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Proceedings of the Seeond interstate. Assembiy

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5^2,^ A SUMMARY OF THE PROGEEDINGS _

•••'• • " - • ' •":••.• --• . " -f ' •:"'. \ .X)F.:TH:E • SECOJ^D INTERSTATE I •~ .^ •/.-ASSEMBLY^ ;^:-^

February 28, March rand 2, 1935.

Mayflower EI()te] -— Washingt()n, D. C.

• • ; ;• Pt^udied by e GbuhGil of State Governments

/v-;-'..-aind '•" The American LegislatorsVAssGGiation

; DREXEL AVENUE AND 58TH; STREET •/ • GHIGAGO, rLLINOIS '

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,^^M G-v Appointees oj governors and legislatures oj 41 states, representatives oj ot/ier official rdodies, qndnicnibers oj the governing boards oj the Association and- the — Council make up the list oj 153 registered participants- in the Assemblyi

\ ALABAMA * . ILLINOIS *Senator Will 0. Walton ' ; ' , . .*Hon. JamesM. Graham, Commissioner on Uniforni ..State Laws ^ : ; ARIZONA ;: _ *Hon. Simeon E. Leland, Tax Commissioner *H H. Hotchkiss, Esq. .' ;/ " V ' iSenatorT. V. Smith • '"-'- ' • ''t. - ••^':--ARKANSAS;,:.-• INDIANA • • • Hon. Frank Pace, Commissioner on Uni *Han. Philk) Zoercher, Chairman, Tax form State Laws . • .- 'Commission • '•--: . COLORADO , 1 IOWA . • *Hon. .William J. England *Hon. John H. Mitchell, Speaker of the *Lieutenant-Governor Ray H.. Talbot House Hon. Henry W. Toll : *Hon. Ray jMiirphy, Chairman of the Board .\ of Assessment and Review CONNECTICUT *Senator Garritt E. Roelofs Hon. Ernest L. Averill, President, National *Hon. Leo J. Wegman, State Treasurer.. •Association of Attorneys General *Hon. William H. Hackett, State Tax Com .^ - • V ;•/ KANSAS. . .' ,;'..,, missioner *Senator Clyde W. Coffman x*Senator Benjamin E, Harwood KENTUCKY \ DELAWARE •Hon. William B. Belknap, President, American Legislators'Association : '*'Hon, Wfultpr Dent. Smith, Secretary of *H©n.-Ralph Gilbert • State I '•..•, • '^Senator Frank Lebus. Hon. William Speer, jMayor of Wilming- *Hon. Clarence Miller .ton :< Hon. Neville Miller, Mayor of Louisville • FLORIDA *Hon. William E. Rogers, Spealcer of the *Hon. H; J.^ Chance,,Assistant State Comp- House of Representatives ,. 7: ; troller." '.' : ^Senator J. M. Rose *Hon. Bryan Willis, State Auditor ••.•MAINE ' • ' / '" GEORGIA *Hon. Frank H. Holley, State Tax Assessor *§enator William A. Hart *Hon. Henry G. Vaughan —tHon, Roy \^ Harris . ; *Senator-,Johh J. Jones . MARYLAND *Hon, WilliamyA.. Leonard _J^Ho|i,J8.alph L. Ramsey Hon.. Douglas H. Gordon . *Hon. Oscar Leser _ -. * Officially appointed by Governor, or by one *Hon. Charles C. Marbury house of the legislature. : *Hon. Edmund R,. Stuart, State Auditor 295 ^296^ THE BOOK OF THE STATES : MASS54CHUSETTS , ^ NEW HAMPSHIRE (continued) . *Hon. Arthur I. Burgess •Hon. Francis Clyde Keefe •Senator William A. Davenport •Hon. Allan M. Wilson Hon. Henry F... Long, Comniissioner of Hon. John G. Winant, President, Council Corporations and Taxation, President, of State Governments National Tax Association NEW^^jaS^Y: • • • - Senator Henry Parkman, Jr. •Hon. Raymond I^.O'Connell . •Prof. Eugene Greider , •Senator James C. Scanlan : - . *Hon. J. H. Thayer Martin, State Tax . *Senator Joseph'B. White; Commissioner • ••-••• -,..y ^•• •Hon. Herbert J, Pascoe -. :\ MICHIGAN ^ . • •Senator A, Crozer Reeves *Hon. Vernon J. Brown, Chairman,. House •Herman Crystal, Esq. Committee on Taxation ••'.' NEW AlfexiCO y-y-:'^ • • .^.•. •Senator Andrew. L. Moore, Chairman •Hon. Keith Edwards .Senate Committee on Taxation ^ • *Hon. tJeorge A. Schroeder, Speaker of the NEW YORK House of Representatives ' •Hon. Seth T. Cole, Deputy Conimissioner, > MINNESOTA Department of Taxation and Finance •Harry T. Dunn, Esq. •Hon. Harold H. Barker ' •Prof. H. R.Enslow : . •Senator J..Vv: Weber •• •Thomas J..Fitzgerald, Esq. •Hon. John A. Weeks •Prof, Charles"TV'l Gerstenberg . MISSISSIPPI ' •Hon. Mark Graves, President, State "Tax. _: •Hon. Ross Collins Commission, FqriTief Prudent, National "' •Hon. Lucy S, Howprth Tax Association . •Prof. Robert M. Haig, Former President, : : / MISSOURI' National Tax Association *Hon, 0. K. Armstrong •Hon. Frank S. Harris, Deputy.Commis- • "^•Senator McMillan Lewis •'•'* • si.on'er. Department' of Taxation and •Hon. Oliver E. J. Schick , -^ •y .... Finance .x • • • . . ' •Hon. Gladys. B.'Stewart •Hon. John P, Hennessey, Tax. Commis sioner, Diepartment of Taxation and •_." .MONTANA:;•;•• .: Finance •Hon: Mayne S. Howard, Deputy Commis^ •Hon. Larry Dobell • sioner, Department of, Taxation and NEBRASKA-/"^ . ''. Finance •G. William Magly, Esq. •Senator Charles D. Green "' •Senator Seabury G. IMastick •Hon. W. H.~0'Gara, Speaker of the House •Hon: George JMcCaffrey . NEVADA ry' •Hon. Francis J. McCaffrey, Jr. •Joseph B.Ryan, Esq. . •Senator Patrick.A, •McCarran^ . •Martin S.axe, Esq. NEW HAMPSHIRE •Hon. Howard Silberslein, Deputy Com missioner, Department of Taxation arid •Hon. Amos N. ,Blandfn',TSpeaker of the Finance House of Representatives ' •Stafford Smith, Esq. • •Senator Austin L. Calef Hon. James J. Wadswdrth ^Senator William M. Cole •Hon; Fred.L. Zimmerman •Hon. Enoch D. Fuller, President, Na tional .Association 5f Secretaries of State NORTH CAROLINA •Senator William F. Harrington •Senator Paul.D. Grady, President />ro/cw •Hon. Edgar C, Hirst,'Secretary, State Tax of the Senate Commission •Hon. P. W. Meekins • •fi!^ THE ROLL CALL 297 NORTH DAKOTA TENNESSEE f(;w//««crf; *Hon. William Skeel •Senator Louis E. Elk-ins •Senator Leighton Ewdl OHIO •Senator Andrew J, Graves ' r^r .' •Senator Bernard R. Donovan .' •Hon. Paul Goddard •Senator Keith Lawrence •Hon. C C. Gore •Senator John G. Lowery •Hon. John W. Lashlee •Hon. J. Freer Bithnger, Speaker of the ^Senator Fletcher Morgan • ' House of Representatives -• •Hon. Jeter S. Rav •Hon. Myron B.Gessanian •Senator John R. Todd . ^ •Hon. George J. Harter Hon. Earl R. Lewis .•'•'••• •^... ,' /TEXAS-/•••;V,V:'; •Hon. Ruth Lloyd ' •Senator Ben G. Oneal •Senator Frank E.'WKittemore, •Hon. George B. Butler ; . •Senator Paul P. Yoder, President pro tern of the Senate VERMOXT^"^^-' •Hon?Frank R. Uible •Miss Consuelo Northrop • • •Hon.^, E. Ward •Hon. Fletcher Pliimley -, OKLAHOMA •Hon. Charles A. Webb. "•.•'••'•, •Senator T. P. Gore VIRGINIA : •Hon.. J. Sinclair Brown, Speaker of the PENNSYLVANIA — House of Delegates ."^ '•'Senator George A. Rupp •Senator Hill Montague •Hon. Frank W. Ruth •Hon. C. H. ^lorr-issett. Chairman, Tax •Hon. Wilson G. Sarig, Speaker of the -Commission House of Representatives enator Henry T. Wickham •Sienator George Woodward : WEST VIRGINIA . . RHODE ISLAND •Senator J/Patrick Beacon . ^ •Senator William J. Burgess •Senator .Albert G.Mathews •Hon. Edward L. L^eahy, Tax Comnussioner •Senator Byron.B. Randolph •Hon. William E. Reddy, Speaker of-the •Senator Ray E. Ritchie • House qi Representatives •Hon.-Harvey D. Bceler " •. ._^ . ^. •. y •. - •Hon. James L. Gajdord . \ SOUTH CAROLINA •Hon. Joe G. Gentry •Seriator Edgar A. Brown " * WISCONSIN; : Hon. R. Beverley Herbert •Hon. Joseph M,Moorer Hon. Alvin C. Reis, Counsel, Public Util •Hon. Walter G; Query, Chairman, Tax ities Commission . . " Commission „; WYOMING - • • . " .TENNESSEE •Senator Edward T. Lazear •Hon. Joe S. Bean . > ^•Governor Leslie .A. Miller •Senator W. A. W. Garden •Hon. Henry D. Watenpaugh, Speaker of Hon. John A, Chambliss | the House of Representatives^ 'Vt»

Resolutions and Reports

. ' Last of Resolutions and Reports Adopted by the'^ /• . Second htterstate Assembly'':

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A. The Short-Term Program:- \ I ' ' * 1. Gasoline taxes . . -•..'• . . , • .^, ...... 372 2. Beer ta.xes . . .-...'. . . . ; , , ....<>. . . 383; 3.TobaGCo taxes , ...... \ '._-: ^ ; . . ^ ;: . . / 375 • ' , 4. Electric energy taxes . . ."...... 383 5^, Federal'Highway Act ...... : . . . .373 6. Memorial to Congress for reprinting 7)r)«Wc Taxation Report ..• . 377 7. Federally-administered, state-sliared'sales" tax ...... -. . . 397 ; 8. Personal income taxes . . : ...... ,390

B. The Long-Term Program: . • ' 9. NTax exemption of public securities ...... 396 ": 10. Taxation of private property in governmental reservations ..' . .. 401 . 11. Interstate tax compacts . . .".y. . .-.,...... 397 12. State and local tEx data , ...... , . .381 13. Tax Revision Council . .,.•.'...... : . . •• . .381 ' 14. Simplicity and iiniforinity in revenue legislation and administration . 401 ,, 15. Study of the distribution of tax burden , ...... 403 l(). Filling of vacancies on Interstate.Commissi^ on Conflicting Taxation.:' 378

II. RESOLUTIONS AND REPORTS CONCERNING THE AMERICAN LEGISLATORS'

ASSOCIATION.AND THE.COUNCIL OF STATE GOVERNMENTS. : .Q - 17. Report of Committee on Agencies for Interstate Cooperation . ... .385; 18. Report of Committee on Finance .;. ,: ...... '389 *.; 19. Compacts for Council'of State Governments ...... 377 . 20. Appropriations to Interstaite Reference Bureau ...... 380_

ill; REPORT CONCERNING THE INTERSTATE ASSEMBLY.

': '••' '• :• ' ' ••: • '•• .'. • * ' \ / ' ' •- ' • " '^-''^. :\.- ' ^ 21. Report of Committee on Plans'for the Interstate Assembly . . . : - 400

•These resolutions and rep.orts appear in this.order in STATE GOVERNAIEXT for April,' 193'5, pp. 100-IOS.

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OR the purpose of publication in this been condensed whenever feasible, and: in Fedition of "The Book of the States" the some cases remarks dealing with situations transcript of the proceedings of the Scv ^nd in individual states have been omitted.: Interstate Assembly has been edited and All substantia! revisions in the form of somewhat abridged by Dr. George C. S. extended remarks have been referred to the; Benson and Mr. David W. Robinson of the author for approval. The editors were e.x- Publications Division of the American Leg ftremely careful to avoid altering the thdught islators' Association and the Council of State expressed by any of the speakers. Governments. The statements in the debates, represent This involved, in general, the elimination personal opinions. The actions taken were.; J-=i of debate on parliarnentary questions and actions of the Second Interstate Assembly.': other material.pertaining to the mechanics The Assembly .was organized by the of the meeting. That portion of the pro- American Legislators' Association and the ceedings haying, to do with the roll call by Council of .the State Governments, but its staties for the purpose of introducing the decisions aire not their decisions. Neither . individual members of state delegations has the Arherican" Legislators' Association nor also been deleted. In an effort to reduce the Council of State cGovernments takes the costs* of publication statements have sides iipon any controversial issue.

••"•••• "•'•'- .-• • ..';••«> • .'•• ''•'•••'' . . "• : HENRY W. TOLL :' Executive D'lrcdor, ' '. The Interstate ^{ ssembly

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SOVEREIGN STATES From forty-one states came outstanding legislators and officials interested iti preserving the. sover eign position of the states in the American scheme of government. Realizing that interstate coopera tion is essential if more powers are not to be. transferred from the forty-eight capitals to Wash ington, these delegates to the Second Interstate Assembly concerned themselvesrwith methods of co()rdinating the activities of the variotts states-—in-.taxation and other fields. ';>

Morning Session

Februart 28, 1935. ^ 7 •

"^HE opening session oj, the Sccotid of government will then be ..emphasized: Interstate Assembly, ivas called to federal, county, and municipal. order at 0:40 a.m. by the Honorable "On Saturday morning, the Assembly will William B. Belknap, Jh'csident of the turn to a consideration of the means for . .Imerican Legislators' .Association and ex- improving communication arid cor)peration officio Speaker of the Interstate Assembly. between the states. ; "Oh Saturday afternoon, the Assembly • SPEAKER BELKNAP:. Gentlemen, tlie first . will consider any specific proposals which order of business is the organization of the the Resolutions Committee commends to Assembly. I am goin'g to introduce Senator its consideration. T* \'. Smith of Illinois, who will act as "Because the President's Program of Eco Secretary of the Assembly..I will ask him to nomic Security contains implications Which • read th^ purpose and plan of the meeting. vitally affect the tax policies of state and local governments, Saturday evening will PURPOSE AND PL.JIN OF THE ASSEMBLY be given over to consideration of this pro SEXATOR SMITH: ''The Interstate As gram, and questions of state officials will sembly is designed to bring the forty-eight, be answered by the man under "^'hose di state gpverniiiiints into, more intimate; di rection the, proposed legislation was written-• rect, and systematic communication with '"This Assembly is a pioneering venture each other, and to enable them to harmo-, on the part of farrseeirig governmentalof- nize their activities. It is intended to be. a ficials, who realize the need for cooperation .convenient agency, for conswltation, negotia between the states, and the fact that the tion, and agreement among the states. It present type; of organization is necessary in is hot designed to consider ta\ matters order to secure results. All of the delegates alone, in the long run, but all suitable sub to this Assenibly have a common interest jects—such, for instance, as crime preven and a- common purpose. Their power is tion,, economic security, pubh'c health, and great, and'if all of them should work to 30 ori. • gether this year, and in years'to come, it ''However, the primary problem, to be ..would alter the course of American history.'.' considered at the 1935 meeting of the Inter state Assembly is. to be; that of confiicting ORGANIZATION OF THE ASSEMBLY taxation. SPEAKER BELKN.\P: The Chair willnow • "On the first morning a few of the leading enterta,in a niotion for the organization of student's, of taxation will develop a picture the meeting. of the existing tax situation. After luncheon HON. .WALTER G. QUERY (South Caro there will bie presented the first report of the lina): I move the following resolution be' Interstate Commission on Conflicting Jax-^ adopted:. "RESOLVED, That the procedure ation, which was created by the Interstate and form of organization for this Assembly Assembly an 1933. will follow that of the first Interstate'Âs- ''•-Thereupon the meeting is to be turned . sembly held in 1933, arid that the following 0.yer to the forty-eight delegations; each committees will be appointed by the of which will be called upon either Thursday ler: . • • ' • '.-.. ' • ••; aftenwoen or/Friday morning, in. alpha 1. Reception. 1 betical order. The interests of other levels 2. Credentials. 301 302 TBE BOOK OF THE STA TES 3. Resolutions and Procedure. • .Will.you permit me to read to you the • 4. Finances. Preamble of the Articles of Organization oi 5, Plans for the Interstate Assembly. the.Council of State Governmejits?^ . 6. Agencies for Interstate Cooperation." Technique of Cooperation SPEAKER BELKNAP :' You have heard the resolution. Is there any second? If we are «o/ to be subjected to extreme HON. LARRY DoBELL (Montana): . I federalization within a short time, it can second the resolution. only be because the states are on the verge SPEAKER' BELKNAP: It has been moved of cooperatingwith each other as they have , and seconded. All. those in" favor of this never cooperated before. And if- we are resolution will say "aye." Opposed "no."- at the beginning of such cooperation, it The resolution is carried. The Chair will will be brought about through the Council appoint these committees at the earliest of State Governments and through this. possible time so they can begin to do their Interstate Assembly.- It is not too much work. . . to say that this assemblage is writing his- i am going to introduce, to you a man _tory, and that each of us will look back who needs no introduction to anybody who to this occasion with a sense of pride and has had'anything to do with the American of pleasure that we have participated in it. •Legislators' Association, Senator Henry I will not burden you at this time with a Toll . . / . discussion of the precise organization which is under discussion in connection with this \^ ADDRESS BY HENRY W. TOLL Council. ' Whatever machinery may be es ; The American Legislators' Association tablished in order to secure the results which and thelnterstate Assembly are the product, we all desire will be a matter of study, of of the efforts of many men during a span conference, and of group action. , of the last ten years. There will be present On Saturday morning we will discuss to at this meeting, men who.have b,eeh actively gether the actual technique of cooperation working on. this project for ten full years. between the stat^, and.afte^îs Assembly ]\Ir. Belknap i^ one of them. There will be adjourns, you will all- be keprfully advised^ concerning the progress of our. planning. at least a score of men present at this meet It is to be/hoped that each of you "will, ing who'have been working on this project continue to give this subject your careful for as many as me years. It is an under cotisideration, and that month after month taking which.: is a\joint effort and we hope you will contribute your ideas and your slig- it will be more and\more so as' time goes on. gestions, in order that the best thought of To this, the SecoW Interstate Assembly, our state officials may be utilized in the there have been delegated official represent development- of an effective organization.. atives, from all of tne state governments; the first conference of tshe.forty-eight states since the adoption of\he federal Consti Orgafiization and Machinery tution in 1789, a- centuW and a half ago. When a corporation is formed to. manu- You are gathered here frona the four corners fa:cture steel rails, everyone'connected with of the nation to discuss niutual problems. it is interested in the product—np one is .Without exception, every one of the forty- interested in the corporation's overhead eight states has provided foa a delegation structure, e.xcept to the extent that the to attend this Assembly; and m every case overhead is necessary in order\ that the this delegation has been designated to rep best rails may be produced. In other words, resent the state either by the ^Legislature it may be said that everyone is interested or by the Governor, or by both. ^ There can be no doubt that this hour ^ Mr. Toll then read the material beginning on marks the consummation of an effort to page 93 under the subhead, Neiv Needs inGove'ni- establish a nationvvide contact among the- w;<'«f—rthe Preamble, of the Articles of Organiza tion ofv the. Council of State .Governments—and states from which there will evolve an offi added the subsequent material through the first' cial mechanism without which the structure, complete paragraph in the second column on page of our government, is seriously defective. 95. •••',.• . • - , THURSDAY MORNING SESSION 303 in the product, ajld that no one is'interested must be full-time workers, and every worker; in the organization. On the other hand, . is Ha parasite to the unprogressive. There we all know that without good organization, must be,expenditure oi money, and there good rails cannot be produced. are many,\vho ^yould have the "governmisht .The ana,logy is perfect in" the case of gov die of gangrene rather,than pay a surgeon. ernment. We all know, in a general wa:y, May I close with two sentences from the what results government seeks." It seeks statement which President Roosevelt is- • for its citizens'.safety, health,'education, sued last week endorsing the purposes of transportation, communication and eco this Assembly? He said: nomic security. The objectives of govern "Both the Congress and the executive ment do not include the organization of departments of the national government - boards, and bureaus and departments and are constantly confronted with problems .. councils and conferences—-nor even the whose solution requires coordinated effort levying of taxes. Those are only the over on the part of the States and the Federal head organization. But without. thc7yi, government. It is apparent, I think, to all : government cannot produce the desijed re students of government that there is urgent sults.-• Is any one here interested in gov need fOr better miachinery of cooperation ernmental organization and machinery? between Federal, State and local govern No! Not one of. us is interested in govern ments in many'fields." . mental organization and machinery,? e.rccpi Shall we all work together during the as an instrumentality for securing the re months which are ahead of us in order to. sults which our government is intended tQ,. .^..byild thqit machinery? And shall we dedi produce.' But M'/V/ZOZ// adequate and well-, cate ourselves afresh to the idealism in gov designed organization and machinery, the ernment which is sometimes called patriot- • desired, results of government iare impos ism? ••/ ; ' ' ..,.••. sible. . j_ . SPE.AKER BELKNAP: Gentlemen, we are Probably few of us are intereêd in the very much honored in having with us'Hon- . machinery of transportation. But if you brable T. Jefferson Coolidge, Under Secre- were in New York City and you wanted to tary of the United Stales Treasury. be in San Francisco, you would Hardly say •that you were interested in results but that ADDRESS BY T. JEFFERSON GOOLIDGE . you 'were not interested in railroad trains I am glad to appear before this Second nor in airplanes. You cannot.achieve your Interstate Ass'efnbly and to meet so many results unless you have the machinery which state senators, representatives, and gov-. •' is essential to their achievement. . ernors' delegates-from the varioti5~st{ites. .The failure of the, states to harmonize Y'ouare here because of your speqal knowl their governmental activities, during the. edge and keen interest'in matters of taxa last century and a half, has been inevitable tion and administration, and because of . because the states havp hot had the ma • your determination, to bring the highest, chinery of governnient which was neces degree of cooperation to bear on interstate . • sary for harmony. And so today you and and national problems. '^ ; ... ^-- I find ourselves thinking about govern Bath the President of the United States mental machinery—-not because we are in and the Secretary of .the •Treasury, have terested in the machinery, but because we publicly expressed their desire fo.rcoordina- • ' are interested in the results which it may tion of federal and state taxation and have produce in terms of governmental harmony, advocated and encouraged .further study. / cooperation and effectiveness. The results of such meetings as this should But make, no mistake.^ This- is not a furnish the basis for real progress.. ' small task. It cannot be done by dropping, The.fiscal problems of governments are letters, into hiail boxes. • There must be, con not likely to be either few or simple during ferences, and every conference is a junket the coming years. A well coordinated tax to the unintelligent. There must be organ system would, however, materially simplify ization, and every-organization is anathema • the.task of raising the necessary revenues . to the narrow-minded isolationist. There in the most efficient manner as well as being 304 THE BOOK OF THE STATES a great, help in meeting the expenses of is going to start the regular program on :., goveriimejit with less friction and hard-, harmonizing the tax .systems of the nation, ^ ship. . ' the states, the counties and.the cities. It The people, through their Representatives, • has been my good fortune to be associated, determine tho amount of public moneys in One way or another, with the Honorable that must be gathered,. and we who work Mark Graves for a number of years. There in the held of taxation must advase them are few in the nation who have had as much -as to the best methods of obtaining these to do with the larger aspects of the tax funds without conflicting \vith each other's situation as the Honorable Mark Graves needs. . ;\ of New York State. There are many hindrances to a realiza tion of the most desirable program. Some ADDRESS BY MARK GRAVES of the difficulties ,are legal and .constitu • In a riatipn like ours-â federal nation— tional; some are the less tangible but deeply the complications ofJ;axation are inherently rooted prejudices against innovation, no great. That is so because we have a federal • matter how beneficial, in the long run, we government and state governments with may expect it to be; and some are dif independent taxing powers. In the early ferences of opinion between thoughtful history of .the government that was not^^ men. These difficulties cannot be swept serious because sources of revenue-were sep aside but must be given the fullest and arated, except for a-short time around the most sympathetic consideration. • War of 1812, I believe, and the Mexican It is at once the duty, and the sensible War. It was not until after the Civil War • course of the federal government to view that the states and the federal government its own land state and local fistal systems commenced to'dip into the-same reservoirs as a broad unit. ' Unless I mistake the for the purpose of satisfying their tax needs. signs of the times, states are tending more Since shortly after the Civil War that proc arid more to look beyond their boundaries ess has been gradually but perceptibly and to view other states as good neighbor's. grpvying. The business depression of 1929 In tax terms, this means that each tax pro- has made its effects ever so much more pro •posal of the future should be considered nounced than they were before 1929. .With by the several governments with this ques a shrunken wealth and a.rapidly falling tion in mind:' "How does this proposal fit national income, the impact of the tax blow into the tax. system viewed as a unit for , is much heavier on the tax-paying public. the nation?'' We encounter here, in na- • tional relationships, the problem which has : Debt already been met by the states within their For several years the federal, state, and own borders, that is, the relationship be local units of government have been spend tween the state and the many local gov ing about fi.fteen and :a half billion dollars ernments wathin its borders. At. present' a year, of which they were raising about we play lone hands—one jurisdiction does ten billion by tax and borrowing.the other . not know what the other may do—and fiye and a half bilHon. If the President's consequently we have competition where financial program is finally enacted, it is there should be'cooperation. . predicted that the national debt on June I have not touched on the remedies that 30, 1936, will be thirty-four billion, and you seek. I simply wish to cqnvey to every that the state and local debt will probably One of you that we, in. the service of the . be another twenty-four, making, a combined federal government, are kie'^hly aware of the debt of approximately fiftyr.eight billion ijuportaiit pi-oblems that you face, and that dollars. Not. since, the fiscal year com- . in your efforts-you may rely upon the un- mencing in 1930 has the federal government .• __derst:andingî.and sympathetic coc'jpcration balanced its budget. It started out in that of the administration. ; • yesfr with a defieit'of about nine hundffd SPEAKER BELKNAP: We are all pleased and three milliori dollars. The President to have this friendly greeting from- the predicts, if his program is enacted, that the United States Treasury. deficit this year will be around four billion Practically all of you know the mari who eight hundred million, and for next year,'as

