that a habit of yours, or just a casual occurrence? Mr. O'NEAL. It is casual, I assure you. I would very much like to have the time, but if you will buckle me down to 10 minutes, I will not have the time to go through this brief here. It will take me about 35 minutes. The CHAIRMAN. Of course, you can put your brief in the record. If you cannot confine yourself to a briefer period in your statement, we will not count it against you if any questions are asked, because you were to go on on Friday. Mr. O'NEAL. Thank you, Senator George. I appreciate this opportunity, because my organization is very, very vitally interested in taxes. Farmers pay the heaviest percentage of taxes of any group in the United States, and it is of vital importance to us all. If you want to cut me off now, and confine me to 10 minutes, I would like to pick out a couple of points. I have four recommendations that I want you gentlemen to consider. The CHAIRMAN. Mr. O'Neal, in the interest of these other gentlemen here, your whole brief will go in the record. Now you may discuss such parts as you can in the 10 or 15 minutes that have been allotted. Senator HERRING. I suggest we give Mr. O'Neal some of Mr. Alvord's time that was not used last Friday. Mr. O'NEAL. The Chamber of Commerce had 3 hours, and I hope we may have a little time to cover our subject. The CHAIRMAN. We will not be very rigid with you. Mr. O'NEAL. The farm people, who constitute one-fourth of the Nation's population, have a vital concern in the Nation's tax policies. Agriculture is a $38,000,000,000 industry. A farm purchase by an operator is the investment of a life-time's earnings; all he has earned to date and hopes to earn in the future. No other large group with comparable incomes has as high long-term investments as farmers. We have sought consistently to view national tax policies from the broad standpoint of the public welfare and not from a narrow, class, selfish point of view. The general policy of the American Farm Bureau Federation on Federal taxes is set forth in the following resolution adopted at our twenty-second annual convention, held in Baltimore, in December 1940: The national defense program is placing new and greatly increased burdens upon the Federal Budget. In affirmation of the policies set forward by the board of directors, we support higher taxes to meet a proper share of this added expenditure. We will oppose efforts to raise this revenue from excise or consumption taxes. The corporate and personal income tax must be the main source of revenue and the excess-profits tax should be tightened and maximum rates of profit established above which all revenues will be considered as excess profits and be taxable as such. Only by such tax policies can profiteering be forestalled and the defense program financed on the basis of ability to pay. At a meeting of the three largest national farm organizations, the National Grange, the American Farm Bureau Federation, and the National Council of Farmer Cooperatives, in Chicago on June 5 last, called to discuss the problems facing the farmers, organized agricul ture was united in adopting the following statement of policy with respect to national defense and taxation: In order to prevent dangerous inflation and an undue accumulation of debts as a result of the enormous expenditures for national defense, we urge that, insofar as practicable, the costs of the defense program be paid from current income. This requires a tax program with a broad base, in which everyone will take part in accordance with ability to pay. In this emergency all unwarranted profits of industry, labor, and agriculture should be recaptured by appropriate taxation to help pay the cost of the defense program. The proposed revenue bill of 1941, as passed by the House, fails to meet adequately our present fiscal requirements to finance the national defense program and to check runaway inflation. In order to meet this need, the American Farm Bureau Federation proposes the following recommendations: 1. The proposed bill should provide more revenue, in order to pay as we go a larger proportion of the cost of the defense program while the Nation is able to pay. 2. The proposed bill should be amended so as to require everyone to contribute to national defense according to his or her ability to pay. 3. Stop profiteering at the expense of national defense and security. 4. Use tax powers to check inflation. This is the most effective way to prevent disastrous inflation. 5. We are strongly opposed to increased excise taxes, a general sales tax, or a manufacturers' tax; at least until other tax sources have been more nearly exhausted; and favor, instead, increased taxes based upon ability to pay. I wish, Mr. Chairman and gentlemen, to discuss briefly these five recommendations. 1. The proposed bill should provide more revenue. This measure does not raise enough money either to cope adequately with the fiscal requirements for financing the national defense program or to provide an effective check against excessive inflation. The estimated national debt now is approximately $50,000,000,000. Already we have either expended or obligated approximately $50,000,000,000 for the national defense program. If the war continues, it is not unlikely that the total cost of our national-defense program may amount to $100,000,000,000. We certainly ought to pay at least two-thirds of this cost as we go. According to Treasury Department estimates, the total Federal expenditures during the fiscal year ending June 30, 1942, will amount to $22,169.000,000; and total receipts without this bill will amount to $9,402,000,000, leaving an estimated deficit of $12,767,000,000. It is estimated that this bill will provide $3,236,700,000 of additional revenue on a full year's basis. Even if this were raised to 32 billion dollars, the total estimated Federal deficit for the current fiscal year would amount to $9,267,000,000. If our national expenditures are going to continue at these levels, it is vitally important-both from the standpoint of a sound fiscal policy and from the standpoint of preventing an orgy of inflation, with the inevitable disastrous consequences of deflation that will follow-to recapture a larger percentage of increased profits and earnings that result from the enormous defense expenditures. We ought to pay a larger share of the cost of the defense program out of those increased profits and earnings instead of depending so heavily upon borrowing. |