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THURSDAY MORNING SESSION 305 I recall it, about foiir billion five hundred sult will be higher taxes- an.d more difficult - million, with the result that the debt of . problems for the taxpayer. Therefore it •^ the national government will have increased is desirable to take an inventory of our since July 1, 1930, by eighteen bilHon dol situation, see in what direction we rare lars or more. ' heading, where we are likely to land, and The business depression has had its ef what we can do by way of corrective or fect on both federal and state firi.ance. First, precaiitionary measures in mitigating the '. it has caused revenues to shrink, and second, problem of the present generation and of it has required the governments to spend the.generations.to come. • • very substantial sums for unemployment re lief and economic recovery, as evidenced by Separation of Sources >• the fact that the federal government pro There are still people who believe that.^ poses to spend .this year and expects to: the thing to do is to. separate sources of spend next yearj if the President's advice revenue, -though the number diminishes • : is followed, approximately eight or nine every year. Separation of sources worked, billion more than the federal government's . prior to CivirWar times, but with the fed income.. . • eral government needing six billion dollars The federal administration is so planning yearly, with state and bcal governments : its finances that it will receive, from .oi*- needing nine" billions, it is impossible to ; dinary revenue sources sufficient to balance continue -(lividing the various sources of the current operating budget, including debt, revenue so that each of these different layers »• service, and^ the deficits will be occasioned • of government ^ill have adequate mea:ns • .by investment in unemployment relief and of support.. Within reasonable limitations, recovery, projects. I am in no sense criti of, course, separation is desirable. The cizing the federal administration. states and locals governments should re- ; , tain, as they have,, the general property Seriousness of the Problem ' tax, the most productive single tax in the ... Now this constant dipping, as I have United States today. The federal govern "alluded to it, into the tax reservoir by the ment should retain customs duties, and I federal government, the several states,-and ' would suggest that the states abandon the the cities, must indicate to you the very entire field of indirect taxation in sales and great seriousness' of the problem/ It is consumption taxes. Traditionally, the, fed- • not only serious from the standpoint of the eral government has used those taxes and government and those who are trying-to the federal government can administer .thenr plan governmental finance,, but it is just more'effectively,'at.a lower cost, and with as serious, if not even more so, to the busi- less burden on. the. taxpayer who is now ; j ness man or to the corporation. Unneces forced to comply with the requirenients of a sary and unjustified expense.is involved in. great number of units bfgovernment. . trying to comply with the requirements of Many of you will not agree- with me en- • the various units of government. Govern- tirely on this point. It would mean that " ' ment is compelling industry and business the states would abandon such fields of . . to waste funds in keeping accounts and com taxation as the tobacco tax, the motor fuel piling data for a variety of report's. tax, the. beverage tax and other forms of The present chaotic condition must.be sales taxation. I believe, howev.er, that it eliminated or both government and busi is the Correct theory. The federal govern ness will be facing difficulties far more seri ment should not be permitted to.retain all ous than those with which we are now of the revenue, but it should be the collect- ."•:'•„ confronted. These debts which we are ing agency and some reasonable proportion negotiating for unemployment relief and of the revenue should be apportioned to recovery purposes are going to make our the states and their localities in some ac debt service charges higher in the future. ceptable form. Moreover, as soon as we emerjge from this In the^case of such taxes as the personal ' business depression, you will see govern ingf)me taxand other taxes of a personal ^ ment continue _tO expand its activities and nature, .low-rating tangibles, and poll taxes, enlarge its functions. The inevitable re the federal revenue act-should be amended - 306 THE BOOK OF THE STATES to provide for accredit against the federal luded to such a plari in a general way. Some tax on account of taxes paid to the states think that it would be better to have the or their local units of government. The federal government collect such taxes as ideal, of course, would be to have a central the personal income tax, the corporation collecting_agency for such taxes as the tax, the liquor tax, sales taxes—in fact, any • income tax, but quite frankly I do not be- kind of a tax where it is desirable to have; lieve that we have'as yet progressed to the a uniform^; rate throughout the entire point \yhere the states can afford to turn CQuntry. Toriie, that.plan, is objectionable over their revenue systems to' the federal" because it plades the states and their lo-- government. We. have not, to put it calities at the niercy of the federal govern bluntly 4f not elegantly, sufficient faith in ment. The time may come when such a our federal governrnerit and in our Congress step is desirable and necessary, but I .am to wish to do that. convinced that the time has not yet arrived. • Still another method has been suggested; Methods oj Integration • that of state 'supplements, which,. put Therefore, although I dislike to see du- simply, would mean that the federal gov . plicate adrninistration of such taxes, as per ernment would administet the personal in sonal income taxes, corporation income or. come tax or the corporation tax, but at . e.xcise or excess profit or corporate excess the request of a state it would add to the taxes, nevertheless I believe it is necessary federal rate some additional rate which the to retain, at least for the titne being, the state ;desired to have applied-r—the revenue duplicate administration of those laNys, but received to be turned back.to the state. I with a systern of credit against the federal doubt if that would.meet with the general tax on account of taxes paid to the states approval of the American people today. % • • " . or their localities. That -is not a new or original thought A group of us (the dis New-Federal Revenues tinguished Speaker of this assembly Avas Tt will occur to "some' of ybu immediately^ in thegroup) succeeded in securing the 80 and probably you have been wondering per cent credit provision, in the federal how I was going to get around it, that if estate tax some years ago. Almost without the federal government should consent to exception it will be granted that that device credit against the' personal income tax or has worked exceptionally well. the corporation tax, a substantial sum—on ; There are other methods of securing a account of such ta.xes. paid to the states— measure of coordination, or of relief \yhich the federal government, already financially •might obviate the necessity- of trying to in embarrassed, would have to find money tegrate the state and local taxing systems Somewhere else. Well, naturally, you want with the federal system. One would be a to know vv'hat I think about that and what .shift or reallocation of the functions of- program \ would advocate; First, I be government. The. present tendency is to lieve that in America we have imperfectly . centralize things in the national govern^ developed our personal income tax and our ment, and this trend will probably become inheritance tax. England, with>a. .hun rnore pronounced as time goes on." But -I- dred/years of experience, has made refiner believe it desirable for the states to. retain, nients inJts system which I.think are far as far as possible^ their present functions. superior to American provisions.: Refine It would be possible, of course, to turn over ment of tax methods would make, up much to the federal government some of the furic- of the revenue which the federal govern /^ tions now performed by the states. Per ment would lose under the plan I am pro haps the obvious ones would be a portion posing. •' ; -V of the highwiay system or a portion of the W'e exclude from the federal personal in educational system, but I .doubt if/even a come tax, dividend Income, for purposes sma.ll number of the men here would say of the normal tax. Dividend income could that such a program would be a sensible be taxed along with other income of the • • one. : •, individua:!. If that were done it would, A number of people advocate a plan of: very materially increase the yield of. the the division of fields of taxes. I have al^ federal tax, with no change in rates and THURSDAY MORNING SESSION 307 with no change in personal exemptions. taxing units of government—which must It is highly desirable to have the federal necessarily continue to have the power to and state constitutions so amended. that tax—cannot be made to harmonize. • interest income from tax-exempt securities / It appears to me that, if we thought in shall not escape taxation. If that were 'terms of the taxpayer iDeing like a cow, done, the productivity of the federal.income anxious to give up her accumulated milk, tax- would be greatly increased. So,, too, we could probably .arrive at harmony. with the official salaries of both federal Though I am not a farmer, I assume that and state,and local employees. There is cows are grateful when they are relieved of no- particular reason why I, as a public their milk. If taxpayers were similarly situ- official, should receive a salary from the .,ated and if a herd of taxpayers, like a herd state "of New York which the. federal gov of cows, could enjoy being relieved of the ernment has no right to tax'. I believe it accumi^lated fluid, they, would no doiibt is ah.unjust discrimination against a man desire harmonious treatment and'would not like Professor Haigwho works iFor Columbia care particularly what distribution was to. University, and who; must pay a federal be made of the nutriment of which they had income tax on his salary. been .relieved. Even with the changes in the income I do not assume, however, that taxpayers :tax laws of the federa.1 government—which •are of this character^ and unfortunately our will be delayed by constitutional limita- government is not based on the principle tions, and perhaps affected by political con- of getting the milk first and dividing it sideration-—it rnay not. be possible. to se- afterwards, but on the principle of distribut- . cure, immediately, an increase in federal ing the benefits in anticipation of an abun- revenue sufficient to overcome these credits^^ daht milk yield. If there isL^ndt^ sufficient "^ which should be allowed to the taxpayers of number of animals ready to be rdlieved of • the various states.. Therefore, it is my re- the milk which has been accumulated, or luctantly formed opinion that it is desirable not enough milk has deyeloped, we assist by for the federal governrrient immediately to separating them from the milk which they enact a general sales tax, which will oper-. are about ready to give up,—and frequently, ate uniformly/over the. country. finding that there is not sufficient to meet : Experience with the New York sales tax demands—seek to supply the deficit by leads me to believe"that sales taxation is using the cow herself in satisfaction Of the - not suited to state use. It operates With benefit given or promised, varying degrees of success, depending upon : It does not seem to me that we should the geographical, tocation of the state a^nd necessarily fayor some particular unit of the rate of the tax. Any such tax law-US- government- because it has developed a undesirable from the state viewpoint. But' glorified system4]|.t,spending. .After all, I if a sales tax should be laid upon all^busi- cannot disassociate the individual from the ness and all commodities'oh a nation-wide governmental unit and must always think scale, there could, be no competition be- of-'-our' government' as subsisting entirely tween the various states. upon what it gets from the people. Be Some such plan as^this is necessary in. lieving this, it seenis to me that we'must order to aid and to promote recovery from ' think in terms of-tjie individual and not in this business depression. terms of spending for the benefit of the in-- SPEAKER BELKNAP: Wie afeTiow to-be dividual. : honored by a talk' from a man"wKo^fias 1 do not-get the so-called • federal view been associated with the financial interests point, rit may be that. I am sufficiently, out of the state of Massachusetts for a Jong of date to have been conveyed here'in a time. I want to jntroduce Mr. Henry stage coach instead of the modern methods Long. of. transportation. It is my assumption that .ADDRESS. BY HENRY LONG : "^^^^ is not •-•—• _^money borrowed with the security of what Harmony, it seems to mej- cannQ.tl..po§^"^'i^ happening or going to happen, but rather -sibly be introduced into our^tax system., money derived from cy^dit which has been The differencesexistingbetweenthe.variousbuilt.up over a long period of years. • N •-• • \: '•Uj.l.1-.^!-

• >••'.. /a 308 THE BOOK OF mE. STATES I have heard no one suggest that present must be had in order to maintain and carry . ability to borrow money has anything to forward, the services, unless of course some do with the promise of additional revenues other source than, the individual is to be. on the morrow. But I think all are in found- with- inexhaustible ability- to furnish- general accord that the credit iipon whicH funds.- . , • ''rr- '•'.'. .-•;•. we have been able to borrow has been the There are, it seems to me, direct connec growth of years. Our government has tions between the tax money paid arid the gained confidence by exemplifying in the particular service that is performed.. The governmehtal units the principles \^'hieli 'es people allovier this country organizie groups tablish a firm foundation for individual ori the thought that, collectively, they can credit. It would seeiri, in. consideration of ' do much more for the individual than in these problems, that while the idea may,be dividual initiative itself can do, and do it old-fashioned, a restoration of the fs'ew much more cheaply. I am' not surprised • England thought of a town meeting, where at the . number of • our various; govern everyone joins in the determination of what mental bodies, because it i^ manifest;that- should.be spent in a governmental way, de groups within, groups are finding things ' serves some attention. The town meeting which they can do to mutual 'jadvantage ;" •attendants had full knowledge that in pro- but are notwilling to entrust to a larger , .portion to ability to contribute, the citizens central body to do. When one spends his would be able collectively to bear the cost o\yn-money he. is ordinarily seeking real of particular services. ; "^ advantage. • ' ' 'If it is true that there need be no con cern with.respect to the sources of revenue, Federal-State Distinet'ion ^ MVht^e assiJmption that sources will take . It must always be borne; in mind, as be-, care of: themselves, then we can think in tween the federal and state governments, terms of spending rather than in terms of that the state governments have absolute jevenue production. If, as I beKeve, we .control over their own' tax structures; and give more thought to the development. those of their political sub-divisions.. There of'ouV revenue sourtes, then it must follow are forty-eight constitutions. There are that Spending shall not come until after almost forty-eight different lines of thought; ther/^is a definite determination about and, while the, atmospheric lines do not SQiifrces-of funds. separate our people as much as they did 'We hiay be.able to go back to the days formerly, there are, nevertheless, distinct-, ['hen^tveryone was compelled to say just siections of this country which are far apart ^ . lat.was to be appropriated and thus indi in thought and needs from other sections cate just \vhat he-should pay. In an adjust ,of the country. It probably is true that no ment of tax sources there surely should be •state would desire pubHcly to express its some relation between the service that js inabili,t.y to function as a state, nor to tell fe;ndered and the revenue source from which the world that its political^ Sub-divisions the funds are taken. It will be found that- could not operate along established lines' the bulk of governmental services, must be because sufficient revenue \yas lacking?. All : expended in the.immediate neighborhood want to appear capable of having the best of the person benefited. It would seefti to government. That thought has led us into follow that the community where the money dangerous paths. We must not overempha is spent should determine the appropriations size the theory that services must be: sup- / and pay for them. .plied irrespective of the-ability to Obtain If.what we need to concern oui-selves with revenue. We should,-it seems to me, first is primarily the ease of tax collection, then emphasize the need of revenue, not by.eat- :, unquestionably the centralization of such , ing our seed corn but by so developing our collections would be ideal, and the farther sources as to .have funds from all, but only away we keep the payin^nd spending, the in moderate individual amounts, ^ more free can be the spendinif;. But bound The states, ancr their political sub up with our collection activities are the re divisions can arrange for taxation in the. , quirements of government which come; from particular territory in which the service tHe individual to whom ultimate resort" is to. be performed; whereas, the federal

-•v- THURSDAY MORNING SESSION 309 ;; : government, having a distinct sphere, should the property, and the domicile of the citi- only resort, for revenue; to those things zen owning the property would be sufficient . ; w'hich ar&sstrictly ^within federal control. to permit a compulsory tax.contribution. It • The states created the federal govern- might be, in addition to a tax on real prop-. ment. Wisely or unwisely they gave to the erty, that a privilege tax or a retail sales federal government the right to do certain tax would make it impossible for any in- things, including the raising of revenue, dividual to escape, direct taxation. Being The states, however, retained the "govern- subject to direct taxation the citizens then mental powers which we regard as more wduldbecertain to be conscious^ of expendi- personal in nature, but gave up a number tures, and could curtail them to'bring them of the sources upon which they could not within the scope of ability to pay. hope to rely in the future for reveniie. The ; The harmony that I visualize in federal, individual ultimately mustT rely upon his state, city and county taxes is-not that, own individual community just as that com- which would grow out of a central body • niunity must ultimately • rely upon the in- collectmg \vjiat could' be niore easily ad-. dividual for its rnaintenance. , . .' ministered centrally, but rather a harmony The states and their sub-divisions can e.xpressed only in the spending of money i.n- usually make clear to the. taxpayer the form proportion to the ability b^ a taxpayer., to - of. service which he obtains from the tax contribute, and all with full and complete . • dollar. There is a direct relationship be- knowledge of the individual. The tax col- tween the power to furnish that service lection could be made so immediate and and the ^ctual performance, of it. effective as to let everyone sense that the The federal government unquestionably ^ benefits he was receiving from government has a definite field, but its relation to the . were corning but of his own "pocket, or that," individual must always be quite remote, being incapable of supporting himselif, his It has the tariff as an exclusive source of fello\ys were carrying their load and his as • revenue, It can lay a tax on interstate well. commerce. It can lay taxes, without injury, If the responsibility of: the individual to on nationwide commercial activities through contribute his share of the tax burden can sales or other taxes—sjjch as one which be restored,? we are likely to get a restora-• .might be.levied upon a manufacturer or a tion of the early thought of our people,-, wholesaler. . ' and a consequent reduction in the cost of The states can not lay a tax burden on i government or at least a: readjustment to the ma;nUfacturer or the wholesaler, because the capacity'of the people tO' support it, that would; place him at a disadvantage in without raidingjhe future. " the markets of another state. The federal We are very reluctant to spend govern- government, by levying a tax on the manu- mental funds, if it is our money; without" facturer or the wholesaler which would be foreseeing and approving the services for uniform throughout the country, could lay which they, were requested. The experi- :such a. tax withoijt creating any .particular, ence of the; last few years^ has been that iembarrassment, , .. .-practically all of bur attention \Vas given The states, however, should exercise the to the matter of e.xpenditure. \Many of our . right to lay a;, tax on their people: so that citizens have been taught to expect much" all persons would know what they \Yere from government without at the same time contributing to the cost of governnient. So being taught that government cannot exist - long as the people, are protected by the vvithout their support. If \ye can. re- • knowledge that the federal government can. establish the responsibility of the individua|7» tax where it is constitutionally or otherwise we can probably bring the costs of govern- . legally impossible for the states to impose a i- rnent vidthin the abilities of our people to burden, definite harmony would come be-, payi' cause the en tire tax burden of the individual SPEAKER BELKNAP: There are few men would be established. in this country who know more about taxa- It is clear that the states or their pbliti- tion than Professor Haig of Columbia, cal sub-divisions could lay a tax on prop- , and very few who can put their thoughts erty by reason of jurisdictional control over 'into words as. clearly as he can. Former 310 THE BOOK OP THE STATES President: of the National Tax Associa clearly as the available-data will permit, tion, and an eminent authority in this the directions in which the material inter field—I take great pleasure in introducing ests of the various states lie. Presumably ' Professor Haig. its report will suggest some basis for har monizing those intierests. Only too obvious ^ • ADDRESS BY. ROBERT. MURRAY HAIG ; are the difficulties faced by the Commission as it attempts to formulate a pt5sltive. and Nearly forty years ago a few far-sighted. constructive program which Will be ac- / . ecbnomists, including Hadley, Adams and ceptable to forty-eight individual states,, f . Seligman,^ began to. warn of the dangers "each with its own particular set of special ; ; Implicit in the attitude of "stolid uncon interests. Its report is eagerly awaited by , cern" -. which, from the beginning of the: every friend of our federal form of govern^' Republic, had characterized the financial, merit in the hope that it will demonstrate '. relations between our federal and state govr that at last there has been evolved a mech ernments.' However, it was not until 1932 anism adeqijate to the task of dealing with that criticisms and complaints assum"edim- problems of common concern, to all the-in priessive proportions. In that year*, with rather dramatic suddenness, a vociferous dividual states. , - but not entirely harmonious demand for The Federal Government and change arose from many different sources; . Private Business from financial officers, both stat? and federal, from governors "and presidents, In national circles there have been signif actual and potential, from legislators of icant developments also. Following the every political conllplexion, from business lead of the Congressional commi'ttees, the men, large and small, and from self- Federal Treasury has taken steps' to study ,^ appointed guardians of the public welfare, the problem from,the point of view of the both academic and secular. Almost over interests of the national government and to night the traditional attitude of "stolid formulate! a program of reform which will.- unconcern" changed to one of alarmed properly safeguard those interests. In a solicitude." ' letter addressed to this Assembly, the Presi- .dent of the United States predicts tha,t this Treasury study will presently ''furnish fhe._:„ ..' /.-^ Tax Reform and the States basis for discussion of the problems involved , It was at this juncture that the. First \vith representatives of the states." Interstate Assembly devoted its session to Moreover, certain of the associations of 'a discussion of the relations of federaFto businessmen, instead of»confining their ** state and local taxation and took the signif activities to general protest and vague icant step of 'establishing the Interstate complaint, have undertaken to gather de-. Commission on Cohflictihg Taxation, Two pendable evidence regarding the operation . , years have elapsed and the Second Inter of the present federal and state taxes as they state Assembly is now gathered to receive affect their interests.' Symptomatic'of this: ^ a report of that Commission. From the able development is the recent decision of the memoranda prepared by its technical ad- American. Management Association ' to., . visers. Professor Heer and Professor IVIartin, secure frorii its members specific account ; we already, know that the Commission has ing data showing what it is actually costing attacked its task with vigor aihd intelligence. the taxpayers of the country tccQmply with It has sought to analyze the practical im the existing tax statutes and "what might plications of some of the more promising be saved by the elimination of duplicate, specific suggestions and to indicate, as administration of the same types of tax. Finally, the, discussion of the problem *H. C. Adams, S.cience. of Finance, p. 498 et has how advanced to a point' where pro- . 5CQ'.; Arthur T., Hadley, Economics, p. 463; Edwin R. A. Seligman, Testimony before the posals are beginning to receive the advan United States Industrial Gommission, 1899. tage of serious-attention from conservative 'The phrase is that of B. P. Adarkar, cf. The critics.. Assumptions are being challenged, .^Principles oj Federal Finance (London, 1933), evidence is being denianded and attention .p. 6^. • ••' '.i-^'--. is being directed to factors which, it is

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THURSDA Y MORNING SESSION 311 claimed, have been ignored or underempha- lustration. But much of .the dissatisfac sized. The recent reports of committees tion would disappear if the states should of the National, Tax Association are ex develop a reasonable capacity to cooperate. amples of this type of criticism.; If intelligent decisions are to be"reached -r„—._As the result of thesie/developments of regarding changes in the exisiing arrange- the iast'two years, tHe phrase "alarmed rhent,it is vciy important to know how sub- solicitude" is no longer truly descriptive of sitaritial the grounds for complaint really federal-state financial relations. Sober are. In some instances investigation would study and analysis of the problem is now H'eveal: at least the general order of the 1 the order of the day. IMore or less formal magnitudes involved. How. great are the negotiations between the federal authori costs both to the public agencies and to ties, and representatives of the states are the taxpayer of duplicate administration of , apparently imminent, negotiations designed the same types of tax? Is the sum involved to substitute a regime of. h^ful coopera fifty millions or five hundred millions? tion arid intelligent articulatici' of taxation Studies already under way should supply for the discredited policy of mutual "stolid an answer to this question but at present unconcern;" - !' no one knows. What is the iextent of the As the movement passes into this new evasion and unjust double taxation -caused stage of negotiation between repres.^ntatives by the failure of the states to.adopt uni of the federal and state governments, it may form rules for the allocation of tax bases? , be helpful to review briefly the general No one knows. How great is the avoidance situation as it stanHs today .with particular of state taxation traceable to the commerce. reference to the completeness of our knowl clause arid how serious is the resulting dis edge of the facts regarding the faults of crimination against intrastate commerce? existing arr;^ngernentj the status cf opinion Again no one knows, but it should be pos regarding the character of possible modiii- sible to-find put. fairly definitely. Certain .cations and the adequacy of exjstiiVg facili-- other questions Regarding the.grounds for "ties for arriving at wise decisions regarding .criticism of the present arrangement can the, policies to be followed in.seeking,a.solii- not receive quantitative inswers but. it tion. should be possible to gather evidence which, would be very valuable in forming a judg- The General Situation .-.\^ . ment. Thus,' are the states really seriously ' Certainly the dissatisfaction .with the crippled and embarrassed in their attempts existing arrangement is widespread and is to plan their finances? Does the exist ' still growing, Morepver if no. positive ac ing situation actually result in a mal tion is taken, the dissatisfaction is not likely distribution of industry? Are the combined • to defcline perceptibly even with the return federal; and state rates upon a single base ^, of more prosperous times. Heavier, rather really oppressive in many cases? AVho to thanlighter taxation is in prospect for a day has a really informed opinion on these long time to come. However, thfi^ com points? Obviously the task of gathering plaints arise in large part because of the facts and of sifting evidence must be car inability or unwilUngness of the states, ried inuch further before final judgment acting independently, to solve the prob- . can be passed upon the validity of the com lems of interstate apportionment of: tax plaints against the existing system. bases"and of harmful interstate competitidn, resorted to with the purpose^of attracting Changes Proposed ' .isf^xable siibjects. . AVill the states, without Tf'urning to the proposals for thange, one federal action, continue their record of is confronted with an even greater mass'of failure in dealing vyith thesB problems? It unfinished business. During the last three is.true,,of course, that some of the difficul- years proposals have been advanced cover . ties complained of cannot be met without ing practically the entire range-of possible positive federal action,' The existing dis courses of action. For the most part the, crimination in favor of interstate com- discijssion is still in a preliminary state, ^ merce under retail sales taxes,'and to some characterized by haphazard and immature , extent under other types of tax, is an il suggestions. Only a feeble beginning.has

:v-•-•-••• 312 THE BOOK OF THE STATES been made.with the task of analyzing the slow and clumsy. What are "the facts on . implications of the various suggestions fOr these points? Many believe that politics reform. As yet there has certainly been will inevitably enter.into the formulation . no crystallization of sentimenit In support of any plan of distributing federal tax of any definite Snd comprehensive program revenues among the states, that such dis of reform. .Various groups are exercised tributions inevitably develop into wasteful regarding particular, shortcomings in the subsidies, accompanied by federal super- existing arrangement and are making sug visioii. and regimentation, and they con gestions regarding steps to correct these tend that our form of representation in the particular abuses, but with little or no refer Cofigress is ° not calculated to secure the ence to the relationship of these pxoposed adoption'of sound distribution arrange steps to each other or to any. general plan. ments. Before turning over the admjnistra- Many of those who are most active in the tion of state taxes to the federal treasury, agitation for reform have not yet come to they insist, the basis of representation in the appreciate what fundamental changes in the- Senate must :be changed. Who is to ap Apierican federal system may require con- praise this danger and decide whether the sideratibn before a satisfactory solution.of situation is so serious*as to require the far- the problern can be evolved. reaching changes in our governmental • It is not sufficient to prepare tables show- structure here suggested? . ing how jnugh money each state would gain I speak as a friend, not as a foe of re- . or l6se through the selection of one method form in fede!al-state tax relations^ Such as cbmpared with another lif^tHod of dis- evidence as I have been able to gather raises • tritjiiting the yield of a federal income or a presumption in favor of the position that sales tax^. Many factors other than im- the complaints against the existing arrange -rnediate financial results are involved. Some ments ha:ve a substantial foundation. --^Such of the most important factors are-the least analysis as I have been able to make of obvious.. Thus there are tho&e who cal^ at various possible alternative arrangements tention to the size of the country and\ to reveal several which appear to me to be the wide variation in conditions frorOj^s^c- definitely superior .to that which now ob tion to section and who contend that i|t is tains. But I am convinced that,the evi dangerous to impair in the slightest degree dence already gathered and the analysis 'the power of the individual states to adapt already made are insufficient to serve financial policies to local conditions. What as a foundation for the formulation of a weight should be given to this contention?. comprehensive new plan of fisderal and state On the »ther hand, there are many who taxation which can be recommended with sympathize with the position of the-.Aus confidence and defended with success. Let' tralian Royal Commission on Taxation, us not fall into the errpr of thinking that, which in the course of its discussion of this because progress has been made, the task * question of invasion of states' rights de is finished. Let us see to it that, in carry clared: "The main consideration to which ing forward the task toward completion, the ' all other considerations should be adjusted country be given the assistance of the judg is the sovereign right of the . . . taxpayers ment and advice of the most competent to have the mechanism of taxation designed and promising agency which can be made and controlled so as to impose the minimum available. . - of inconvenience and involve the minimum . of cost." ^ What weight is fb he ^iven to A National Commission this view? There are'those who claim that What the recommendations of the Inter the alleged superior efficiency of "cenfralized state Commission on Conflicting Taxation . administration is a delusibn and who assert are to be is not knowji to me, but I express that Congress is alreadyx so overburdened the hopie that there will be irlcluded a recom • as to be practically impotent, and the execu mendation in favor oft establishing an \m- tive departments already soMarge a

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" THURSDAY MORNING SESSION 313 but. the .people of the United States! Treasury, dissenters, ari ts—ana. ask This proposed commission should address for a considered judgmen nd evaliiaKon. itself to the formulation of policies. It The next step in the reform of feder2 should not be a negotiating or administra state relations is the establishment of a tive body. It should investigate and de tional commission—a commission in ex- liberate. It should be a very small body. celsis, to represent no one in particular but Five members would be a desirable num all of us in-general. "We, the people of the ber. Personally I should prefer' three, United States" stand in need of guidance Australia in 1932 entrusted a similar task and counsel which can apparently be sup to a Royal Commission of two, the Chief plied so \yell in no other way. May the Justice of one of the statesV and a dis event prove that ourpolitical. leaders have" tinguished accountant. Disregarding all the insight to appreciate the richness of the questions of availability, I would-suggest opportunity and the need for prompt ac Bs the three ideal members—Charles Evans tion. May the event prove that we have 'Hughes, A. Laurence. Lowell, and Edwin among our national resources a few men R. A. Seligman. Certainly no active poli worthy of the appointment as commission tician should, be a member and no attempt ers. May the event prove that we. in shpuld be made to apportion seatS:.on the -America have the character and intelli commission so as to secure representation gence to utilizfe successfully this venerable 'of political, governniental, sectionals'^'dr Anglo-Saxon institution whicfi^ we have in economic interests. It should m\\it\ the the past so often abused. submission of testirhony from every compe SPEAKER BELKNAP: I am now goirig to tent source and should publish the evidence ask the ^creitary of the conference to call in full. It should also be provided with the roll by st^s technical assistance for prosecuting inde pendent studies on its own initiative. There followed the roll c^ll by states The'problem, then, despite its superficial SPEAKER BELKNAP: I should like to read appearance of simplicity is a very compli to^this Assembly, as I think it is only fitting cated one. Its legal, economic and political we should, a letter from President Franklin ramifications are numerous.and important. It is a problem whose very nature'Semands Roosevelt pertaining to our meeting here, and whose importance deserves the sus I suppose most of you have read it, but some tained and concentrated attention of a dis of you may not have done so, and when interested national commission made up of the President deigns to write to us we men^whose intelligence and judgment com should certainly give consideration to him. mands the complete confidence of the pub (A jacsimUe appears on'pagc.314) lic. The country should not be asked to " * give a series of decisions on specific pro Introdnctiotf of Governor Miller posals which are unrelated to any general , SPEAKER BELKNAP: I would appreciate plan. It has the right to request that it it if Governor Miller of Wyoming would be furnished with a blue print of what such come forward in order that we may wel- a commission, in the light of its analysis com^e him to our assembly.' Governor of all the factors, considers the wise general Miller, it gives me great pleasure to intro*- program. If we are to be asked to amend duce you to the members of this Second the Constitution with respect to.the basis Interstate Assembly. Your.problems as of representation in the Congress, with re fgovernor, and the.problems of the other goV-. spect to restrictions on, the taxation of in ernors, usually filter through.to us legis terstate commerce or with respect to the lators, and our problemss sometimes cause scope.of the functions of the national gov- you consideral^le trouble, We would like ernment", we should be asked to do so by "a word from you, such, a commission and not by any group HON. LESLIE A. MILLER: I have no par- Withasectiohal or political interest at stake, ticular message to convey at this time ex- Before such a commission all could lay their cept that I am very glad to participate in evidence and the results of their thqught. this meeting. It is going to be very bene- and analysis::=--Interstate Commission, the ficial indeed for the members of this As-

•'''>'l^

-^»#v /

^ THE WHITE HOUSE WASHINGTON

Februaiy 18, 1955.

Mr. dear Mr. Toll:. ,• T;' : . ^ .•.:.::• .. . :

v.. •; .• . . , . . • - /•-•,;• -- •• : •.,• ,. --•; ••: •..•• -•• .,-..' I writeto express I^y own veiy earnest hippe that the Second Interstate Assembly to be held in Washington February twenty-eighth to March secbncl,''will be successful, in its approach to and solution of the important problems it meets to. consider.

. ff - ",•'••.•:.'•.:., ••'•.'".-'.-•

..." N ••••..' ts • . ' It is apparent, I think, to all students of government that . ther^^.is urgent need for belter-"machinery of "cooperation between FederfuL, State and local; governments in many fields. Both the Congress and the executive departments of tbe national government are,constantly confronted' with problems whose solution requires coordinated efforts on the part of the States and the Federal goverhraent. Two notable instances are the•coordination of law enforcement and the interrelation" of fields of. taxation-. This latter cju^stipn has long seemed to me one of prime importance. Only recently I-directed the Secretajy of the , Treasury to undertake a study of. sources of taxation, with particular reference to the matter of/conflict or overlapping of Federal, State and local taxation. When^this study is complete it-should furnish the basis for discussion of the problems involved with representatives of the States.

' "i- •. . .• ••' • " '•.'.•-.,,.. -•..•• '.'•-• I shall follow with the greatest interest the proceedings of • *< the second Interstate Assembly, with the hope and-expectation that many constructive ideas will be developed as to means for perfecting and strengthening the relations between the State governments and the national government in'the disposition of the problems in which both States and nation aire vitally concerned. . '

.Very sincerely yours.

.J.

^C^a-^-

i-. Xtes

THURSDAY MORNING SESSION 315 sembly to confer together. The state present governmental machinery was pecul many problems in common and it is iar tt^ America. When they got there they tainly desirable that we come togeth nd every other, nation had its own pe •such a meeting as this- as frequently as culiar problems and all the peculiar prob possible. , ' J lems were the same, whether they; were I am glad the management of the As under a-Mussolini or a Hitler or under sembly has provided this opportunity and France or under England. They came to has so arranged ftrings that the represen this very interesting conclusion, that the tation here is so generous. I hope to meet- • changes in modern life, principally the many of you personally during the period changes in transportation and communica- of. the Assembly and, for the time being, • tioh, had so changed the whole set-up of I simply say that I wish the Assembly ^govei-nment that all the nations are facing every possible success. - tHe same, difficulties. They asked for-the appointment of a committee composed of Remarks by the Speaker ' two factions, the central government and the local •governiiients, to meet and see how * SPEAKER BELKNAP: It may interest the they could work out these frictions that Assembly tQv know that last summer there exist, apparently, iiife£very nation. were held, in France, two different meetings I state that because every man who has of administrative officials of government. spoken from this platform this morning has Those meetings were of international as- • noted these changes in government and sociations'^nd there were at least two rep has expressed the feeling that- ours is a resentatives from .America there in ad peculiar problem, that there is something in dition to delegates from France, .Germany, our government that is wrong. But to my England, Italy and most of the other im mind it is a change in the work, it' is a portant nations of Europe. Kow here is change in the life of the nations. We have th6 interesting thing! Each nation went corne to the point where we must overhaul to that conference"; of administrative of the machinery to meet,, changes in the en ficials—one conference was of central or vironment, and I think'that is the problem federal government officials, and the other we must discuss this afternoon, tomorrow was of local government officials^—each and Saturday. I think if we get it in thinking that their particular, nation had our heads that Providence hasn't visited a very peculiar problem. Our Americans any particular plague upon us in the United thought that oiir conflict between, federal, States but that the whole world is going state and local governments. in our tax- through this same struggle to adapt gov systems, and in. all the other fields, was ernmental machinery to modern conditions, peculiar to the American form of. goyern- we may be able to work with more intel ment, and that what might be called the ligence. breakdown_, certainly the inadequacy, of T/ic meeting adjounicd at 12:05 p.m.

.Q>-. Thursday Afternoon n ^ Fehruary 28^ 1935, #

HE 7nceting was calbsd tôrdeiSiat : CHAIRMAN MORRISSETT: At' this time 1:50' p.m. by Speaker Be it gives me great pleasure to present Senator T Si'KAKER BELKNAP;. 'Ijnose or'US Mastick, .Chairman of the Interstate Com who were at the First Interstate Assembly mission on Conflicting Taxation, who will will remember that the conference was submit the first report_pf^!!iat'Commis3ion; called, for the primary purpo;re of^ tackling Senator Mastick! ' *" the, tremendous job of conflicting taxation. . • .s. • Vou will recall that after considerable dis REPORT OF THE INTERST.ATE COMMIS cussion, the Chair was asked to appoint a:n SION ON CONFLICTING TAXATION Interstate Comihission on Conflicting Tax ation. That commission has been working Presented by . . for two years. .. • V SENATOR SEA^-RY C.MASTICK Cji? We have been very, very fortunate in . The. first part of this report to the being able- to get the services of Senator Second Interstate Assembly summarizes the Seabury Mastick- of New York. as Chair Commission's activities during the biennium man of the Commission. J don't suppose since its appointment; the second concerns there is a man in the Unite'd States who the recommendations dealing with possible has had more experience with state finance "immediate adjustments designed to alle-r from the legislative point »of view than viate tax conflicts; and the third develops Senator Mastic!/nor will you find a better a long-run program for improving the tax chairman of a committee or a. comrnis- system" in the direction of eliminating con sion.., , . • . • flicts. This commission has served faithfully and I want, to thank them personally for the work they have done, - I. THE. WORK OF THE COMMISSION Two men have serve4âs the professional .' SUMMARIZED advisers of this Con^ssion, Professor Since its appointment at. the close of the Heer of the LTriiversity (^fcjXorlh Carolina First Interstate Assembly in February, who started off the worlând Professor 1933, the Commission has. held a series of Martin of the University otmentucky who meetings,'the last of which was on February took up the work last summeÎ think you 27, 193'5. It has held several fprmal, meet all have before you'the reportât Professor ings, one in Chicago, one in Boston, and Martin has helped to prepare,Wlong with fiVe in Washington. In addition, several the Chairman of the Commission. These .members of the Commission have met two men have worked hand in hand and informairy" with the Committee on Ways have brought out data of which I thihk and Means of the United States House of we should all be proud. • Representatives. During January of this : Before we hear the report of the Com year, the Commission met jointly with the mission, I waht to call on Mr. Morri^sett, governing boards of .the Council of State State Tax Commissioner of Virginia, wô is Governments and the American Legisla to preside at ..this meeting. I take g^r-eat tors' Association. Usually the meetings pleasure in intfoducing to you, the presidr • have lasted two days, with ses^^ns in the ing officer for. this afternoon, Honorame mornings, afternoons,'and evenings of each C. H. Morrissett of Virginia. \ day. At its meeting on February .27 the Mr. Morrissett took the chaiY \ Commission met for only one day. :

31^- • •••..;..:; THURSDAY AFTERNVON SESSION 317 " The meetings have been varied in charac- Chairmen of the Committee on Ways .ter. In some instances the Commission has and Means and of its subcommittee on considered at length.problems of organiza-"^ double, taxation;-and to President lôose- tion and procedure and in others specific velt, who wrote "a letter . endorsing the proposals for tax reform, generally jff'the ol^'ectives of the present Interstate light of research reports , which had pre Ass£.mbly. viously been placed in the hands of the Com Shortly after its appointment the Com- mission members; The members and the- . mission engaged'Professor Clarence Heer research staff, Jor the most part, have met of the University of North Carolina as its privately; but occasionally certain other research director. Mr. Heerj together with corisultants have be^n invitedv the staff of the American Legislators' Asso- Actihg under the^ authority of the Iriter- ciation,-cafried onUlie office activities of the state Assembly resolution, the Commission ^Commissio ^—.•--:-«•..-..:n untiil vr„.May., 1934in7i . DurinT^..„:„„^l.g th„e has conducted certain "negotiations with •summer of 1934. the only staff activities members of .Congress, particularly with the' were those of a secretarial character," cop- leaders of the House Committee on Ways ducted by the permanent staff b f the Ameri and Means and the Senate Finance Com can Legislators'Asso'ciation. - mittee.. The chairman and the secretary of Beginning September 1, 1934, a research the Comffiiîon pjrênted {.he Commis staff directed by Professor James W, Mar sion's yiewpoihton gg«solin^ârt^liquor tam- tin of the University of Kentucky 'was •- tion to the Committee on Ways and Means. organized. In addition to Air, Martin and On another occasion the CoThtnissôn met the permanent staff of the American Legis jointly with members of the t\vVcongres- lators' Association are Hershal L, Macon •sional committees aiid with persons repre and Johrv^^' Akers, research associates; senting the administration to discuss the . i\Iary Ada Honey, secretary to the research entire problem of conilicting taxation and director; and Dorothy Diemer Thompson, to make known to the federal representa stenographer. The staff has conducted the tives its vfewpoint on specific questions. general secretarial work of the Commission Following, the negotiations. Chairman Har and has also engaged in resi?arch activities, - rison of the Senate Finance Committee the general character of which is indicated . showed a cooperative viewpoint by appoint by the following list of research reports and ing a subcommittee on Double Taxation, articles in STATE GOVERNMENT. His Finance Committee also adopted the sta:temerit in a report of the Senate Finance Committee that, "This committee is of the . Research Reports opinion that the gasoline tax should be re Is thelnterstate'Conimission on Conflict served for the states after June 30, 1934," ing^ Taxation Worth Its Salt/ (73rd Congress, First Session, Report No. Elimination of Tax Conflict's .58,p.T.) Fiscal Coordination t/iroii^h. Intergov The staff of the Commission has main ernmental Agreement ,' tained contact cpntihubusly, but informally, State-Shared Federal Sales Taic - with individuals responsible for federal and . Pertinent Statistical- .Data Relative to state tax policy. In the case of the federal Various Proposals for Reducing Tax. govêrnment this includes the Joint Com Conflicts. •• • y. • . • . mittee on Internal Revenue Taxation, the ' Coordihatiofi of Feeleral and State To congressional subcommittees on double bacco Taxation . :• • ••;• taxation, the personnel of the Treasury De Problems Preliminary to a§ttidy oj Con partment, and individuals in other branches flicting Income Taxes . " . • \. of the administration concerned with taxa Sales Taxation: State vs. Federal,: tion. / The Corporation Income Tax and the^ • The Commission acknowledges the cordial Crediting Device \ (9 cooperation of federal and state, adminis- iThePersohallncome Tax and:the Credit-^-\ *-r- trators and lawmakers. It is particularly •; ; ing Deviee^-:-^,:.,._ /^^^, _ ' ^ ,.' • •; • indebted to the staff of the Joint Committee State Income Tax Policy in The^hight>-oL.^^-^ on Internal Revenue Taxation; to. the Experience

• i -x 318 THE BOOK OF THE STATES

Articles in STATE GovEfmiENT government and the various states result in distributing the tax load inequitably and, "Conflicting.Taxation," Fi^bri^ary, 1933. in the second, that overlapping and un "Interstate Commission,"^-2^ra^, 1933. . coordinated taxation places an iftrreasonable '^323,Conflict^" (table). May, 1933.. burden on business and industry and con "Recommendations Contained in First stitutes a problem calling for iinmediate Report of I.C.C.T.," July, 1933 ' action by federal and state legislative "The Story of the I.C.C.T.," July,' 1933 bodies. "Friendly Negotiation Instead of Federal. On the basis of these findings and of re Coercion," July, 1933 search work carried on by the staff of the - "Tax jMimicry," July, 1933 Commission, the following reconimienda- -Report on gasoline-,-tobacco, Hquor and- tions have been approved during the past electric energy taxes, July, 1933 two years. These proposals look to im Report concerning Recomtiieudations for mediate action which can be taken in the : Taxation of Alcoholic Beverages, No interest of better Coordination of state and vember, 1933 ^ . local tax plans. -. ' •• > "Splitting the Liquor, Taxes," December, 1933 • ": .; J. Gasoline Taxes "Federal-State Liaison," (Recommenda tions to Ways and Means Committee Since Congress has declared that the and Senate Finance Committee) federal tax on gasoline was levied only as "Conflicting. Gasoline Taxa'ttoh," Janu- a temporary e.xpedient on gtcouht of the ..••;• ary, 1934 emergency, the Commission urges the Report on the May 18-19 meeting of the federal government to relinquish this source : LCX:.T.,July, 1934 of revenue for the exclusive use of the states Report on the September 29-30 meeting at the end of the next federal fiscal year, . .. of the LC.C.T., November, 1934 namely June 30, 1934. '" "Current Tendencies in State Taxation," January, 1935. .. TobxLCCo Taxes Thirteen' statfei now have taxes on to Besides these formal reports and disciis^ bacco, and many other states-are seriously sions, the staff has prepared approximately considering levying such taxes. If the states forty-brief statements regarding the activi continue to impose additional levies on ties and recommendations of the Commis tobacco products, the" return to the federal sion. -1 government from this source of revenue will To develop interest among college be further diminished. Since any material teachers and to secure assistance from them, increase in these.ta.xes during a period of the staff of. the Commission organized an depression will decrease the amount of Advisory Committee of college and uni ) tobacco consumed, such increase will ad versity professors in the autumn of 1934. versely affect the. producer as well as the The members of this committee have aided manufacturer. Accordingly this Commis by offering constructive'criticisms and sug sion recommends that no additional tobacco gestions. . Several of their suggestions have taxes be adopted by the states for revenue materia.lly influenced the work of the staff, purposes. a.nd some have been referred to the Com mission membership. 3. Electrical Eticrgy Taxes

li. REGOMMENDATIONS FOR Since the conditions of the manufacture and distribution of electricity Vary so widely • IMMEDIATE ACTION from state to state, this Commission recom At the end of its first meeting, held on mends that Congress should leave this March 24 and 25, 1933, the Commission -•'source of revenue for the exclusive use of adoptedf a report summarizing provisional the states. The states-have long depenc^ recommendations" pending further investi on the taxation of electric utilities, whereffs gation. In the first place,, it recbgnized the federal government has just entered the that conflicting taxes imposed by the federal field^ • ; ": THURSDAY AFTERNOON SESSION 319 4. Beer Taxes •'..'.. • 6. Liquor Taxes . Congress has already levied a heavy tax The Commission adopted the following 'on beer. Substantial additional taxes on this resolution at the time the Eighteenth beverage, or heavy license taxes on its dis Amendment was repealed and prior to any tributors, levied by the states, or by their federal legislation. : political subdivisions, will diminish the "Resolved, That it is the sense and the federal tax revenues. Therefore, the Com- recommendation of the Interstate Commis missiorhrecommends that the states, munici sion on Conflicting Ta.xa.'ion: palities, and'other local units of government 1. That the sociaUmplitations of the re refrain from levying heavy taxes on beer, peal of the Eighteenth Amendment greatly except for regulatory purposes. - outweigh in' importance the revenue as pects of repeal. ,—-. 5. General Sales Taxes 2. That the taxes on alcoholic liquors, as . At its first meeting the Commission recog well as the taxes and license fees upon the nized the signi&cance of the general sales traflic in such liquors, should be so devised tax movement and directed its staff to con as to promote temperance, and at the same duct an investigation.. Later the following time to discourage, illicit, trafficking in such resolution was adopted. "~" beverages. • "PREAMBLE: We are confronted with "3. That there is gt'ave danger that if a situation in which fhany of the states are both the federal and' the state governments, being embarrassed in the administration of without regard to each other, impose taxes e.xisting sales taxes; therefore : or other- imposts on these commoditi.es, or "Without passing on the merits of either upon the traffic.in them, the combined load state sales taxes or federal sales taxes, or of taxation will become so heavy as to de of other taxes of similar characteristics, and feat the foregoing objectives. .without passing upon any possible alloca • 4. That volume taxes, or so-called gallon- tion of these sources of revenue at a later age taxes, whether direct or indirect, should B- date; be it hereby be imposed upon liquor by the federal gov "Resolved, That this Commission favors ernment only, and only at a moderate rate. the enactment by Congress of the so-called '.5. That the rate of the volume tax Harrison Resolution as now amended." ^ should in no event exceed three dollars per gallon on.spirituous liquors, and that the 'This meîsure reads as follows: .-Vll taxes or excises levied by any State, upon sa]^gg^tangil)lc rate of taxes on beverages of lower alco persoMJiproperty, or measured by ^!^^p tangible holic content should be correspondingly ~ pers(!il^. property, may be ieviecT upon, or lower. measured by, sales of like prppertv in interstate commerce; by the State into which the property 6. That of the combined gross revenue is moved for use or consumption therein, in the from the liquor traffic, derived by the fed same manner, and to the same extent, that said eral and state governments from all sour(^, taxes or excises arc levied upon or measured one-half shoulr/inure to the benefit of.tITe by sales of like property not in interstate com.- merce: Provided', That no State shall discriminate states and their localities, and- the remain against sales of tangible personal -property in ing half should be-retained by the federal interstate commerce, nor shall any State dlscrirh- government. inate against the sale "of products of any other States: Provided further, .That no State shalT 7. That in-applying the principle which levy any. tax or excise upon; or measured by,' jjs stated in the preceding paragraph in the the sales in interstate commerce of tangible per case of those states which adopt the state sonal property transported for the purpose of stores plan or other form of state liquor resale by the consignee: Provided further, That no political subdivision of any State, shall levy, monopoly, there should be substituted for a. tax or excise upon, or measured by, sales of . gross revenue as defmed in that paragraph, tangible ; personal property, in interstate com the actual profit derived from state liquor merce. For the purpose of this .Act a sale transactions.- of tangible personal property transported, or to .be transported, in interstate commerce shall be "If the federal government should prefer a , considered as made within- tjê Statp. into "which system .which, would avoid any occasion, for such property is to be transpoFtctTTor use or con auditing state accouhts, it could establish a, fi.xed sumption therein, whenever such sale is made, allowance for selling costs, based upon a per solicited, or negotiated in whole or in r>art within centage of the gross sales or upon a percentage that State. of the cosjtof the hquor to the state. 3^0 THE BOOK OF THE STATES 8..That the federal government should At its meeting.in jMay, 1934, the Com ascertain its total gross revenue from the mission adopted the' following resolution. liquor traflic derived from all sources, and divide that amount by the total population 7. Federal Commission in all the wet areas in the United States', "Resolved, That the Interstate Commis thus estabfishing the federal per. capita. sion on Conflicting Taxation, on its'own Similarly each state should ascertain its account and on behalf of the American Leg total gross revenue, including both stateand islators' Association, respectfully requests local proceeds, and divide that amount by and petitions, the President of the United the total population in all of the wet areas States to appoint, a Commission, of such in the state, thus establishing the state per number as in his judgment seems best, to capita. In the case of each" state, the state study and report on the allocations of func per capita and the federal.per capita should tions of government between federal, state, then be added, thus establishing.the com and local jurisdictis>ns, and on the coordi bined per capita for that state. The state's nation of federal, state, and local revenue minimum share, should be one-half of the systems in such a way as to secure the most combined per capita. Accordingly, the fed equitable distribution of the aggregate tax eral government should make payments to load, and such other related problems, if each state which contains wet areas, in ac any, as may seem to him desirable for cordance with the following formula: study." \ Ascertain oiie-half of the combined per This resolution,embodies the same pur • capita. " pose as that contemplated by the proposal, Subtract from that anfount the state per offered at the end of this report, for a Tax capita Revision Council. It is the Commission's TÎultiply the difference by the number qt^je'^4ML,SlL!^^°-"^^°';^ as^ incorporated in "".the total population in all of the wet the'preceaingâragraph should receive no areas in tjiie state, thus arriving at the further consideration. It proposes, on the amount .to be paid by the federal gov- other hand, that the more mature plan sug ernmerit to the state.^ gested below be approved.

. ,•. ••• • - • ,- • - '^•.• 9, That revenues from spirituous liquors ,8, Commission Plans ; which are sold for medicinal purposes , The Commission has worked out a pro should not'be included in the foregoing com gram of investigation which contemplates putations, but should be,separately handled, checking alf recommendations, that' have in accordance %vith the above stated prin- heretofore been made, together with certain ciples, but in accordance wth the method others still to be investigated, against state stated in the following paragraph. and federal revenue statistics, in order that 10. In the case of each state, the federal it may know the fiscal consequences of each government should compute the amount of. plan for reducing tax conflicts. In general revenue which the federal government de-- it is believed that anv successful plan for 1 rives,-by taxation and licensing, from the legislation must be piecemeal in character, sale of liquors for medicinal, purposes in Is^o progra^^vhich involves a radical modi- that state, and also the amount which the fication in state or federal revenue policies state derives from such licensing and tax-, can be con^dered in the light of current ing, total the two amounts, and pay to the fiscal, uncertainties; However, 4«}fe-Com- state such amount as will give it not less mission is looking forward to tm develop- than one-half of the total." ment of plans ,for fairly substantial re visions to be made step by step. 'It Avould.be possible for any state to enter, into a similar arrangement for sharing the pro-' cccds of liquor revenue with its local units of III. THE LONG-RANGE -PROGRAM government at any agreed ratio. Having outlined an immediate program, R&peal will shift, much .bf the cost.of supervi sion from. the federal government to state and which in the nature of the case must be local Royernmcnts, and therefore their share of partial and piecemeal, "it seems desirable liquor revenues should be. liberal. that the Commission indicate its views re- r

THURSDAY AFTERNOON SESSION^. 321 garding a Ibng-rahge plan for dealing with local tax situation ^^rid incid'Cntally provid conflicting taxation and related problems. ing data necessary'-'for any tboroughTgoing This' program, of course, must concern interstate investigation. ;

largely the development. of machinery • '.' • ,,••''9 .•.•••' .•.•-••• rather than specific solutions; since the tax 3: Public Understanding oj Fiscal '.. situation is essentially dynamic in char- . •••' Affairs '. .; . / . acter and since any ^ plan of solving con . Partly.,-as an outcome of these two^sug- flicts is likely to become, obsolete in the gestions>and partly asârresult of current .course of time. govern/iiental activity, ^âch state should i. Better Statistics conduct continuously a campaign of public education regarding state and' local taxa- In developing a long-term program, for tiph. The educational prpgrarri along this/ dealing with federal-state and interstate' line not only_ should contempla,te popular tax difficulties, the sevc'-al" states can im^ izing information as to, tax problems, but mediately lay the founua .ion for'progress^ it, should also supply the public with full The-first necessity perhaps is the develop information on governmental e.\penditures ment in each state of more adequate and the administration of public debt. , financial statistics of-state and local gov ernments. At the present time only about 4.. Congressional Enabling atid one-fourth of the states mako any pretense Consenting Act • of collecting all of the statistics of state and A fourth recommended course of action, local taxation, and even in thest states the looking toward a long-range policy of deal statistics are in some.cases meager and un- ing intelligently with conflicting taxation, • satisfactory. Each state should certainly would be the enactment by Congress of .a •know the total amount of tax ^revenues of general enabling and conseiiting act re various classes which,it raises"by ât^ or specting interstate ta;x compacts. A still local action. It should know, alspf the more fortunate arrangement would be the facts respecting the distribution of :1ts state _passage of an enabling and consenting act and locîl expenditures and those regarding applicable'to aJl compacts negotiated under public debt. In addition, it is desirable the auspices of the. Council of State gov that the states assemble more complete in ernments. In all probability, the develop formation iêgardihg functional activities. ment of treaty relationships between, the Incidentally, this reconi'mendation to the states will, in the long run, be essential in states contemplates^ more generous co dealing with conflicting taxation. operation with the statistical agencies of the federal government, particularly with 5. Vacancies in Membership of Inter the Bureau of'-the Census,: • . state Commission on Conflicting '2. CdmprehensiveTaxStudy- ' Taxation • • •.., >:, . In the second place, many of the states The Commission recommends that, all need to conduct comprehensive investiga vacancies created by the retirement of its tions of their own state and local tax prob members from public office or otherwise lems. A valuable incidental result will shall be filled by the' Sppaker of.the Inter y be the development of information needed state Assembly. . . - by the Tax Revision Council proposed be 6, A Tax Revision Council low.' Some of the comrndnwealths, as for example Connecticut, New York, North Interjurisdictio7ial conflicts inherent in Carolina, and/Bthers, have already con American GovcrnmeyZ ducted such--studies of state arid local •:' Tax cOnllicts arise largely from the fact taxation. More-than half of. the common-, that the federal government and the, states' •wealths, however, have not recently con have constitutionally coordinate taxing ducted thorough studies of their tax situa jurisdiction in all important fields'except tions. These states, it is believed, should in property taxation and customs duties. the near future provide for official investi In the early history of the United States gations looking toward improvement in the the important sources of tax revenues were 322 THE BOOK ajF THE STATES almost exclusively property and poll taxes, It must also be recognized that, even tariffs, and a few selective sales taxes. With though immediate steps were taken to solve rare exceptions, the excise taxes were im conflicting tax problems, one could not e.x- posed only by the federal government and, pect them to remain solved. Gdvernmental in consequence, interfered but little with institutions are developing at such a rapid local tax plans. \Vith the expansion in gov •pace that new problems of taxation are ernmental "activity during theii,past thirty arising continually^ years, both the federal government and the Permanent means of study essential: states have found^t,necessary to expand the Therefore, no • matter what legislative scope of their to^ systerilis,.. Death taxes, cliahges may be adopted to reduce the evils income.taxes, and selective excises arfe now "of conflicting taxation, it, will be essential imposed by both commonwealth and cen to maintain machinery for dealing continu tral governments. ously with the problems of this sort which In the meantime, states have been sub- easily arise from our plan Of government. ~clivided-into counties an^l • sometimes, into It has become a commonplace among towns or townships. Cities,, school dis • students of government that agreement on tricts, drainage districts, and other taxing controversial public questions is reached jurisdictions have been supierimposed on : almost invariably-T-if at all—-through per •these, often in siich a way as: to provide so sonal conference. This is particularly true many layers of taxing jurisdictions that an in the field of taxation, especially in the individual taxpaye7>nust contribute to sev-' matter of developing a spirit of interstate eral levels of government. These local gov and federal-state comity; for in this field ernments have assumed large importiance. an attitude of give-and-take must char They have developed semi-independent tax acterize any ^successful procedure. This, ing programs which, in many cases, overlap viewpoint is.in keeping with the following the state tax plans and sometimes both the e.xpression of President Roosevelt in his state and the federal tax plans. As an illus letter of February 18 to the Executive Di tration, certain Alabama cities liave gasoline rector of the Assembly.: V . taxes besides those imposed by the county,' the state, and the federal governments. At Tax Revision Council the same;time the city, the county, and the .There are two practical plans of organiz state each impose various sorts of license ing the investigation. One contemplates taxes, on vendors of petroleum products. the establishment of an unofficial commis In certain states, some effort has been sion, such as-that set up for the Inquiry on made to alleviate the difficulties growing, Public Service Personnel, which has just out of overlapping local government, juris-: I issued its report.- This commission was dictions. Some attention has been giveftl composed of eminent men representative of to working out tax plans which avoid' •': business, education, public administration, discriminatory practices, although they in^ and scholarship in the field of government. volve duplication of levies. In keeping with The other contemplates the establishment this activity, the Interstate Commission'on of a comrnissioh officially representative of Conflicting Taxation, as indicated abbve, the interested parties. In the case of con has given attention to preparing specific flicting taxation or of-the reaflocation of plans whereby the federal government and governmental functions, which require offi the states can avoid conflicting tax/levies cial legislative and administrative action, by separation of revenue soijrces, by utili it is.believedthat the second type of comi zation of federal credits for state ta^ces,-and mission js to be preferred. Therefore, perhaps'by federal administration 'of cer \the Interstate" Commission on Conflicting tain taxes the proceeds orvyhich. would be Taxation recommends that the Interstate distributed to the states, eitber/directly or .Assembly propose a semi-permanent com as grants-in-aid. .All these maiis, however, mission made up of legislative and execu contemplate dealing with ihe situation tive personnel representative of the federal piecemeal, and eacn of themi looks toward governnient in part, the states in part, and amelioration of immediate ^ficulties rather the local units of government in' part. > than a complete sSfflion pi the problems. /A facsimile bf this letter appears on 'page 314. THURSDAY AFTERNOON SESSION 323 The selection of personnel representative levels of .government depends largely on of these various units of government is in Avorking. out. a sound .vie\\TDoint.regarding keeping with the principle that the parties the proper allocation of various govern which have an interest at. stake shall be' mental activities among units of govern represented on .the body established to deal ment. • - . . with controversial issues. The individuals The Interstate Commission on Conflict-' chosen.to represent each level of govern ing Taxation recognizes that this study of ' ment must include menwho are in key po the distribution of governmental functions sitions to exercise leadership in the financial may, and doubtless should, require a sepa affairs, of government and who arfe willing rate staff from that concerned with the to give generously of their time to the task. technical problems of taxation.-. On the •" If is recommended: that the Interstate other hand, it sees no reason why the pro- Assembly propose the appointment as a Dosed Tax Revision Council might not con- • Tax Revision Council of seven persons rep duct both studies.simultaneously under ap resentative of congressional and federal ad propriate direction. ministration viewpoints in public finance; State Conunissibn on Interstate Relations that the states through the Interstate As reccmmended. To fatUitate the work of sembly authorize appointment "of seven this Council it, ;is desirable that-each state persons' representsative of state legislative prov de a suitable official cominission for and administrative viewpoints in public inte-state coiiperation. This body would finance; that the United States Confei-ence be; particularly effective' in providing a of IMayors, the American IVIunicipal Asso-. nleahs of Communicating with and securing elation, the International City IVIanagers' the points of view of each of the several Association, and the Municipal Finance states. Such a committee" is cordially Officers'. Association each appoint one per recommended. son representative of city viewpoints in Continuous study essential. There is no public finance and that the Chair appoint reason to expect that eithei* a coordinated :'.. three public officials reptesentative of tax program or a plan of allocating govern county, rural school district, and other local mental activities to various units of gov government vievypoints in public finance. ernment would remain sufficiently static to It is-contemplated that this Tax Revision render any particular solution permanent. • Council will have the benefit of assistance Thus the Council, if it is to be successful, from the existing staff of'the Joint Com must conduct continuous investigation with mittee on Internal Revenue Taxation, from the aid of an adequatqs staff of experts and the staff of the Treasury Inquiry on Public must engage in frequent and sustained de Finance, from the Interstate Commission- liberations regarding matters of policy in on Conflicting Taxation, and from such . volved. other specialists.as may be made available. To carry on its activities such a Council Council to study, reallocation oj govern would require reasonable financial support: mental junctions. In addition to problems (a) to defray expenses of Council meet of taxation strictly defined, it is anticipated ings; ;. > • •' that the Council will investigate continu- (b) to maintain adequate research and ously the reallocation of public functions secretarial staffs; and between the various levels of government. (c) to conduct such hearings and con'- '-' The work of the Interstate Commission on ferences as may be essential to the Conflicting Taxation has already been . definitionj)f governmental policy. severely limited by lack of comprehensive CHAIRMAN MORRISSETT: You have information regarding the distribution of • heard the report and the resolutions. The . governmental activities among federal, resolutions will -be referred to the Com state, and local agencies. More than once mittee onResolutions and Procedure, which it has even been suggested that the Com committee will report in the regular course mission's own efforts be directed to the of business. investigation of these p''vblems. Thus it Now we come to another interesting'fea is apparent that progress toward the solu ture of the program, namely the ascertain tion of tax problems affecting the various"^ ment of the viewpoints of state delegations • 324 THE BOOK OF THE STATES

concerning the removal of tax conflicts. • CHAIRMAN MORRISSETT: Florida.; The viewpoint so expressisd should be di KloN. BRYAN WILLIS: We from Florida rected principally, if—not entirely, to. the can assure the Interstate .Assembly that wê subject under consideration, namely the; arg willing to cooperate in wiping out con removal of tax conflicts. If; perchance, a flicting ta.xa.tion between the federal and spokesman for any delegatio^n desires not "state governments. ;^ • to comment on this particular problem, CHAIRMAN MORRISSETT: Georgia. he is at liberty to give a word of greeting HON. ROY V..HARRIS: There .are five frôm his state. delegates here from the General .Assembly • Proceeding then under this plan, we find of our state, which is now in .session, and that .Alabama is the first state in the alpha 'T want to say that we are very-.muclv inter betical list, and so the gentleman from Ala ested in the problem of removingthe p()ssi- bama is recognized, . bilities of double taxation. ••*•••,••:'•.- ^ ••• \ •/.. • .AsTepresentaf ives of the state,of Georgia, VIEWPOINTS OF ST.ATE DELEGATION'S "we wish to commend the work of the Com SEN.ATOR WILL O. WALTON: ..AS the only mission' headed by the Senator. froni Xew, official representative of the state of .Ma- York, and we certainly hope wewiU be bairia in this Second Interstate Assembly, able to make some progress.- .At the 1937 by appointment of the. Governor of Ala session of the Georgia Legislature our tax. bama, 1 am delighted to be here and to system will have to be completely over giv^ thqughfand study to those important hauled and we would like to make it.con problems. form, as closely as possible, to many of the The matter of taxation is a matter in- tax systems in other states. vwhich .Alabama is interested, as you are. CIL-MRM-ANMOKRISSETT: Indiana. T can only statt" to you that down in .Ala- HON. PHILIP ZO;[!:RCHER: I come as..a -bania, under the able leadership of Gov delegate appointed by the Governor and I ernor Bibb Graves, we expect to move want to extend greetings, and say that ;pnward and forward to higher and nobler Indiana has met some problems. achievements. . CHAIR.MAN ÎORRISSETT: Kansas. ' Alabdnia, Hke .you, recognizes its sover- SENATOR CLYDE W. COFFMAN: Coming' ' eignty as a state, of the .American Union, It from Kansas as Chairman of the-Ta.xation 4- has'giiarded, and will guard with extreme Committee of the Sje.nate and also as repre-. .jealousy, those rights which wdDelifevej-and sentative of the Governor. I want to assure' which ypii believe, belong to the sovereign you that Kansas, is inlensely interested in states of this Union. However, as the offi uniform state government.. cial representative, of Alabama I bring you CHAIRMAN MORRISSETT: Kentucky. greetings from that state today and I say ' HON. WILLIAM E. ROGERS: . Kentucky to this .Assembly that while. .Alabama does brings greetings to this assembly.. W'e in stand on its s.overeign. rights as a state;of Kentucky, as a matter of fact,.have our the .American Union, .Alabama reco.gjiizes tax problem but we are. happy in the also that it belongs to the sisterhood of thought today that Kentucky has solved states and is ready today to join with the its tax problem as far as possible. The other states of this Union, in matters of re regular session of 1934 found Kentucky moving conflicts of taxation and in all other with its statewarrants selling at 75c on the matters looking to the common good, of dollar. Today, our warrants in Xew York the people of these United States for whose are $1.03;' • . . benefit these governments exist. Kentucky and the respective counties of : CHAIRMAN MORRISSETT:-Connecticut. Kentucky owe today as much as they ever .\ HON. WILLIAM H. HACKETT: This is will or-can o\ve unless some future legisla the first time Connecticut has been repre ture changes Kentucky's laws.. We passed sented at this .Assembly, and I bring to the a budget bill that is actually functioning . -Assembly the greetings of Governor Wilbur and we cannot spend more than our income. Cross who is greatly interested in the work The counties of Kentucky, many of them, .-of this Assembly and hopes some good will had defaulted not-only in the payment of., come froni this, conference. the interest on their bonded indebtedness

1 THURSDAY AFTERNOON SESSION 325 but on the indebtedness as well. Today', by voluntary contribution or by gentle every bond issued by every county in.Kenr men's agreement. tucky is worth par. . Efforts have been .made ever since that ; CHAIRMAN J\IORRISSJ:TT: INIaine. , . decision to cure the resulting situation. /•'fl. « HON. HENRY B. VAUGHAN: Just now Certain-amendments were introduced which we are- under a blanket of snow two. feet brought about these alternative methods, deep, with zero weather, and I was real but the right to tax the shares is stiU weak disappointed coming down Here still to findil' ened because under the statute as it is now snow, but we are used to it. The Gov worded, the tax on the shares is compared ernor appointed one of oiir ablest men in to matters With which it cannot be com the Tax .Department, Mr. Hplley, to come pared. You,cannot tax a share of stock down here, and 1 would like, if I may, to as you .tax a bond or a mortgage. Recently ask that Mr. Holley be permitted to take a bill was drawn which in effect restores up the rast of my allotted time. the system so satisfactorily used for thirty CHAIRMAN IVIORRISSETT: Mr. Holley is years. The bill virtually restores the right recognized. to tax national bank shares as the shares HON. FRANK H. HOLLEY: Maine is tre of state banking institutions are taxed. mendously interested, of course, in this sub^ That bill received a; favorable report from ject of conflicting taxation but we haven't the House Committee on Banking and Cur yet advanced very far into so-called mod- . rency. I used this opportunity to arouse ern taxes. We are still running along on your interest in this subject because those the property tax and a few things like the who 'were benefited by this situation have \ gasoline tax and we haven't yet modern been able to force states to adopt a very ized our tax assessments. So probably we low income tax method or to use other iur \Vould feel less of the conflicts than some of effective, methods.; l those states who have modernized their tax . One other subject, which is now of great methods and are taxing everything. public importance, is the matter of the pink I bring to you the greetings of-Maine,. slip. I believe an Assembly" of this kiiul representing the Governor of the state, and . .ought to take some interest in it,";'and there- assure you that when the proper time comes . : fore take the libertyof.rtading a brief reso Maine will be very glad to join with the lution. .^. group in giving any assistance possible to '. ''RiESOLVED, That the Interstat,e -As working out the program before us. sembly recommefids that Section i5B of --CHAIRMAN MORRISSETT: Maryland. , the United States Internal Revenue Actof JUDGE OSCAR. LESER: We'are not'Con- 1934 Avhich requires publication after scious of any conflict with other states in >\,Iarch 15, 1935, of intimate details of the matter of taxation, but we are yery taxpayers' financial affairs, be repealed anxious to coiiperate with the other states promptly before the effective date thereof.;' in. a matter which has received very'little : 'CHAIRMAN MORRISSETT: The resolution attention. I refer to the matter of taxation will be referred, under the rules, to the Com of banks. , As you know, the states are mittee, on Resolutions and Procedure. . permitted, by Section 5219 of the federal' .Massachusetts. . • .. statutes, to fax banks on shares and in HON, ARTHUR I. BukdEss: Massachi|- several other ways. Mure than two-thirds . setts brings its greeting to the convention of the states still rely wholly upon the tax and feels deeply honored to have an oppor on shares. tunity to participate in its assehiblage. We For thirty years that, law was construed . feel proiid to. lead all of the states in the to periiiit states :t0;tax national banks in lowest increase in governmental, expendi the same manner, and at no higher frate, tures, but ask result of our dual system of than they taxed their own institutions. In govêrnmfent, IVIassachusetts realizes Ihat- 1929 there was a decision by the Supreme two sovereigns .must levy taxes in the same Court which overturned that doctrine. You territory and on the same people. We real may be-, surprised-^to know that in a large ize, too, that there is not a uniformity of number of states there is how no legal way : opinion 'her6, or in our present delegation, to enforce a tax on banks, but it is done so therefore we of Massachusetts are tif the 326 THE BOOK OF THE STATES •opinion that where", conflicts êxist they. ° in Missouri, and J believe that I express'the should be removed only afJter a v^ry careful sentimefit of all here, that if an approach \^ study "of the causes that brought "them to the solution of the problem of conflict ^ about, and a definite safeguard should _ be ing taxes can be made here, we will be ' ' established to prevent a recurrence of these rendering a great service to the people of same problems. . our states and the nation.; CHAIRMAK-MORRISSETT: Michigan. ' CHAIRMAN MORRISSETT: Nebraska. , HON, VERNON J. BROWN: I bring you HON. W. H. O'GARA: Senator .Qreep the greetings of, the state of Michigan and and I havei)oth.been delegated by our re- of the Governor, Frank Fitzgerald, whose • spective houses and co^wmissioned by the commission I bear* to this convention, Governor of the State to appear before, your ^lichigan has many tax problems. Unlike Assembly and take part in its deliberations. Maryland, our problem is. not how to tax We believe in leaving to the federal gov „the banker^biit how to get our money out ernment the imposition of income taxes. of the banks. We feel that a great deahof the wealth of The particular concern of Michigan in Nebraska is going out of the state into duplicate taxation is the gasoline tax. We manufacturing states. It seems to us :that hope that this convention will take a stand the wealth of Nebraska going into other • in favor o^ reserving the gasoline tax to the states should come back, in part.^ iii income states. We heed it for^ê upkeep of our .taxes. That is true also of inheritance highways and our pu^^ streets. Our taxes. We dfl not claim to have the most municipalities, under a fifteen mill Hmit, salubrious qlimate in the world and if some find maintenance and improvement of the of our citizens wish tb move 0 other states, streets impossible. we see no reason why the" federal inheritance We are also interested somewhat in the. ' tax should not be collected " om them and question of the inheritance tax and what . returned, in part at least, to the state-frijm may be done to preserve as,much of that which they derived their wealth. We be-^ for the states as is possible. We need some heve that a sales tax, harmonized with the*;* fedeial aid in proper administration of our . sales taxes of our sister states,, would be sal;s tax. We are so close to the mail- better than a sales tax administered by the order houses of Chicago that many of bur federal government. • people are buying there, in preference to We have had some e'kperience in trying paying the sales tax through a homemer- to eliminate conflict with our sister states. chant. I might mention one instance, and that is CHÂIRMAN MORRISSETT: Missouri. the conflict which we found with the states HON. O. K. ARMSTRONG: It-seems to me surrounding us on farm truck legislation. the problem of'conflicting taxation leads to We have been able to cooperate with our one that is just as fundamental, the prob sister states and have been able to make lem of conflicting"services. We should defi progress. I hope for the success of this gathering. '•a' nitely settle' some policies in regard to what services should be extended the people of I am sure that the contacts available to us this nation.by]the federal government and- will make it worth while,\and I am sure \vhat services shoyld be reserved to the state that we will get closer together, that we will and local governments. It seems to me be able to understand each other and take that is fundamental and we mustôlve that back to the people of our states a message ,]be.fore 'we will ever solve the problem of of what we have accomplished, conflicting taxes. Services lead directly to CHAIRMAN MORRISSETT: New Hamp- ,.the exacting of taxes to pay for them. It shire. is true that taxes are not levied, for, the HON. EDGAR C. HIRST: May I say a few specific purpose of taking care of some par words'on some oflthe specific things men ticular governmental service, bftt some di- tioned by Senator ^lastick. On gasoline vision of functions is necessary—else the tax, we agree with all of?-the speakers who States will lose their sovereignty, "have.preceded^d with the recommenda- i' ^ Of course, that will lead the way to a tion of the Commksion that we should con- "great many problems,-but after all, we feel fine gasoline, taxl^lo the states.

. •; THURSDAY AFTERNOON SESSION 327 We are interested in_the Commission's . Jersey, that there should be some plan for ' recommiendatioh in regard to the tax on interstate harmony, probably mapped out electrical energy, because we have had, for by this organization. It is doing a fine job . a number of years, a tax. on public utili- and I am sure this. Association is jgbing to . ties, which has been, vitally affected by the accomplish a great deal. ^ ."''""' ' . , federal tax. We are greatly interested in I bring you the greetings of New Jersey. ' that! recommendation of the Commission. " We are very proud of our membership in We approve the proposed offset on the this organization and we feel, by becoming federal income tax, a tax on earned income. • rnembers of this organization, that we^will Our income tax is confined to the receipts- reap great benefits'from it, and I hope that from intangibles. In regard to liquor, we we may contribute a little bit to its success. have the system of state stores, so >ye have '', CHAIRMAN IMORRISSETT: New York. no particular interest in that. We have no HoN. JOHN P. HENNESSEY: The causes: tobacco tax and, as yet, no sales tax. . - which have resulted in this assemblage and The last item that I want to speak about., the subject matter which wie have under dis- illustrates the effect of cooperjation be- cussion may perhaps serv^ to emphasize tween states. We have a good deal of shoe somewhat the weakness of our dual system "^-manufacturing; so has the state of Massa-' of government but we do not believe that - chusetts. In assessing many of those shoe" the difficylties which have been presented plants, there has"been talk among the mem-', by the various speakers, to. whom we haVe bers of the trade to this effect: "Well, we been privileged to listen here today, are in- will move to Massachusetts if we are taxed surmountable. . We believe that an assem too high." I dare say jNIr. Long has heard blage such as this, representing the'numer-- theysame thing. Through an informaVdis- ous conflicting interests involved in the. cussion of this matter with Mr. Long and great'problem which we have under coii^jij^ some of the assessors in JIassachusetts, and sideration—the problem .which I regard as with some of our owiyassessors, we have one of the most important governmental I agreed" fo a system o7 valuation for shoe problems which can engage the attention of. plants.and shoe machinery, so we are well any assemblage of gove«nmental officials— . on the. way to having shoe plants taxed on can be of :benefit,..v'*'' . practically the same basis on both sides of Voicing the collective opinion .of the dele the state line, so there.will be no moving gation from the state of New York, which is about to dodge taxes. , . one of the Li[rgest.if hot the largest delega-* CHAIRMAN MORRISSETT: New Jersey. tion represerited in thisÂ|sembly, I desire SENATOR A. CROZER. REEVES : New to say. that this, delegation approves the Jersey, like all of the other states, has its recommendations of this Commission, and problems, which it is gradually solving. the resolutions attached. thereto, designed Financially, it is in fairly good shape. The to carry into effect those recommendations. state itself has always closed the fiscal year. CHAIRMAN MOI^RISSETT: Ohio. with a balance. The difficulty has been HON. J. FREER BO^TTINGER: I wish to with the municipalities in the state. state that the members of the Ohio dielega- So. far as our interstate problems are con tion are at this Asseinbly by a jmnt resolu cerned, we have been getting along very tion: five .members represent the House of well with Pennsylvania-^nd New York, but Representatives; five members, the Senate; the differences of taxing methods between and one has.been commissioned by.the .Gov- . New Jersey, Pennsylvania and New York ernor. I ha;ên to be the representative have caused some confusion to our citizens. of the Governor. I bring to this conven I believe-that- confusion is caused by indi tion the greetings of the General Assembly vidual interest. - ' of Ohio and the greeting of the Governor We have a ôpOsal for a sales" tax and of the state, the Honorable Martin. L. an income tax. In discussions on this, Self Dayey.. •.. • ••yJt/''.. -." „;5 '-*:,./ . ' ishness steps in and people always malce I shall ask a member "bf the House who is the excuse that Pennsylvaniaor New York Chairman of the Tax Committte to .present is doing certain things which are conflicting our situation to you. Mr. Ward! vv'ith their interest. We realize, in New' HON. P. E.WARD: In the talks thus far, • i^'

328 THE BOOK OF THE SÂJES,^ X something has been said of the service per ought to do so in Penri^ylvania in the sin formed and the result of the service per cere hope that twenty-two new taxes will formed as the necessity for taxation. I dislodge the Dembcratic"administration. fpel that the general public does not under CHAIRMAN MOR.RISSET/: South-Carolina. stand that taxes are a payment for services HON. R. BEVERLEY HERBERT: My dele and if there cpuld be~a-greater movement gation has aske'd me to say that South Card-- to educate, the public as to what they get Una and her representatives are in agree for the tax-money they pay,Uhere would ment on. this matter of csqflicting taxation not be asûch arilipathy as there is today. in our wish to iron it out.s(5*«^hat along The service idea is comparatively new and the lines expressed by the very^jle repre our hereditary antipathy to tax paying sentative of the state ofMassachusetts. In dates back to conditions that existed long; other words, South Carolina is now in. com- ^ beforeôur day. ^_, ~pleieâccord with; that good state and we We have a great.deal of complaint over can proceed shoulder to shoulder andârm- the sales tax from the standpoint of those in arm. . people who live near state-boundaries or.in South Carolina lias....almost the widest those areas where merchants feel they are aggregation of what might be termed selec- being placed in unfair competition with the live sales taxes and revenue raising taxes mail-order houses. I have prefDared a reso- • of any state in the Union. We are in con- lution which was passed by the Ohio House stant fear that the federal government may of Representatives, asking the federal con- encroach on our preserves in one way or gress to dct in. order that we may .meet that another and deprive us of some of the reve situation. All the states arqjjnd us, except nue which we are now raising. one, have a sales tax, and Illinois has a sales .Accordingly,:we believe the federal gov tax, yet mail-orders escape the tax both ernment should be restrained from inter in the state from which the goods are pur fering in the taxes which we are collecting chased and in the st.ates ,wherein the pur-»> and should follow the line of taxation on chaser lives. which it has heretofore subsisted, . I: feel that the proper solution of the sales r CHAIRMAN MORRISSETT: Tennessee,. ta.x situation is the passage, by the federal SENATOR ANDREW J. GRAVES : There are, government,- of a sales tax and the alloca- many things that are conflicting and l don't tion of some part of that money back to know just what the solution is but T do be- the states. I also feel it Is only just to ask lieve that, this organization is doing more the federal government, to return some than any other organization in the United thing in the way of a credit to the states States to bring about an understanding in against the federal income, tax. the various states, and I believe in a few CHAIRMAN MORRISSETT: Pennsylvania. years that the people of every state in the SENATOR GEORGE WOODWARD: . Greet Union, will recognize this organization and ings from the rock-ribbed comrhonwealth .that they will appropriate money to bear -''of triumphant democracy, Pennsylvania.' It- its expense. certainly is a high honor for a Republican CHAI^^MAN MORRISSETT : Texas. . survivor of the Novem-ber election to be SENATOR BEN'&;'GNEAt: I probattiy^- chosen to represent, in this august assembly,, can .be excused-for being rather a sfates' the cornmpnwealth of Pennsylvania. rights i^dvocate when it.comes to taxes or We have to raise, in Pennsylvania, in any other ipatter, since I come from a itate Addition'to the ordinary budget, $203,- which, for nine years, was an independent 000,000. The Democratic Governor called republic to. which the United States" in the wise men and they subrriitted to him America'sent a resident minister. It is every form of tax known to human in- state in Nvhich the federal government ne\V&r genuity, from which he selected twenty-two ownecl a foot of land except when permitted new taxes. The Republican program in by legislative enactment. I view the main- contradiction is very feeble, the .RepubH- tenance\ of the states'. independeiTce, the cans advocate only three new taxes, j I am . maintehance 'of a government free from supporting the Democratic program. I -fêâlynterference, except "what is spe- think any Republican of good judgment ciftcaily granted under the constitution, as

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THURSDîY AFTERNOON SESSION 329 the best for the people not only of Texas, HON. J. SINCLAIR BROWN: Our delega- but of all the states. . tion had elected Mr. C. H. Morrissett, State ]\Iy o\vn legislature has approved the Tax Commissioner of Virginia, to speak for establishment of the Interstate Commission us, but inasmuch as he is presiding we are on Conflicting Taxation by the First As going to ask Senator Wlckham to speak sembly and has already approved part of for us. - the work of this Commission. Our Gov SENATOR HENRY T.W'ICKHAM: I .am ernor recently attended a meeting of the oil commissioned by our delegation and by the states' governors and their representatives Governor of .Virginia "to extend a most in Dallas. There the oil stales entered into .hearty greet ill g to this splendid assembly a compact which must be ratified by the arid to e.xpress to you how deeply we are in states and approved by Congress. In enter-. terested in your work. . We, like the lady ing into this, compact, the Governor of from Vermont, feel that we absorb a great Texas has put into practice one of the deal more than we can give to this As recprnmendations of our Association. Inter sembly, We feel that we.are not here to state compacts are a means whereby states commit ourselves to any line of action; that may.sfettle among themselves those things our function is to report to our governor upon which states should agree instead of •and to our-legislature and let them decide' looking toMVashington for assistance. the questions for themselves, always desir These twqîllustrations will serve to show ing to be as a harmonious and as cooperative that the, state of Texas is behind the work as our necessities will permit. which the Interstate Assembly has started,, CHAIRMAN MORRISSETT: West Virginia. as well ais the work of the Interstate Com SENATOR ALBERT G. MATHEWS: I doubt . mission on Conflicting Taxation. the advisability of the states' going- into CHAIRMAN MORRISSETT: A'ermont. the taxation of tobacco. W'e have to leave HON. CONSUELO NORTIIRUP: My col a certain field to the fe.deral government leagues and I are here representing our and a'certain field to the state governments, newly elected governor, Charles M. Smith. and I believe that this .Assembly is doing a During this session of the legislature that great work when it can separate these is drawing to a close, the legislators are try things. .An understanding between the fed ing to raise some taxes. Until four years ago eral government and the state governments we never had an income tax in the state is possible only through an organizatioh of of Vermont. It so happened that in 1931 this kind. The federal government cannot I. had the pleasure of being the third woman deal wffh each state separately. to sit in the Vermont Senate, and at that When we tried to pass the sales tax in time we put into effect an income tax. The West Virginia, one of the ajrgumfents Was people of Vermont are in favor of a sales that the merchants who lived on the Ohio " tax. We are in favor of getting away from River and the Maryland border would be coming to Uncle Sam lor everything. As damaged. 6ne-of our members, who had we .were an independent nation for fourteen a large department'store, said all his cus years before we were admitted to the Union, tomers would run over into ^Maryland and we got into the habit of liking to stand on buy goods there. He thought he was bur own feet. Vermont was one of thefew ruined. But judging from the best infor states, if not the only state in the Union, mation we can.get, nobody was seriously that did not have a bank failure. The de hurt. The people who are affected most are'; • pression crept upon us very slowly and it the automobile sales' people. If a man can' will probably leave us very slowly. buy an" automobile at a saving of $20 he . It is a pleasure to be here, although we will go across the line to buy it.. So wq' have come more to absorb than-to act, and, placed in our sales tax act a provision that we will make as intelligent a report as we anyone who bought an auto'^nobile out. of can to the House and Senate and to Gov the state must, before he gets a license in ernor Smith. We hope you will cpme, as West Virginijji, pay this sales tax. It soon as you can, to the glorious^ Greei worked all right until some fellow went Mountain State. into court with it and the court said it was, ". CHAIRMAN MORRISSETT: Virginia; unconstitutional. • , / 330 THE BOOK OF THE ST A TES CHAIRMAN MORRISSETT: Wisconsin. , taxes, I believe it should remain outside HoNORAPLE ALVIN C. REIS: I appreci of the sales tax field and leave that field ate the wore of this organization. My work to the states. is now in the public utility field. Some of Uniform taxation is desirable just as uni •us, representing the state's, view with some form criminal laws are desirable, in my alarm the evident contemplated encroach opinion, and the more utirformity we can ments of the federal government into the achieve, the more economy we are going states' powers over utility regulation, I to make possible in the state governments. have always maintained the same perspec ^So if this Assembly^ can create a. sentiment tive as a member of this organization in directed toward securing uniformity of tax the realm of taxation, I think it needs no legislation in those fields in which- the " reiteration here to ask you to hold your states tax, I think it would be very helpful own flags high in laying olit a definite de-; indeed. marcation beyond which the federal gov CHAIRM.AN MORRISSETT: IS there any ernment should not go in the matter of other state now desiring to be recognized? taxation. If you desire to be heardnow I am sure the CHAIRMAN INIORRISSETT: W'yoming. Assembly would be glad to hear from you. HON. LESLIE A. MILLER: I.agree with Minnesota. ^ • what has been said here with regard to the SENATOR J. V. WEBER: Minnesota has diversion of gasoline taxes. I think the memorialized Congress to stop levying the gasoline tax should be confined to the build one cent gasoline tax. We in Minnesota feel, ing and maintenance of roads. In this as many of you do, that the federal govern matter of conflicting taxation, I dp think ment is usurping the rights of our state gov- '^ that eventually we are going to confine sales ernmeht. We feel that in the present relief taxation largely to taxation at the source. set-up we are being placed at a very great I will try to illustrate just what I mean disadvantage. In this session of the legis- by this. It is generally recognized that latifre we are .going to appropriate ?2,000,- themost efficient tax is the cigarette tax 000 to the farmers of our state for the that is levied by the federal government. purchase of seed. As you know, Minnesota The liquor tax is an effective tax because it" was extremely stricken by the drought. is efficiently "administered by the federal Mr. Hopkins notified us that although he government. Both are levied at the source. required a^ 10,000,000 levy from the State In the matter of gasoline, I hav.e for of Minnesota for relief purposes, we would • some time thought that it would perhaps' not be given credit" for the $2,000,000 for be wise if the federal government levied a seed relief or $1,000,000 for feed relief, uniform tax on gasoline and then distrib which the state appropriated, and I;inight. uted the taxes on gasoline by some agrised say I am down here as much as anything formula to the states. All of you know to fi[nd out if we can't iron out that prob there has been a great deal of evasion of lem. > . . the'gasoline taxes. ' If the tax could be Minnesota is not in very good shape and collected at the source like the cigarette we of this^,î^âtion would be delighted tax, and then some forniula of distribution if this or^nization. can devise some means devised whereby the states would receive of ironing out the conflicts in taxation and the tax pnjthe gasoline'"'soId or consumed of seqiirir^revenu^s without placing more in those states, I think we could get a great burdens onTtf^-^xpayer. deal more revenue in some of the states SENIOR WOODWARD (Pennsylvania): Is j than we are now receiving. it in order to offer a resolution at this time? Tplie^ federal government should confine I. will relad the final paragraph, omitting its|ax cpilecting activities to certain fields the pream^le.- an^ leave other fields to the stater There RESOLVEto, That this Interstate Assembly,. shmil'd- noir^. any conflicting fields of, taxa representing\forty-eight states, deplores.the tion vbetyê^the federal government and growing volume of tax. exemptions, includ- . the states\n the federal government finds ing: that through its internal revenue laws it (a) Federal\ bond issues and public sal .can collect considerable sums from income aries exempt frohi state and local taxation. r jf-

.fl»^ THURSDAY AFTERNOON SESSION 331 both ,as to income produced and: as to exemptions should be removed to promote capital volume under the property tax, the use of money in industry rather than (b) State bond issues and^public salaries to provide an inert refuge ioj" moneyed exernpt from fedl^ral taxation, both as to capital. income produced md as to capital value CHAIRMAN MORRISSETT: The resolution under the property iax; and will be referred to' the Committee on Res (cj Securities of governmental units at olutions'and Procedure. . all levels exempt, both as to income pro-- Announcements duced and as to capital value under, the CHAIRMAN MORRISSETT: The meeting •property tax; and be it further is adjourned. " . • ' / RESOLVED, That we believe that these tax : The meeting adjourned at 5:35 p.m.

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; COFFEE AND CIGARS The genial atmosphere of coffee and cigars, which filled the Mayflower Ballroom after the Thurs day evening dinner of the Second Interstate Assembly, was well suited to the theme of friendly cooperation between the states. ' The^.speakers—Governors Pollard, Winant, and Miller—as chief executives in New England, the South; an4 the far West^ have fared the problems of interstate conflict. Thus it was with vigor and conviction that they iirtsedfl program of unifortnity and harrnohy. s February: 28^ 1935,

HE viceting was called to order at to show their respect for their father, they 8:40. p.m. by the Toastmastcr, Hon erected a tombstone on.which these words' T orable John Garland Pollard, jortner were written: Governor oj Virginia. "Ma loved Pa, ;. ToASTMASTER PoLLARDi This is a scri- Pa loved women. ous occasion but we have not yet come to Ma caught Pa with two Jhe serious part'of the program.. Tn fact, in swimmin', I can not believe that my friends are going ;. Here lies Pa." to allow me .to be serious because, as I And so you see, these two friends have came into the hall, I met two old acquaint diverted my mind from the serious prob ances who reminded me of something lems before us. foolish I had .said years ago. The first I am seated here between two governors,' gentlemari who met me was my friend one a Republican and the other a Demo Franklin Edmonds of Philadelphia, with crat, and I have to be quite impartial. I ; whom I served in .welfare work in Fraince remember hearing, once, of two politicians during the World War. He .reminded me riding home from the funeral of another that,.on one occasion, I was addressing a politician and one said to the other, "Where body of American volunteers soon aftier T do you think our departed friend'has gone? had left my home in Virginia, and I said, Has he gone to heaven or to hell?" "Boys, I. have just come from Virginia and The other ;poIitician said, "Oh, don't ask I know that many of you are from that me. Thave friends in both .places." ""clear old state? I want you to stand up and And so I hope I have some Republican give me the privilege of looking in your friends left, although.it.is not a very good face. All from Virginia, will please rise." crowd to draw from. No one arose. I grew eloquent and said, The first speaker, Governor Miller, is .. " I know that among . the 500 volunteers a Democrat from the West. He has the now before me, old X'irginia, the mother distinction of being governor of a state that ,of states and of statesmen, must' be rep now has th^ first legislature, Democratic in resented. Boys, stand up for your state." both branches, since the existence of the There • followed a long, embarrassing state, and he is the first Democratic, gov pause. Finally a boy stood up and said, ernor ever to- be reelected. The papers say "i\Ir.'Pollard, there were two Virginians that the senators and congressmen from in this battalion but both of them are in these western states have formed a bloc the guard house." . ;• and they are going to demand from the Now the other friend who recalled to my: President that the western states get mope mind something that T ought not to have patronage. They think that they'ha^'t said on so solemn ah occasion, reminded received their share. They want more. . me that we' were both at the White House They are, it may be truthfully said, loyal together, having been called there as gov political adherents to the Pre'sident of the ernors to confer with the President. What United States. A political adherent is a he wanted.with us T. didn't know, but the man who hasn't yet been given all he governor who sits, here to my left says wants.- • " that I made this remark to him at the I always thought that .Al Smith was very White House: I was illustrating the filial , much slandered when someone told this loyalty of the children of a man who died^ story about him. They asked him, during at one.of Our.j,easide resorts. Desiring his campaign for president, "jMr, Smith, 333 334 THE BOOK OF THE STATES how many states west of the Mississippi the boy take up the Bible and put it under River are you going-to carry?" . his arm, take the bottle of whiskey and Mr. Smith replied, "Well, I don't know. piit it in his, pecket, take the apple and What states are there out there?" -" start eating it, and head for the door. The ,Well,, Wyoming is one of the states, and father e.\claimed: "My God! He's going it has a governor whose ancestors came to be a pblitician." • from my state, t knew from the first time T was assigned the subject of "Gpopera- I met Governor Miller, that he was a great tion Among the Western States." I am man. I didn't exactly understand why it going to take the liberty of talking on the was, ^t I found out later that he came from proposition. of the cooperation which Virginia. . You "know we Virginians are should exists among the. western states. great historians and the rest of you would Perhaps that will be more to the point, for be historians too, if you- were Virginians, although the very friendliest kind of a because we start out on our historical re spirit does exist, actual cooperation among'**^ search with the absolute assurance'that if these states has been sadly lacking. a thing is really good, or if a man is really great, its or his origin is in Virginia. But Western Frontier , our friend, the governor who is about to Eastern people have little knowledge of speak to you, is not looking backward to the very great changes in the western ancesiry, he is looking forward to posterity. states—unless they have had the opportu [•: Governor.Miller is to address us on the nity to tfayel through and study conditions subject of Cooperation Among the Western in this section' recently. States. I suppose, of course, he refers to the Until just a few years ago there was an movement now on foot to see that the West opportunity for' every man who became ' gets her share of the appointments. There dissatisfied with his situation to seek • out are some others who are also interested in and establish a new home in the frontiers the patronage which the President has to of the west. So the west grew up through bestow, and therefore we are more than the settlement of lands under 'the Home glad to hear you tell about the cooperation stead Acts of this country. Now there are in the western states. Governor Miller! no new frontiers for dissatisfied people to .• occupy.. The west has become like the ADDRESS BY GOVERN.OR east,—a country in which.we must learn LESLIE A,'MILLER to live with our neighbors. We have come . Before I enter on my subject I want to to the place where we must learn to get refer to something which Governor Pollard along with ourselves,'and so we have ar said about men in politics.. I have a brother rived at a period where cooperation between 'Governor in a state which adjoins us, on the western states is a very vital necessity. ' the. west, who tells this story about an early • incident of his career; When he was a boy Land Irrigation T ' • his folks discussed at.length what his future . May I illustrate bydwelling for just a mo should be and his father devised sa test ment upon the existing situation in regard to which he. said would give certain indica theirrigationof laiid in thewest? Those of tion 'as to what might be expected from you who are familiar with conditions out him in the future. The test was this: He there know that in land irrigation lies the put. the" boy in a room in which he had- very life of those states, and. most large p.lacefijpn a table, a Bible, an apple, and streams are,, of course, interstate. The laws a "bottle of whiskey. Then he told the of priority with regard to. the application . mother that he was going to watch'him of watier for beneficial use upon the lands through a. Avindow, unknown, of course, are very much alike in all the western states. to the boy. If the. boy took the Bible and The laws of priority established the fact read it, he unquestionably would be a that the earliest date of beneficial applica preacher; if he-took the apple, he would . tion of water is the date which establishes probably be an agriculturist; if he tfeok the a man's right to the controlled use o.f that bottle of whiskeyj he Would probably/be a water.; There have been great conflicts saloon keeper. Watching closply he saw between slates as to the use of the waters

J- THURSDAY EVENING SESSION 335 of interstate streams, and long and tedious affect all the unappropriated public land lawsuits have been carried to the Supreme of the western part of this country. . My Court of the United States. A lawsuit friend from'Massachusetts and his col involving the use; of the waters of the Ar leagues in their legislature are not called kansas River, which has its origin in Col .upon to deal with the problem' o.f public orado and runs down through Kansas into lands, nor is any other state of the east. Arkansas, occupied the attention of the Outside of forest reservations there is prac- . courts for years and years. It-was one of tically no, public land in the east, but out the things which grew out of a lack of co in the western country a great part of some operation on the part of the western states of. the states is still unappropriated- public in.the early stages of their development. land. You will understand the magnitude The state of Nebraska has recently en of the problem" when I tell you that the tered a suit against the state of Wyoming unappropriated public lands of the western regarding priority in the use of the, waters ptates comprise.an acreage of almost four of the North Platte River, arising in Col and a half times the total area of all of orado, running through Wyoming and into . the New England states. Nebraska. On thellth of March we begin Under the provisions of the Taylor Act, the initial a.rguments in the.United States as the Interior Department proposes to Supreme Court in.a./law suit which may;be amend'it,, the 173,000,000 acres-of unap in the courts for many years. propriated public lands in the west are to Well, these lawsuits, growing out of the be used for conservation purposes. With . lack of cooperation between the states over your permission I would like to dwell for . the waters of interstate streams, are 4jut .just a moment upon the effect that policy . one evidence of what" can happen through, will have upon the progress of our western a lack ol cooperation. In recent years, country. legislatures have given certain officials of Heretofore, under the homesTead laiws, their states the right to negotiate compacts any citizen was eligible to receive a grant between the states regarding these streams. of land from the federal government. It, Most of us recall that before the building is now proposed to withdraw from all forms of Boulder Dam 'was authorized by Con . o,f entry the entire remaining 173,000,000 • gress, the states included in the watershed acres of land and to void the homestead, of the Colorado River were advised' to laws under which the country, west of the enter into an interstate compact. Repre Mississippi River, was developed. When the sentatives of the. seven states concerned western states were admitted to the Union, met and agreed to a compact which was .Congress, realizing that great ^reas of the . afterwards ratified by si.x of the compact public lands were hot fitted for settlement ing states. One of the seven, .'\rizona, has and would remain publicly owned, granted never agreed to that compact, and has tried these states, upon admission to the Union, to void it in the Suprenie Court, unsuccess great acreages of land for the support, of fully up to.this time. -The four upper basin public institutions, tands were granted states still have to frame an auxiliary com for that purpose because it was recognized pact to divide the waters allocated to them the states would never secur© tax revenue for their purposes. - Since reclamation is from land not privately owned. The states the very life of many of the agricultural could lease the lands, for grazing purposes, communities of the West, it is extremely and use the rentals in the support of their vital to the economic welfare of the western public institutions.- Lands leased for this part of the country that these compact^ be purpose have been a source of considerable arranged. revenue to many of the western states. There is a great distinction between the ' - Public Lands " ,,- use of lands for conservation purposes as Another phase of-this new situation which opposed, to use for revenue purposes. If confronts the western part of the country the federal government takes over," for cour today is the resiilt of an, acit of Congress servation purposes, all of the renmining passed less than*a year ago, known as the .public lands, the western part of the United Taylor Grazing Act. It was intended to States faces a very great change in devebp- ;

•I 336 THE BOOK OF THE STA TES ment and policies. There arises, then, a that way in New Hampshire, but I can't necessity for cooperation arnong the west bring myself to the position of pitying ern states, a necessity for cooperation in Republicans. I think that w^e Democrats , matters not of concern to the states in the ought to be very careful of how we pity eastern part of the country. • the Republicans, because things are bright- - fining very much for them in these last few Need for.CooperUion '|' •days since the Republicans in the.United Many of you gentlemen htre are occupy States Senate have decided to follow Huey ing places in Congress, and others of you Long. They have become political bed are potential candidates for such positions, fellows of the Senator from Louisiana. Now since we find that the le^slatures of the .Governor Winant, political bedfellows are various states are breeding grounds of the- those.-^vho like the same bunk and I think germ which inoculates individuals with that the ray of hope that has been given the ' the desire .to serve the states in greater Republicans: in the last few days, ought to . capacities. So I would like to plead with cause us Democrats to stop and think. you for an understanding of the problems The gentleman who is about'to address of the west, an understanding of the need you is a scholar in.politics. Someone has for cooperation between these states and said that we can do' very little worth while between the east and the west. This in the science of politics unless .\ye have . change, in the method of developing the first mastered the art. of getting elected. western part .of the United States is some The gentleman who is to address us is not thing to which all the country should give only a profound student of political ques heed, because we have, passed the time tions, but he has mastered the art of getting when there is-a new frontier to which elected. He has been elected governor of. dissatisfied people may move. his state twice, and many times he has > been elected to the legislative body of the . We need cooperation between the states in this matter of a change in policy; wef .state.: need cooperation between'the states in the\ I think it was William .Allen White who \: matter of taxes. In the deliberations of said, "Whenever you*" find a man with a . this Assembly this afternoon, much was gentle, ingratiating voice and an easy fiow said abotit the different forms of ta.xation of innocuous language, unimpeded by existing in the several states, and I had 3. >pestiferou s ideas, then you find a man =that few words to say myself as to what I con-, God sent into politics." If that b,e so, ceive to be the desirability of uniformity who sent Governor Winant into politics? in taxation. It is certainly no description of him because I-hope that this Assembly will continue ,he is interested, in a broad, non-partisan to grow in importance. I.think that Mr. way, in the very serious problems which Toll, who has been the guiding, genius be confront this nation and; all of the states hind the organization, is rendering a real composing it.. I take pleasure in introduc service to the several states and to the na ing the former Governor of New Hamp tion, i compliment him upon his industry shire, John G. Winant.. •^--..,....._ ' ; and his ingehiiity, and conclude by saying • that-1 wish the Assembly many years of ADDRESS BY . usefulness. *'• GOVERNOR JOHN G. WINANT' ToASTMASTER POLLARD:. I. see among What J have to say this evening is largely our guests tonight a number of our repre-' by way of introduction and suggestion to sentatives in the Congress of the United. sonie of the things that..we have come here ... States. I hasten to try to make them happy to discuss. If my-speech had a tit^, it by assuring them that. I will not call on might be, "TheiMechanicsof Qovernmeht." them to make speeches, but I want them The Governor of W'yoming suggested . to know that we are very grateful for tlieir that the dissatisfied citizens of-the east •presence here tonight. had made their way years ago toward the'--' The. next and last speaker I have referred frontier'. I have a feeling that some, of to is a Republican. I/do not hold that^ our dissatisfied citizens in the east are still against him, he can't help it, he was born with us. Speaking seriously, we might all

•ft THURSDAY EVENING SESSION 337 of us take as a motto,', a phrase that feel that if each house pf each legislature a friend of mine used to repeat over and in the several states would establish per over again—"Never dissatisfied but forever manent co'mrnittees on interstate coopera unsatisfied." Certainly that is an intelli tion, it might be helpful. We have also gent attitude to take toward government. felt tliat it might be of benefit to set up We have spent most of our energies during regional Secretariats to aid:the states within the last fifty or a hundred years developing the different regions of the country to co a great continent, and too few of-us have operate with one another, spent much time attempting to make prog- I am thinking, now,:_in termsôf New [,' ress in the mechanics of government. England, because I,am more famrliiyr with . it than with other sections of the country.. , , Governmental Units We started, at Poland vSprings during a Counting the federal government, the Governors' Conference some ten years ago, •states; the counties and the local govern what has been known as the New England ments, there are approximately 175,000 . Council. It was primarily established as different-units of government within thie an economic unit, but it has also done a "United States today. There are over three great deal to stimulate governmental COT and a quarter million, meii and women who operation between the states of New Eng work for the federal government, for the land. 'Through that orga;nization, which is state governments, and for local govern supported by voluntary contributions, the ments. • ' governors of the'New England States are I think of a small, town outside of New called together frequently to discuss New York which, has a variety of taxing juris England problems. In my three terms as dictions. When efforts were made to co governor, six months never passed without, ordinate these different taxing gf'reas, one a meeting of the New England governors of the first things the investigators did was on some problem which affected the people to attempt to find out what the debt was. of the entire region. . They found that the city had borrowed It was through this organization that we up to 75 per cent of its total taxable value. asked the State Comniissioners of Healt|i- Even the people who owned mortgages had to meet for the first time. It would seem questionable assets, and those whoôwned natural to have frequent meetings of those property free of taxation had only a frac , in charge of health in a closely knit com tion of what they thought were assets. munity such as New England. Today most And so it would be helpful if we tried of the civilized nations of the world discuss to spend some time in. simplifying govern- their health problems together. Yet until , ment. We loi'ow what our national debt is, this organization was formed, the Commis-^ we can find out what our state debt is, sioners of Health of the several New Eng-, but I don't think that there has ever been land States had never met. any accurate compilation of local debt. The same. thing was true of the Com-. In this country T don't believe we know the missioners of Agriculture. In New Eng-- combined total national debt. i land, we found that we had failed to establish.standards for agricultural commodities, Coordination and Cooperation . arid that commodities from other sections It has seemed to me that we might at of the country, and even from abroad, were' tempt to develop greater coordination a;nd displacing our own products. So v/e asked '" cooperation between the federal govern- the Commissioners of Agriculture of the meiit, the state governments and local gov- New England States to rneet. They did ernments.'^nd it has occurred to some of so and set up.aHegislative program wJiich us that it might be possible to make con was unanimouslâdopted at the next ses tacts l3etween the different states of • the sion of the legislatures. As a result of Union more valuable, It has been said that legislation, the distribution and the that it is easier for the federal government consumption of the staple products of New to deal with the goverrirnent of China than England have been greatly; increased.. • it is for a state of ,the United States to Through Senator Parknian and the deal with another state. So some of us Governor of Massachusetts we were able

\^ 338 THE BOOK OF THE STATES

to establish a commission in each of the government, citizens of the.^state govern- New England States, and also in Pennsyl ment,.and citizensof our local governments. vania, New Jersey and New York, to dis There can be no reasonable quarrel within cuss labor problems. Looking forward to, ourselves as to whether we are represent action, under the compact tlieory, those ing, at any given moment, the federal gov commissions have unanimously recoin- ernment or the state government or the rnended a rninimuni wage law in the states Ipcal goviernrhent. W'e owe loyalty to all which I have nanied. three,- and we ;expect the rights and privf We have a milk problem in New Eng ileges that belong to us as citizens of each land which affects more than a single state . and of all.

and rnight be settled oh the basis, of co- • But we have not thought abo^^it the / • operation, perhaps by a compact between problem of making an'intelligent adjust the states. More than 90. per'cent of the ment between the functions of the federal milk consumed in the Boston area comes government and the state.government and . from Vermont, New Hampshire and Maine. the local government. It is as if .we expect An interstate arrangement i« imperative men who labored over these difficulties more if ;We are to stabilize the milk market in than a century ago, to set up a form of the area. •, ^government which, without any effort|on tQ- The oil problern is another interstate our part, will meet all the changed con difficulty. Transportation problems often ditions of modern life. It is not so, for involve cooperation between states. We we must use pur own imagination and spent seven; years- trying to work but a . initiative if we are to bring up to date these .cooperative transportation program for governments which were seMlt>s|t'nply to New England. Had it not been for this, •protect the individual and pmmuMty life. business organization we call the New Eng- There have been attempts, to coordinate lahd Goimcil, the problem • would never these governments. Take the county agent, have been approached on a regional basis. as an example. I ain sure he .'is familiar So if you could haive a regional secretary to any of you who live in rural Areas. He who would call together the governors.of is the paid agent of the federal gqvernment, a section or the representatives from a sec the state government and the ciAinty gov tion, their work woyld be greatly facilitated. ernment. In all the counties^here^have It would also be equally valuable to. call known the/ county ageirtrTie has oeeh an together the heads of governmental depart efficient officer. AVhen the federal goyWn- ments. ment found it necessary to make- sMistan- There are many things on which all the tial loans to individuals, thdy were usually states might cooperate. If we are intelli forced to set up an emergency administra gently to take the lo'ad off a centi-alized tion. In the field of agriculture, that was government we will have to enable .states not necessary since the government made to. handle business which affects them re use of the county agent. He was accus- ^. gionally, or as a .whole, more efficiently tomed'to work for the federal govern men t,. than it is handled today. People turn to- the state government, and the county the federal government for action because^ government. If you will study the efr they fail to get action by state cooperation. ficiency of the making of these loans by the county agent, and loans made through Governmental Admhiistration other, agencies, I believe you will see the The question of administration is an- eft'ectiveriess of that form of agency. We " other one which puzzled us! I have a feel usually appoint a man to do a job for ing-that we are going:to turn from Avhat the.federal government, and another man we might term parallel administration to to do the same kind of a^ job for the state a perpendicular form of administration. government',' and then.a' third man to do We verv often think about the federal gov a similar job for the county or other local ernment encroaching upon the state govern government, ^jp'requently, we have hired ment and the state government encroaching three or- fout people to do a job that mighty upon local governments. Yet, you and I—'• be more efficiently and,.-effectively accom individually—are citizens of-the federal plished by a singl^,ag'ent. THURSDAY•EVENINiS, SESSION 339 The questions involved in taxation are This is not ah interesting subject, but similar. A generally accepted theory is rather a complicated. subject. It is not that taxes'should be levied on; a basis of concerned with what we call issues; but it capacity ;to pay. Take, for example, the has to do with'the~"mechanics of govern graduated income tax, which is levied ^y ment. Largely because it has been an un- the federal government and by some.state interesting siibject, few people have spent governments. One of our largest urban time in trying to solve it.^ But I want to communities is levying a tax of fifteen say to you that if Teprjesentative govern- , per cent of the tax levied by the federal ment—by the people—^ver fails, it will government to be collected by the city, be because that governhient has not ef-r There can be no honest measure of capacity ficiently reacted to the want^Qf the people, to pay when taxing jurisdictions pile one There, is nothing more dangerohs in a great upon another in this fashion, * democracy than a clumsy, inco^npetent It would be a perfectly simple matter - governmental machine. If you\ want to • to have the federal government leyy a tax hand over more than debt to posterity, if whiclf might be distributed to states and you want to turn-over to. those triat come . . local goverhrnents. Thus yoii would at •^t

•\ ;•'•

•;•:..)•• fT

Friday Morning Session \ March 1, 1935,

\)Ê meeting was called to order at of South Dakota, but the Black Hills '. ten o'clock by Speaker Belknap. country so resents this effort to saddle'the SPEAKER BELKNAP:' The^meeting burden of taxation on one county that they will please come to order. Gentlemen, two . are asking Wyoming to help thei\sec6de years ago we made the start on this fight from South Dakota. They want to* come for a meeting of the legislators of the na- oyer and join ^Wyoming. \Vyomingvyould tion.rf> At that time those of us who were like very much to have the Blaek Hills •struggling with the problem found that we. country within her confines, and if. you were a little too exclusive. We were limit- gentlemen- have ah opportunity, to put in ing^the thing too much' to legislators. W'e a word for Wyoming we will appreciate it. found, as you find in your own legislatures, When th& meeting adjourned, yesterday that coiiperation of'the governors and the afternoon, wis had completed the roll call tax commissioners and the highway commis 'of the states, and .had heard the various, sioners and the auditors and the treasurers., representatives give their views on conflict • was. essenVial. If we were'going to function ing taxatipn. There are a few states properly we were going to have to ask these represented here today "who did not answer gentlemen to join us in our ^fforts to better the roll call yesterday, ai:id before begin the machinery of cooperation in state legis ning the regular program we-are going to lation. •" . give them a chance to express their views. It is, therefore, .with great pleasure that I now call on the delegation from Illinois^ , we find a number of this type of man "with HON. SIMEON E. LELAND: I would like • Us today. j, c. to rise first to come to the aid of the state - \Ve haVe, .as presiding officer thisjnorn- of \Ji'yoming. Conflicts in taxation will irig; oneot^ these men-whom we air honor. cmainly not end uptil our political juris ^ I refer to the'Goverpor of Wyoming, Leslie dictions are coextensive vvith the areas of A. Miller, whpm ma^y of you heard Vlast . economic îfi^ and the areas of our economic \ night, and who is going to preside at this interest in trade. . morning's session. I introduce Governor A large.proportion' of these conflicts, it Miller. . • .» , . seems to nie—ând now la^m speak-ing en-' CHAIRMAN MILLER: When the name of tire|y for hjyself, and Idon't'know whether the** State >of South Dakota was called in anyone else in jlliriois sjiares'these view* . th^ course of reading the roll "of • the stages or'^not-âre simply matters of psychology 'it reminded me of a very interesting'dcVel- rather 1 than rhatters'of ecorioniic. concern. opment in thfe tax'Situation out-there.. Out Theiwhole problem of conflicting "taxation in the Black Hills of South Dakota is the is simply -a. problem in differential rates, great ^gold developmemt-pf the.Homestake and the economic effects pfodyced by those ]Mining Company. South. Dikota, essen rates. ]\fore. especially, the problem iS one tially ai\ agricultural state and hard hit by. . of conflicts in notions of taxation - rather * the drought, has devised a' system to let than conflicts in jurisdiction, and those con the Homestake Mining Company pay all flicts^ exist not merely between the states the tkxea in the state of South Dakota. -A but within the states. The states neither bilbhas been introduced before the legisla- have .a solid foundation, theoretical or o.th-_ .tiireôf South Dakdta calling for a 10 pei* envise, tipofi wliich they bê their revenue cent tax on the gross output .of gold ore. systetjis, nor ire they .advanced much A'40 per cent tax on the putpCit of gold- farther in thoitght than that taxes are would - provide a great revenue for„ the state imposed'upon things-and.are paid by thin.szs.; 340 r

\ /= w

FRIDAY MORNING SESSION 341 ^ They are mindful neither of-the amount 'of interstate meetings of various sorts in of the levy nor of the fact that the levies Gslorado, when he visited us. ,We in the ultimately rest upon- the people other than West have no boundary lines. On many oc those who pay thern. The whole.conflict casions when Governor Miller was with us between fhe debtor and creditor states, for I alnriost introduced him as the Governor example, rests entirely upon a misconcep of both Colorado and Wyoming. We have, tion of that fact, the result*" of which is the friendliest feeling with our sister states that when forms are reached in the debtor and bordering states. states the effect of that simply is to increase I know that the states differ on many of the tax burdens upon the states which im- the tax problems we are- going to.discuss, • pose the taxes.. •* ' but I personally feel, and I know Colorado .It i^ only, then, when we understand the believes, that the .American Legislators' As fundamental principles behind these taxa sociation is going to help to eliminatê the tion 'conflicts that we are in a position to imaginary boundaries so conducive to. the do anything about them. We |iave to learri, . friction that liow exists and bring. about first'of all, .that- taxes are ultimately jDaid harmony not only within state bordersjjut only from two sources, either from wealth, ' between. the political subdivisions of the ' or-income, and that on those sources all many states in the Union.. "taxes ultimately rest. The sooner we get CHAIRMAN MILLER: The. gentleman to a point where we have the courage to . from North Carolina is recognized. , impose ta.xes dfrectly upon those .bases and HON. P. W. MEEKINS: TWO years ago in relation to personal capacity, the sooner* we enacted, a 3 per cent retail sales ta.x will we minimize the conflicts and develop in our state. To my mind t|[iat is the a fiscal system which ultimately rests upon prinjjipal conflict we'have in taxation there tbem.' • - [-^ •^ today. We find, particularly in-the border This, of course, is the difficulty-with the counties, that; a good many of our citizens •philosophy of" Reparation. The sepgâtion are going over into Kentucky, -Tennessee of sources of revenue theory first of all and South Carolina and making purchases in " doesn't l¶te^ and i^js only as we begin -. those states-—to avoid the. tax. Naturally we are losing a great amount of revenue to integrate, through one scheme or ari- • kM - other, the entire^tax system .that, we can •?n North Carolina by reason ^f the sales ' relate *to these^, the fundamental principles tax. We are alsb losing revenue by reason that ought to control and guide Qs, and wntW of the bootlegging of liquor into our state. CHAIRMAN MILLER: W'e shall nowpro- •i^ we do that it seems to me we are-in no ^position really to approach the problem^ ceed with the program for the morning.^ CHAIRMAN MILLER:' \Ve will new ask The national congress is very much inter ./• "'Rhode Island to present I its case. ested, of course, in the problem of taxation, HON. EDWARD L. LEAHY: The message bearing,.as it does, the very great burden which-I brir^ from Rhode Island this of providing the imrnense revenues goyern- mornirig is that we want.to cooperate with' • ment requires under existing conditions,. I the.other states, 'As L view it, that is-'the tbink we are very fortunate in having with underlying 'siDiritôf this conference, the us here a,menlber of the Ways and Means. 'development of a spirit of cooperation. In Committee of the House oT Representatives, the past we haven't realized* the necessity who is Chairman of the Subcommittee on* for it. We do realize it now, arid we realize Double Taxation. I am glkd at this tirne' it in Rhode. Island- notwithstanding' the 0.to introduce Representative Fred M. Vinson fact-that we do not have those conflicts of Kentucky.. which, some of the other'states have. ADDRESS BY FRED ]\I. A'INSON CHAIRMAN KILLER: We will next hear \ „ from Colorado.. ; .."it was my pleasure to speak to th'e First LiEUTENANr GOVERNOR ' RAY H. TAL Interstate .Assembly, which convened here BOT:. Governor Miller of Wyoming is the" in Washington two years ago. It is a presiding officer of X^^^ morning for thjs genuine pleasure for me to be with you, .Assem'bl;^_Ît has beteri my pleasiire, on a today. Your work is a necessary brie. We number Of' occasions," to be the chairman have hac| ta.xes with lis from the year one.

«• 342 THE BOOK OF THE ST/^TES Butsocomplex is our civilization that for have liaison'agencies in the congress and some'reason people have not striven to thisliaison agency of state governments, but. alleviate the burden that comes to us from we ought to get closer together than that, these conflicts. We have been told that I would be happy to have the Commission there .are '175,000 different governmental on Conflicting Taxation, or such other com- units in this country. When you visualize mitteesasyoumightdesigriate, to meet with , that condition it seems as if the struggle our subcommittee on conflicting taxation. to iron out'the difficulties may Be insuper • I realize that this Js not the work of^ able. But r^do not think so. day, a week, ,a m^g^â year, or perhaps In the'seventy-second congress, somepf a decade, but: it is a work that must be us had the notion that we ought to take a' done irrespective of time. Today, all gov- step in the direction ot either lightening ernrrients, whether local, state or federal,. the biirdetis o.f taxation or perhaps, in , invade the tax field and gather taxes, where some Way, removing Wie burdens due to 'they may,' Even though we must have !his, conflicting taxation. heavy burden of taxation, it should be (fis-^ The Ways and Meahs Committee of the tributed as equitably as it can. Irrespective House has a subcomrnittee that devotes its of whether the tax burden is heavy ordight, , time to the study of conflicts in taxation: the taxes should, be distributed equitably. I am proud to be Jjiexhairman of that subr There have been several methods sug committee,—în* a way the liaison officet, gested to solve the problems of conflicting •or the contact man,-" for the Ways and taxation. There is the nationalization Means Committee. We havt, as chairman method, whereby the federal government of that committee, one of America's mo levy would: be made" and the individual s^ndid gentlemen: You {vill be pleas^^ "taxpayer in the state would receive credit to hear him spea^k today.' If there is a for specified amounts against his state j;ax. man in congress who^plores the burdens _There may. be many other methods sug-' of.conflicting taxatioh, it ig the chairman 'gested but we may not be able to use-g^ny of the Ways and Means Committee, who particular one. We may haAje to mould a will strive with all his. power to cooperate composite of them^ all. in this movement. ^ We must" study this problem. We need Your Assembly occupies a most impor- all the agencies th^t can be Sevised to study tant position .in this campaign. You are this problem. The suggestion of a na the liaison officers, you are the contact ijieti, tional commission I have heard before. It for the state legislattires. Nothing can be rnight not be a bad idea, because we want done by state government alone,"nothing all the thought and the"^tudy and the effort can be done by.the federal government ahd the cooperation that we can receive.^ alone. It is at best a fifty-fifty proposition. But when that is done, when the national We may have our views and you geritlemen commission pr any other organizationTr;\:, may have your views, but we may not be "ves at specific qonclusions, then you need able to sell those view^ to our respective' .ialiaison group.,. You need mei^nd women legislative bodies. Tfitre ought to be a to sell the plan devised to state legislatures,- clearing Kouseâ meeting, of' the represen and you neeH that same contact with the ' tatives of the-states ^nd the representatives federal government. . ' . of congress—to discuss thiese problems. It CHAIRMANS-MILLER: We are now going - . > • is my m-m beliefr^that, if-nothing more came to have tjie pleasure of hearing frorri ,the from these meetings of the' Interstate As Chairman.of th^ AVays and Means CoHi- ' sembly, than getting acquainted with "^ the mittee of the House of -Representatives. viewpoint of the forty-eight states, it wouljl It is my privilege t6 present Representative, be a splendid thing incfeed Robert L:'Doughton of North Carolina,. I recall, with pleasure, the discussr9n that Chairman.of the House%Ways and Means 1:ook place here two. years ago. I maiweled Gortimittee. ; .at the splenditj presentation of tê problems » of taxation. I stayed hfere and listened, ADDRESS BY^ ROBERT L.- DOUGHTON not only with pleasure but with .profit, arid r appreciate very much the opportunity I would like to suggest that not only do'we and privilege of speaking to this intelligent

^^ ^: \ FRIDAY MORNING SESSION 343 4nd distinguished ' assemblage of people tions necessary to the defense and preserva- upon what is one of the oldest and yet one tion of such government and the welfare of -/ of the most important and essenjtial ques its citizens. Under our dual 'system of tions confronting the American people. government two sovereigns, federal arid ^he subject of taxation is as aid as state, exercise virtually independent tE^cing »• civfj^zation. It is' as necessary and as in authority within the same territory and, dispensable as salvation. Over .this Subject upon the same people. Each governnierit^ wars have been fought, rumors of wars renders certain sprvices to its citizens and, have been heard, dynaisties, empires and re- in turn, each must'look to these, same cit- publics have been overthrown. Th^ people izens for its'necessary revenjie. In exacting of our great country demand so much in this' revenue; governmental officials owe,. the way ,of governmental service that ^the these citizens the duty Q fa scrupulous re- heavy burdens pf taxation are necessary and gard for their interests and welfare. No. indispensable. Our objective, which ^'e will person or class ought to b'e preferred and nevef attain but toward which we'should allQwed to avoid a proportionate share of ever strive and direct our efforts and our the tajilo^dwhile those who ace less for- ; energies, shoultjbe, m my judgment; that : funate are burden&d-with double taxes. .We no one should l39^*s;4guired to contribute must keep the taxpayer's viewpoint ancl not more than his just sh^^qf the burdens of onlyi strive to distribute the tax-load, as f . taxation for a governmenT^Mat is honestly^ .'equitably as possible but also strive to give efficiently and ec'onomicallylffdministered; the taxpayer his money's worth. .• " . /." a:nd tonversely<..no one shoura be permitted i to escape his just Share of these .necessary V ' Two Levels of GovernnicM burdens. .-, - I The fexercise of authority.by tw'o govern Taxes are essential to the life and 'ex ments upon' the same pedf)lje'opens the istence and^ maintenance of ourgdvernment way for (Conflicting taxation, unless it. is A just as food an'd blood^tare to the existerice prevented by cooperation between the gov- *:-?: ^ and support of the huriian body.. THerefore,w eniiijients. In addition^ there may .be con- • our t^x system should, if possible, be so flict betvyeen the state systems of taxation fair; so jusC, and so equitable that every inasifiuch as the profit sources open to tax American citizen should as \Yillingly con ation by one state may be confused and tribute tp the support of his government as intermingled with those dpento other states. he does to the support of his family,' It is true that th^ federal government employs a ,few types of taxes which the V \ Basis of Taxation • states have not authomy/to levy, and, con- As a basis_of taxation I would say, asf versely, the states levy certa^ kinds of, has been mentioned here this morning, that taxes which the federal government can not 'the,only sound basis is capacity to;^ay, well impose. oThe states cjfn not tax -im- or in< the language of ;the Scriptures, "To ports, nor can the federal government levy whom much is given, of him much shall ad valorem property taxes which would be be required." Tl}ose possessing, great uniform arid'equitable, due to. the fact that wealth c^n better bear'the Burdens of gov the Constitution requires such taxes .to; he ernment, or a larger share of the burdens levied on the basis of-population. t of theirgovernment than the poor can out The tax- field, however, with these fevv; of their poverty;. " ' ^. e.xceptions, is a common hunting ground .for :; The po\ver. to tax is^not .only a, well • both governments. ^xcep,tfor the property recognized privilege of any government but taxes levied by the stated, the bulk of all it'is a duty that must.be exefcised if such gpvftdmerital revenue, both state andfed- , government is to exist and function.: While , eral, is derived from,/such sources as in-.^ it is undoubtedly true that both the federal come, estate, "inheritafic^ and franchise governmerit'and the several states abuse taxes, and "excis'e taxes on sales. iPressed this power at times'by. excessive.or unwise by the necessity for additional revenue,", use, the- greatest-,abuse possible would bev both_gpyar{iments frequently tax the same the failure to provixie,\by taxation, for the., article or transaction. . •''^•. /, funds required for the governmentar func- '•'' The resulting double.^orefonflicting ta/a-

'•'•^''•-••' ') ^.'"':^ --s''}'.:::'-^^-' •'.- •>•:•:'":•:..•.•.•••/• :^ -••••vv- :-:-,-; *.-..4>,,.- •;••-.••-•.• ,: . • '.: :^

-••-:..• f-•„. • •. . - • ^- • •. • •• ' ^ •' • •• •• '• ,-••..•.,•- • ii ' T. . , • • , ^ - • . . . , • - • • V 344 THE BOOK OF THE ST A TES . tiori is not'necessarily an -evil, but it rapidly are taxed in another state on the basis of /becomes one unless wisdom and discretion -domicile. InCbme may be taxed in the . are used and therp' is due regard for the state in which it arose and also in the'^state combined burden of both taxes. We are in which the recipient resides. ' all agreed that siich discretion has not been Until recently •th.e estate and inheritance used and that we are now in the position tax conflict between the states was a glaring * where ;this,combined burden, in a great .example of the inequit-y and injustice which number pf QSse^, is too great, and is caus- can be caused" by lack of uniformity and' - ing gross.inâities t|aat will continucun- coordination. Happily, this situation has • ; •' . kss. joint action is/faken to alleviate this been greatly aided by court decisions and conditjgn. From the taxpayer's standpoint, legislative action. , . • there is considerable resentment, and justly - ''We can ôt, however^ depend on judicial .: , - so,'wheh this combined burden, causes an interpretation to iron out all :of these dif- ' ' inequitable distribution of the tax loacf.^ ficulties. There miist'be effective coordina • Certain types %; objects lelid themselves tion between the federal government and particularly well to taxation. ^Vheh taxes the states, and .between- the several stat.cs, • • on such objects are highly productive of irf order to/remoye the inequities caused • revenue and are capable of being effectively by doifble taxation. We rnust constantly ' administered by the state as well âs the keepa'n mind dup goal of a fair or just dis-^ :' federal government, they will "tend to be tribution of the.taxes necessary for the exploited"^ by bqth* governments. Unless mainlenanceof our governments. In the: i duplicate taxes bn.ûch objects are cdordi- long run, no advantage can be gained by ' nated and due consideratiofh, is given to the ^the levy,- on the part of any state, of an combined burden thereon) they become un- ûnjust or unduly high rate of tax. Such \ . ' .duly'burdened as compareg with those 'ob- a rate usually "results in.^the loss, 6f revenue • . jects which'canJjg^ffectivelyta.'êd by only rather than gain, as business will seek'more one of such governments. favorable tax jqrisdictions when the- tax . " : The actual firiancial burden of this.du- burden becomes oppressive. Moreover, - plicate taxation is not the only objectionable . high tax rates encourage.tax. evasion.-and feature as yi©wed by the taxpayer. The .tax avoidance. T^"' ; . '^.- waste of time and money involved in filing Persons and property are continually the-necessatyr returns, keeping, the'proper moving from, one taxing jurisdiction to an • accounts and data, and keeping irack of his. other. There are numerous instan/Te's of •«• taxable stattis under rapidly, changing tax the enticement, by means of lower tax rates, ing systems are'extremely irksome, and add, of persons and business enterprises to move . to the taxpayer's burden but contribute: across state lines. The federal government, nothing to the revenues of the states/ When being able to enibrace all .American business a taxpayerj whose interests and business within its borders, is under no such handi are nationwide, may be. compelleoyto file cap. a maximum of 22 income tax returns, no A further cause of conflict between the » two of which are alike, the extra troubl-p states is thedifficuky in finding fair criteria . and expense are apt to impress him very for the allocation of" income, in the case of vividly with theJ^waste and inefficiency:in business concerns whose activities extend volved in the lack of coordination of our over several states; The-allocation, frac- •* ^ • • taxing system. , . tions now in use, in a number of cases, ac The tax conflicts which arise among the tually cause the sum of the parts to exceed several states are nearly as serious as those the whole. * • ' Which arise between the federal government Pressed by the cry of the distressed prop- anSxUie states. Themod^rn, widespreâd, .'cKy owner, and the. threatened collapse of . unitary system of business which transcends the {.jroperty tax systems in a number .of state lines, .and may, jn fact, reach into ^jurisdictions, state authorities .^haVe been every state' in the union, has added new compelled to rely more and more upon the "'"7 difficulties to^ an already complex, situa- field in which doubleVtaxation is" already • . tibn. Property'may be taxed in'one state encounjtered. Th6re is ino reason to hope- \ while the certificates of Qwn^rship thereto •for/decreases in the-present tax conflicts,

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.. > FRIDAY MORNING SESSION 345 unless steps are soon taken to coordinate ever, must go the realization that this task our tax^ystems. is just begun. The coordination Of effort Several methods of effecting an equitable and mutual interest already demonstrated redistribution of the tax burden, with is very' encouraging and, if continued, special emphasis on the elimination of these promises an eventual.solution to the difficul evils, have been advanced.- State-shared, ties so prevalent in our present tax systems. nationally administered taxes; and the sep SENATOR TOLL: I am sure I express the aration of tax bases, upon which conilicting feelings of every person in this room, when tax:es are now imposed,. into federal and I pxtefed our very sincere expression of ap ^• state fields are some of the most noteworthy preciation to Congressman Vinson for. his of these suggestions. very illuminating address and to Qong.iêss-' The Committee on Ways and Means of man Doughton for this careful statejiient the United States Congress has given seri which he has made. I am exceêdingry ap ous consideration to the problems involved. preciative of. this opportunity to make pub We are fully cognizant of the fact, that,- lic expression to these two officials of the while the states have' frequently encroached federal Congress, of our gratitude^ not only upon types of taxation developed" by the for consenting.to address us today but ajso^ federal government, federal authorities are , and more especially, for the national se^yiî^/^ no Jessûilti' of the same offense. The wh[ch they have been doing in their work;, membersof.the Coriimittee realize the graA'- on "this subject, in which they \were the/ ityjDf 'these problems and are willing .and pioneers. The Ways and Me.anS Committee anxious to cooperate with the ôfficials of * of the Congress was the first gbVernmental the 'several states in an attemM to solve agency in this country to set ;u^»,a unit, the them. We are very much interesled in the unit of which Congressman' Vînson is Chair findings and conclusions of this; Assembly man, to make a specific study of |/his prob and will give them careful consideration. lem of conflicting taxation. Thesmembets I have recently reappointed the Subcom of the,Interstate GommissioiT on Coiiiflicting mittee on Double Taxation from .the Taxation and the officers.of the .American membership of the. Committee on Ways Legislators' Association, during the last two and i\Ieans furthfer to investigate this sub- • or three years, have enjoyed the counsel, ject and to furnish a contact point between . the active assistance and the constant co this Assembly and thev federal legislators. operation of these two officials of the Ways^ The Honorable Fred AK A'inson, of Ken and Means Committee. I may say that\ tucky, who has already done some spl^did both Coiigressman Vinson, and. Congress work on this subject, is Chairman of this man Doughton have, wit,hin the [lajBt tw^ Subcommittee. wee^s, sat withio the President's office in . The purpose of-thjs Second Interstate the WhitQ House anddiscussed with him Assembly can not be too highly praised. this problem of .conflicting taxation,\ the The accomplishments of the First Interstate work they .have jointly done, and the work Assembly and the \iork done by such groups of. this Interstate Assembly.. I. may say as the American Legislators' Association also that the active interest which the Presi and the Council of State Governments have . dent of the United States is taking in this- helped materially to focusofficial attention work is dire very largely to tjie stimulation upon the problems of cojiflicting taxation. of Congressman Doughton. and Congress Progress has b.eep made in analyzing these man Vinson. In that connection,^ I should problems and considering methodsôf their .also mention the fact that his interest in solution. There is no doubt but that.a this subject has- been' enhanced' by two"* hew spirit of cooperation is growing between former .New York State, official associates " taxing authorities and that the old. policy of the President, Mr, Mark Graves and of isolation and self-sufficit^ncy is vanish Senator SeaburyiMasVick,' who have, on ing. We have learned' that pnjgress in any various occasions, discussed this matter with' unit of government is hindered unless the the President arid to whom he has'alsp ex officials .of'such unit exercise due regard for pressed his active-interest in

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346 THE BOOK OF THE STA TES ress in behalf of the Interstate Commission seems to me to render it unnecessary for . on Conflicting Taxation; This Commission me to gb over that ground again, I think is maintaining a full time staff of five pedr you have had enough illustrations of con pie in the administrative offices m Chicago, flicting taxation in the various relationships Dr. James W, INlartin, who is .the Director, •between the federal government and the is on Ifeave of absence from his regular posi-: state governments, and between the various, tion, that of Director of the Institute of states, so that I need not again discuss that Business, Research of ,the University of matter. So I turn to certain factors that • "Kentucky. I am sure that everyone who seem to me should characterize . all ap- is familiar with the field of tax research prQaChes to the problem of conflicting ta.xa- would agree that among t}ie academic au tioh. thorities on taxation, Dr. Martin is oneof ft" the five leading nien in America. When I Conflicting-Taxation say "academic," I use the word in its finest One; approach to the solution of conflict • sense and without any of the implications ing, taxation problems is'the allocation oi which are sometimes unfortunately attached certain revenue measures to the federal gov- to the use of that term. Dr. ]NIartin'is a • ernment and certain others to-the states man who has a rare combination of attri and local, subdivisidhs, a plan cpmhionly butes.^ He has been a professional student known...as "separation of sources." This ., both of government and economics. He has device is recognized in the federal Constitu been 'very frequently consulted concerning tion and should probably be utilized much tax problems of many varieties, not only by more fully than ,the Constitution, itself rer ; the legislature of Kentucky, but also *by •quires. It is not, however, to be> regarded\ many commissions and boards of the state as the sole solution of problems growing out of Kentucky. .. : ^;^^^ • , ;. of tax conflicts. It is my great pleasure to introduce Dr. It is important that problems of adminis Jam^sW. Martin. '".-. \ •' tration be differentiated in some me^^sure m • • • . from problems ef revenue distribution. -\ ' . . •: . • ADDRESS BY J.4\MES W. MARTIN V Doubtless, a case .can be made ^for federal administration of certain tax measures while One of the issues in the problem that is little or nothing can be said for federal ' facing this group_ is the issue of how tQ utilization of the revenue produced by the .tackle the job. Now that should be not sameirheasur.es. For example, it has been v;n'ierely a probleni for research workers, vigorously ^rgued in certain circles, that •but it should be also a problem for political motor iuel taxes should be administered by • leaders and particularly for tax administra the federal governnfient alone. Even those tors. . I have attempted to set d,own.:\)n who maintain this • viewpoint,, however,- paper a few thoughts that have •6ccurred generally insist that the states should ex to me as to approaches to the problem of pend the* funds derived from gasoline taxa conflicting taxation, partly from^he point tion. Here, allocation of,the revenues to of view of how the researcher shduld attafck" N a jurisdic'tion other than .that which can it. sBuf I have attempted-id weave info most effecftively administer the tax arises my discussion' the point of view that' the from the peculiar character of the'motor 'whole group of us must take if we are to fuel tax. In other instances,.it may arise . seek a practical political solution of the is from no peeuliarity of the tax itself but from sue. I should sayjiot merely.a practical a fiscal situation in which added support political solution, but also an ^administra- for the central government is less essential -tlve and perhaps a psychological-solution, than additional reyehues for states or their because the .whole problem involves the subdivisions. If, for instance, it. should ap development of a proper attitude quite as pear that federal administration of the cor much as it does the deyelopment of' proper poration income tax is the best-solution of, techniques. - conflicting co.rpor^ti'dh^taxes, then part of I haveHDeguii the manuscript by indicat the revenue .derived from'' this measure ing certp.in types; of conflicts which are might well be distributed to the. states q^ characteristic. The discussion thus* far : the ground that othervjl^e they would .te

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.; • • *(: FRIDAY MORNING SESSION 347 reliiiquishing revenues they could not afford ing federal and State plans rather than by to lose, 1 retiring, the federal or the state govern . Generally speaking, in all study oif con ment from this field. Allocation of a part flicting tax problems it'is desirable to dis of the revenue to the' federal, government, tinguish carefully between allocation of ad and a part to the states, with a'dministra- ministration and allocation of revenues, tidn partially or. wholly duplicated, may even though in most cases there maybe no prove to. be more desirable than administra practical necessity for actual separation'; tiop exclusively by one or the otêr gove£n- Incidentally, in keeping with this viewpoint, mental jiirisdictiqn.-. If this is the case, it it is highly important that techniques for will probably be necessary to have dual ad the allocation* of centrally administered ministration, as in the case, of the death taxes to the use df subordinate govern- taxes,, not only to avoid the evils of com « mental units be more thoroughly studied. pletely decentralized administration, but amo because, maintenance of administrative Administrative ConsiderQtims .;jtiachinery by. each agency, cotrtributes to Arc Always h?iportant its sense of responsibility. The most obvious administrative consid'erations associated with contlicting taxa- Constitutional Problems Pervasive . tion are the cost, the measure of efficiejicy,* It is necessary, too, to examine all prob-. and the feasibility of reducing, the irrita- lems of conflicting taxation in .the light of Viions to taxpayers. But it is undoubtedly the constitutional- backgrpuhd. Someone true' at tMe present tiiê that the federal has suggested that prograjns for tax reform go\'trnment could admimgter all state, local, •should be-developed originally without re and federal motor fuelta^xes with little gard to legal considerations, and "perhaps expense above that now incurred for col this is a good rule to follow in studying the lecting the federal tjix alonej This arrange possibilities of alleviating tax conflicts. ment, however, would necessitate a.uniform Nevertheless, before the job is completed,' rate. If - rates—and particularly exemp it is essential that the legal possibilities of tions—v\êre diverse, the experise to the any contemplated, change be thoroughly' Bureau o,f Internal Revenue would be canvassed. It is in this-sense that the legal greatly increased. From the point of view ' aspect may be said to pervade all prob - bf efficienc5?\ and of convenience to tax lems growing out of diversity of .taxing payers, also, central administration would jurisdictions.' ' , . be preferable. On the other hand, central administration would tend to check expferi- Politicdl Issues Invariably Important mentatio!! with various administrative de Possibly the most import,ant aspect of vices arid would prevent adaptation of gas investigating programs of eliminating tax taxes,tp local needs. • conflicts is that broadly referred to as4he. it'was found, for example, that, under njîtical. I'he terra "political'.' in thi conditions existing following the World mection is not used in its .iiarrow sense War, administration of state inheritance na^np reference to party politics. It and estate taxes proved extremely difficult cerns, rather, flTe feasibility frot^ the| ; and dernanded some solution". Precedents point of public acceptance. .^^N.- for solution by allocating the tax exclusi^'ely No parti^larly useful purpose is achieved to the states we're well established. More by the development of (Comprehensive plans over, ithere was strong sentiment"-for this whichhave legal, administrative, fiscal, and procedure. After extended study^ however, ^^conomic advantages over ayailable alter an expert commission largely representative natives, if those plans i'nvolvei legislation of state viewpoints .decided thatj for ad which"the public, and heitce the legislative, ministrative reasons, .the federal govern^ bodies, would' not accept. It is not' im-\ ment should continue to impose an estate probafjle that, at least for the time beingj ^tax. The plan.was adopted practically as programs .for federal- administration of recommended. ' « numerous taxes are of this sort. The states It may develop that personal income tax i do not look with favor on the federal gov- conflicts should be alleviated by coordinat- ernmeht's monopolizing lucrative sources of

^ 348 THE BOOK OF THE ST A TES revenue, even though revenues should be flicting taxation now facing the United . . shared. For that reason, they are unlikely States involves weighing each co.nflifcting to accept a. plan which involves large ex- tax measure in fiscal and administrative • tensio'n of federal administration. This,is terms with a view to discovering what not to say, of course, that this plan has specific rearrangement is essential to elimi •no possibilities, but rather that it probably nate or alleviate the evils inheriiig in them. cannot be used, at least in the immediate Several variations in approach are possible. future, as a complete solution for. difficul- • Jies of taxation inhering in the multiplicity- . Study oj PartiaHar Conjlicling Taxes of governmental units. ':_ One attack may be made in terms of a Xo matter what particular type of study particular'proposed solution indicating the is contemplated, therefore, consideratio'n ofi varying possibilities of the proposal. For the attitude of the public toward the fac example, an e.xamination of the possibilities tor.-^'involved is important. • Possibly study of federal administration of general sales. • . of this factor .may be excluded from purely âxes with or without a sharing of revenues <. ftscal, administrative, or legal studies; but constitutes an appropriate application of any..comprehensive investigation or. ex- this technique of investigation. ' Such a a.niinatibn of conflicting taxation to be com study estimates the fi§cal and administra plete must give: a large place to the simple . tive consequences of a tax in terms of •question, '^Will this or that procedure be several proposed plarts. For example, the. - acceptably to the people?" However, pub recent Commission report on Sales Taxes:' lic opinion is by no means a static thing-;, . State vs. Federal, in addition to the.statis-...... so a program need not ordinarily be aban- ticai presentation of experience, includes a . doned solely because it isjimpopular. ". *sys'tematic, theoretical examination of the II. SPECIFIC T^PES OF STUDY NEEDEID proposal. A more complete study would, of course, envisage a much larger number Techniques jor Solving £onp.kting .s of plans for rate structures, for relationships ' Tax Problems ;. " v with other tax measures, and for the scope The study of procedures whereby the of application. v-. • ^Xx-cohtlicts attributable to diial Jevies a;nd. Another possibility of this) approach is diversified legislative and administrative the comparative study of alternative pro policies may be alleviated or eliminated cedures'for solving the difficulties of con>, must occupy a large place in the attack on flict. "An\investigatio/i comparing the merits conflicting taxation. Students of the sub pf~ê cr^Blting^device and of federal ad ject have given-this aspect of the-difficulty, ministration with the^resent plan of han- , especially those phases arising from tax' dl'ifig the corporatioR incbiiie tax is desir levies by various levels of goveimment, a able.. Siich a\study might include a canvass prominent place in.,.their discussiolns. i. The of the fiscal experience, the theoretical" cbn- earliest papers .on this subject _ by such sidefations involved, and the fiscal and eminent authorities' as Messrs.. Robert ••iiadministrativ e results growing out'' of each Murray^'Haig, Franklin S. Edmonds', Mark [X)ssible arrangement in comparison wi,t,h . Graves, and Clarende.Heer emphasized.this the existing fiscal and admirtistrative situa; line of attack. Indeed some other students tion. By such an investigatfon it would be , have seemed to think ,that this approach feasible to predict, comparativi^ly, the direct is a means-of solving the entire gamut of consequences of each pjan. conflicting.tax problems." ' In the case of either of these two applica . * On. the other hand, the- leaders .in. this tions of the plan of-in', estigating adminis - type of study recognize that other api- trative, and fiscal consequences of one proaches .thari inv£stigation..of techniques particular tax, it would, be essential; to; .-. must be employed-in order to reach a sen completeness'that thelnfluence on the;e'ntire sible solution' to the problem. Some of fiscal situation be estimated. .Preferably these approaches may be briefly summarized this should; involve measuring the cliange with illustrations a§. far as possible from effected by each proposal ofr the distribu .. the investigations already reported. tion of the entire ta.x load between individ- . . .A second attack on the.problems'ôfton- ual taxes, the. distribution of the burden FRIDAY MORNING SESSION 349- between, different indople'groups.(_ , and, as haps the type/.of stiidy most needed as a •-far as possible, the inmience of the change background for such deliberation as that • on the tax situation 4i^t bears pn different in which we are engaged in this assembly.. industries and businesses. These two ap To present' satisfactorily 'some of • the plications "of this-.a'pproach obviously do difficulties of conflicting taxation, a com not exhaust the-J}(issibiiitTes"; they give plete revenue picture of the entire country ^simply two aîcrel^r^liustratidns of situa- is essential. Data available do not render lions in which thi^Tplan of investigation possible ah entirely satisfactory, revenue could be utilized. summary for all states and their subordinate A thirdTtype of investigation,involves units, but some effort in this general direc the examination of the entire gamut of tion is-desirable. The revenue picture Will . conflicting taxation, or of a considerable disclose only part of the truth unless it is part of the field, in Terms of one particular supplemented by in formation . respecting limiting factor. Perhaps- the best example public borrowing and other aspects of fiscal. ' of this.type of investigation is the study of policy. If, for example,, the state highway the legal factors. in. all or a part of the system of Kentucky has been developed .general field of conflicting taxation. One only as current jêvenues-are available for • concrete illustration of-"this approach is the purpose, while the state of North Caro A..; fouiid in Professor Harding's Double Taxa-, lina has borrowed millions of dollars for ' tion of Prophty and Income. This particu- highway construction, a direct comparison • lar research examines only one aspect of of revenues for highways jn Kentucky with the legal problem., namely, that, "involving those for highway purposes in Xorth Caro- discrimiriatory/double taxation. Another Una is misleading. > In the former, revenues type of legal analysis might concern itsel/ are raised for road purposes which, in the with the constitutional possibilities of vari- latter, are largely devoted to-debt service, . ous plans of "integrating tax' systems of liiade necessary of course by highway con state.s with localities and states with the struction, •actually"- already ^consummated, federal government, such as operation of -But, with'tDroper interpretation in terms of the credit plan .in fields tried and untried, fiscal practices respecting borrowing, budg- ' the legal feasibtiity of federal sharing of. etingfjand accounting, it is possible to de :, . revenues from each of several particular velop, partly on the. basis of estimates, a tax measures, and the feasibility.under the revenue picture which will serve a number, interstate commerce clause in the federal of purposes. The first objective of such a .- Constitution of imposing restrictions to revenue picture should be to find out the "(', avoid discriminatory taxation by constku- relative and absolute load on various types •-N, tiorial duplication of tax jurisdictions. of taxes;

'•""i . . • • ' * • • This differentiation ^s important partly _ Complete Revenue Picture'Essential because studies heretofore made have de I^. is indispensable to any plan for im-^ veloped evaluations of individual types o'f provement in the tax situation that infor- ^ax measures; Thgse investigations have mati()n regarding the distribution of the tax shown in some measure the kind of burdens load: be made available. . - iinposed by property "taxes, of those im ^. • . /The approach to, the study of conflict- posed by sales taxes, and of those imposed ''"~'"-- j{ig taxation through the development of a by-income taxes. Only by statistical syn y Comprehensive revenue- picture is essential thesis can the complete picture rendering in order that any proposed reallocation may possible this sort of appraisal be drawiV." beweighed in terms of its influence on the Incidentally, it should be remembered that ; distribution of*.tji-S-Had:-(a) between taxes, the difficdlty of accumulating'.siich sta . (b). between income groups>and (^c): be-. tistics has been enhanced, recently by'fail ' tween industries .and busiiiessies. Plans .for ure of the Xensus Bureau to contimie '• the reallocation b\fJ sources of revenue and publicatian of-its Financial Statistics of for the integration.of the federal, state, and .States. ... V y-v. • • local tax systems should be made in the This type of approach ^fs necessary &lso flight o/ in formation, disclosed* by this type to an •examination "of tire incidence of the of investigation. At the moment, it is pen- tax system- as.^ between various incomis

:f V 350 THE BOOK OF THE ST A TES groups. - It is possible to a certain extent to points of particular conflicts and of pro measure the distribution of, the ^tax load posed solutions; and (c), perhaps most betwee^ income classes affected by any important of. afl, development of a compre one particular tax measure, but only by hensive revenue picture for the entire aggregating the-effects on.each income class country, which will make possible an ap of each separate tax measure can the dis proximate riieasure of the influence of tribution of the load imposed by the entire proposed remedies on the load borne by tax system be estimated.. Even with sueh each tax measure. An various îndustries data the estimates at best will be mere ap affected, and on/ea«m income group, and proximations, incidentally, no compre-. which will not oVfly make available addi hensive effort to formulate such estimates tional factual material but will also add , for the Uriited-States,has been published. perspective to any other approach; It is important • that the retarding in SENATOR TOLL: It has been suggested fluence of tax riieasures on business activity that opportunity should be given at this. • be reduced to a minimum.: .^Measurement time for questions which have been raised 'of the relative economic "Effects of the tax by this paper. Accordingly, a:t this point, : system on various industrial groups is an we are going to throw Dr. Martin to the, .^ objective which a. comprehensive revenue lions and will be glad to have you ask-any picture Avould serve. Poll taxes, personal questions of Dr. Mar{,in with,regard to his , irtcome taxes, and other personal taxes are discussion of the,subject. . '''" not particularly Ijurdcnsome to industries HON. MARK GRAVES (New York): I . as such. -They fall^ rather, on individuals would like, to take the opportunity, not of-> as individuals or on individuals as con asking a question, but of making a few ob- sumers; and-'their only influence on.indus ' servations that might be helpful to the trial activity is indirect. But business people here if I stated them at this point. taxes of most kinds, taxes oh many kinds r doubt if .any of-us appreciate the sig- -of; property, and ntimerous typesôf con-, " nificance of the last approach that Profes sumption taxes, so-called, fall upon or sor Martin mentioned. I consider it, as . inci.dentally,. affect business enterprises. he doe^, the. most' important of the three, •Perfecting measurements of these ^ff^cts is but it is not to discuss^this. approach that . not easy,- since it involves an understanding' I came ,up here.. Many of you may riot of .the market, situation, especially the . know that the federal government has re elasticity of demand and supply, as well.as quested each'O&the states to develop proj . the distribution of taxes and the effect of ects for the relief''of unemploymentJn the the one upon the other. None the less the various states, and one of the pr^cts effort is certainly worth making—not only 'which the state of New .York has presented for. economic but also for political re:asons.. for consideration—rin, the event that the $4,800,000,000, appropriation is made ^ by •.i ' ' Summary :•' the Congress—îs a project to collect the Lest you may have been unable to fol precise type of data that Professor Martin low my inadequate exposition, let me ex êntions, for the state of New York. plain whqjt I have.been trying- to Bay. In My only excuse in being up here at the .^the first place, all general investigations of present time "is to say to yo'u tax admin conflicting taxation should: differentiate istrators, you»members of legislatures,-and: • revenue , "from adaii.nistrative' problems, other, officials, that an opportunity may be should emphasize administrative feasibility given to your" state to secure, out of that and economy, should streSjS copstitutional unemployment relief appropriation, if and. and other legal aspects,. and should reccig-. when made, an adequate allowance to d'cf , -^pize clearly all .political factors involved. the kind of.jofe th£t should be done in 'in th^/secoitd place, I hive suggested three carrying out Professor Martin's recommen • sorts of attack on conflicting taxation each- dation. I ha,ve.sound reasons for beUeving ; of which promises generous results: (a) that;such projects will\ appeal to the federal appraisal: of the various methods by >vhich authorities as the sort of thing for which" conflicting, tax difliculties may be allevi federal allotments should be made.^ I ated; (b) investigation from various view thought you ought to know this so that--

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'.. FRIDAY MORNING SESSION 351 you may take it up with your .governor, be the largest cotton center in the world and who> I believb, is the oftlcial in your state the delegation from that county has been with whom the federal government is very, vigorously opposed to the sales tax," negotiating along that line, • insisting that it would handicap Memphis SP^ÂKER BELKNAP: "May I suggest that as a cotton center. Now, in addition, there j!pu give just a little more detail oh that? is this specific question. Jf a man is going Just what have you proposed and how are to buy a Ford automobile and there is a you going to work that sort of an investiga sales tax on Ford automobiles in Tennessee, tion? Have you gone into any detail on it? he will go to Rossville,. Georgia, \\îch is [JMR. GRAVES: ISÔ, because we don't know only three miles from-pie center of* Chat-, that \ye are going \o receive the allotment tanooga, and buy that autp'mobile,.>will he of funds. In New York we have in our not, i\Ir. Martin? And if so, how are you department a research organization, tiroiind. going to deal with that sort of problem. •''. which nucleus we could build an additional MR. MARTIN: The gentleman from Ten force to accumulate^ this particular flata. nessee ha^ raised a.nmnber of very interest We have submitted our'^project to the Di-. ing questions. I should like to take just rector c^f the Budget in New York, the offi a mimite, if I may, before turning to those cial who has' been designated by the gover questions, to add a httle to what Mr, Graves ; nor, as the person whom department heads said about the sort of work th'e state'tax should contact. AVe want to collect data, department could do along the line of get which never have been accumulated by the ting a coniplete picture of jthfe tax situation. state of New York, with respect to the, It might be^helptul to put it in concrete -amount of revenue collected by each of the terms. It octurs to me that one of the unitsof government, the sources from which ' things th^t may, be done is to get a total collected, and the. purposes to which it was picture orfhpw much of the state and local de^voted" when collected. While we perhaps: r(?venue is raised from ^le ta\-ation of each have as good statistics as any of the states, '' of several classes of property, depending on they are far from complete. They fail to the statistics that can be developed and on furni'^h the data which a commission, like the expense that carr be incurred in the de the Interstate Commission on Conflicting velopment of those statistics.• That is.one Taxation? needs to have*in/order to ap thing that practically "none/'of the states proach, intelligently, a^^solution of the prob have done in>a really systematic way. / lem. • . • The same, type of approach jnay be ap Speaker Belknap A ssiimcd the Chair plied to the income tax, to the inheritance KSPEAKER BELKNAP: YOU are very much tax,- and, incidehially, a.-sludy of data interested, I know, in what ]\Ir. Graves has developed by analysis of the character of to say. I would like to have any other ; the states-will be extremety helpful for sev questions from the floor. I think the gentle eral- other purposes, both for analysis of' man from Tennessee said-'he "had a ques income tax data and for the analysis of tion he would, hke to ask. property tax data, to talce only two illustra . HON,. JOHN .A. CH.^MBLISS (Tennessee): tions. In.other wordsyould.^ likei to hAve him telf me a)nd these for researchers .olS^he.. type represented by\ "other ^gentlemen irom Tennessee-jwhat is J the staff of the-Interstate Commission oh the distinction. Conflicting Taxation to do the rest^ because One of the things that has immediately federal. statistics are pretty gerierously. concerned us in Tennessee,'jirf debating a available whereas local "statistics within sales tax, is this: Memphis is supposed to most of the states are not available.

K 352. THE BOOK OF THE STATES • If I may'take the questions raised by The effect is exactly the same, but the ap-. the. gentleman from Tennessee in reverse pearance of bufdening interstate commerce order, I should like to speak of the purchase is more substantial in the Colorado statute . of the automobile as one issue. Two at- than the Kentucky statute. tempk^o solve that difficulty have been In the case of the Memphis situation the' tried in legislation. One of them is that only Solution that I can suggest there is incorporated in the North Carolina statute, the exemption of.cottofi from the scope of which provides that the sales tax on no par- the tax. There are some states—''and this ticul^ individual item shall exceed ten dol may include Tennessee—in which that lars. In my judgment that is a bad way would not be constitutional., in the Ken of going about it, because it means that you tucky gross sales tax act, or gross receipts enhance the evil characteristics of the sales tax act as it is-technically called, the~solu- tax. .One of the worst, characteristics of the tion reached .on that particular point with sales tax is that it hits the poor-people who . respect; to coal, which is the cotton problem can least afford to pay it, and that particu of Kentucky, was to provide a definite linii- lar provision tends to, increase that effect. - tation on (the application of tlie;. taix'to the .It is' unfortuiiate, secondly, in that it coal industry. Such a scherne may be feasr does not^lv/s'the problem, because there ible in Tennessee if the provisions for excise arfe a good many instances in which the ten taxation under the Tennessee constitution dollar differential is sufficient to cause the are comparatively generous. Therfe are 4hift from one state to another. some of the states, including even^some of. ' The second measure that has been ap: the New England states, wherein the con-, plied has been tried in two different forms, stitutipns pre very generous »in many re- , first in the state of Kentucky arid second, spects, and' in which that sort-of line would three or foiirweeks ago, in*the state of not properly be drawTi. Colorado^ . No appraisal of the' way the Answering the original question that Mr. method works can be given, but I mention Chambliss proposed, namely the difference tlie. method as one that may help to solve between the revenue aspects of conflicting situations in Tennessee. "^ The Kentucky, tax/problems and the fiscal aspects, I thinly legislature, immediately after adopting a I cpn do that more pointedly by means of general sjHes tax, passed an. amendment t(t an illustratio.n. There is not much question the automobile registration tax law provid in the minds of the great body of the Amer ing that every automobile -which is sub ican people, .so far as I know, but that' mitted for registration and Was purchased most of the highway construction and main aft'er the ena'ctment of thfe sales tax law tenance job should beuridei* the direction would be required to pay, before it could of the states rather than of the federal gov be licensed under the registration provisions ernment, the states and their subdivisions. > / of the statute, an excise'equal to 3 per cent And'yet a good case can be made for fed of the value of the automoWle, in the eyent eral administratibri of gasoline, taxes. • r it had not already been subjected to the suggested, in the "first place, that I had . sal^s tax. ; • chosen this illustration • because the Com That solution has been. adopted by a mission belieVes that states should. ad- . somewhat, different method in Colorado,, minister gasoHne taxes rather than the fed- but the methods are essentially the same. , efal government. Every member of the My legal friends tell me that, this solution; Commission, I think, admits there is strong is open to gra\'e legal questions. However,. arguriient to the contrary. All agree, ho\V;- the Kentucky act has been brought before • ;ever,-that-there is not much argument about, the highest trial court in Jven;tucky and per who should spend the money. The;.point haps the be^t one—it is in the city of SJouis-^ is that a. careful study of the administra-; ville—and the trial court has .sustarnecl' the'. tive problems shojiild be made to see.\yhether meas,yre. I don't think the decision was the federal governmerit can admimster gaso- appealed. The Colorado measure seems to. • line taxes so much more effectively than the nie to .involve; somewhat more risk than the '• state governments can, that the,'job shoiiW Kentucky measure-because it is more ap be 4^Fned over to the, federal government parently a burden on interstatje commerce. completely, as it already is in part." Such

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i5«. 'FRIDAY MORNING SESSION 35.3 k plan would contemplate tjaat the J revenue good: many evils.. In-some ways, it \y6uld should be spent by the states j"u$t as it, is meet the situation. It would give the states now. i am not suggesting that as a solu jurisdiction to tax these.items that they tion, but as a thing that deserves, and I do not now have jurisdiction to tax think inevitably •mu^t, receive a good deal under the law. Actually,! believe it would «• .of consideration.'; not' meet the situation because I ,do '^6i : - Take another case. 'If'^all of the com think the. states, even, though they . had • •: petitors of thecity of Memphis in this cot 'legal authority to do this, would be able ton situation wiere subjecte^d to the same to administer the thing; as a practical tax, there would be 'little diftlculty ex measure.. There \yould be specific in perienced by Memphis/in dealing with this stances in which they could administer it;^- problem. One group has suggested that •. pr^ictically, and it may -be that'those will" , thie solution lies, in turning that sort of taxa-' be found any\vay. Kentucky thinks it' has tion over to the federal government so that fpund it already as regards automobiles. T' each" city will have the same tax problems sho,uld poirit out, however, t'hat motor ve on that particular type of tax measure. A hicles constitute only one .class of difficulty good deal can be said for that. , .A good and that there is a fairly'substantial nuTh- deal can also be said on the other side, even ber, of other classes of merchandise sub though the states must have the revenue ject to this same difficulty, and that some . that accrues from that t>qDe of.ta.< measure, of these itenis are comparatively small it^ms or. at least a share of that revenue.. . \yhich could easily be smuggled into the HON. ]MYRON B. GESS.AXIAN (Ohio): On state even with a cord(in of police around • this. problem.,.ef7crxing automobiles pur the borderline to prevent smuggling. chased outside of the state, I would like to The thing I think is most unfortunate .ask Df. Martin if the real answer to the about ,that ariswe'r to.-.the problem is that whole question is to secure consent from a cordon of police; if established., arourid the Congress to permit the states to tax the boundaries of each state, .would- be certain types of interstate commerce? An nothing short pf calamitous. However, it ticipating your answer, let ime say this: must be taken into account .that some of that a resolution already has been intro 'the states, quite properly I think, have . duced in the Ohio Legislature asking the. "established that sort of an arrangement, for Congress for this permission. I believe it the enforcement of gasoline- taxes, under is in line with a bill introduced by Senator the legal authority that they actually haye Harrison a' few years ago. Is not that, at the present time. Jhat-is rather ridicu- after all,- Dr. Martin, the only complete ,lous in its actual appearance, in some in way of hanidling that proposition? .^ . stances. Pshall gke one illustration. Along MR.- MARTIN: The gentleman from the eastern border of Pennsylvania you Ohio. embarrasses me in a, rather • urfiisual -.have a ring of policemen parading up and (\vay. The gentleman asked my personal down the border to keep the "dishonest" in opinion, and as-an honest man I have, to habitants of Ohio from bringing gasoline into, give it to him or say I won't give'it to him. the state of .Pennsylvania and selling it tax; It happens that my own judgnlent on that free to the /innocent" people of Pennsyl question.is diametrically opposed to that vania. Over across the line you have a of the Commission^ ' r . similar group of police—t presume this is The Commission 'has&imanimbi^sly ap still true, it has been for a numb.er of years-— proved that method of dealing with th? attempting to prevent the "dishonest" peo- ;

situation^ and the view of th«-Cpnimission,' .pie of Pennsylvania from .bringing the same •\- it seems to • me, ought to be giyeri more sort of'gasoline into the "honest" state of •'weight than ^my own, bedaiise ;T was not Ohio. T don't know of any way to avoid -: associated with, the Commissiiin^ when it that difficulty'under the existing situation, adopted that view, and T have ri.ot given and 1 think a good defense, can be made it the study the Coiiimission doubtless gave for it. But to extend, unnecessarily, it before readhing that.conclusion. ; the'handicaps to free trade between the . ]\Iy own opinion is that that is no solu states, seems' to.me nothing short of a tion whatever, and, that it would create a calamity.. ... 354 TBE BOOK OF THE STATES We have cfene soriie of that by licensing /absolutely necessary-protection. T do not measures of one sort or another, \ve have^ believe that we- are .justified in. adopting done some of it by taxes like the oleot questionable measures unless we have very margarine tax,'which is not. designed to substantial assurance in advanpe that.they raise revenue but to prevent. the sale in will be ;effective; direct competition of products growh in In the case of the gasoline tax, which I other parts of the United States. It seems gave as .an illustration of; a case I think to me that if we can get our revenue and is/justifiable, it seems to nie you. have one if we can get reasonably satisfactory means situation, in the ease oj the problem raised of pi-otecting oui-selves aigainst JDersons who by the gentleman from Ohio, you haye a would dodge the revenue measures, it is ca,se which in my judgment is not j.ustifi- desirable to avoid, at all hazards short of ^able. The Commission believes to the con actually denying ourselves something we trary, and the Commission has given the ,have t^ have, placing.additional restrictions matter more study than I have..,. ' • on free intercourse between the states. MR, LONG: Can, I follow that just a I hope that some member of the Com- step further? You and I are in .agreement 'mission will teir me in polite terms that up to that point. Do you also agree that I'm dead wrong, because I really am em- the expansion of the idea Of protection bar.rassed to express this point of view in under the commerce clause, as laid down the light of the fact that the-Commission by the Supreme Court,, has been abused unanimously disagrees with me, ' and that there was no thought under the. . HON. HENRY F. LONG: -While you are commerce clause to offer the opportunity— • tect the revenue sources of the people? ' ATR. LONG: I did, and the point in that MR, M.ARTIN: If 1 conveyed the impres was entirely different from what I am try-: sion, that I ."was trying to state" it in abso ing'to.bring out. ' '.,./:'• lute terms, I didn't intend to. I tried to - DR. GERSTENBERG:' The sky is the limit convey, the impression that I thought the as far as the Supreme Court is concerned. plan Pennsylvania and Ohio had adopted MR. LONG: That was a case of situs and was a desirable one. I agree with the gentle contract entirely within the state of Pehn- man from iMassachusetts that certainly w-e sylyania... oijght to prptect the inhabitants of one DR. GERSTENBERG: But I rather think state agaittsrt disease germs coming into it the tendency is such that all the fears of from anomer. We ought to ^protect the i\Ir. Long would be dissipated, and even revenue system of "one state against reve this motion that ..is asked for is not neces nue disease germs coming into it from an-- sary, or the ..bill that: is asked for is* not other,; coming not because of the d^honesty necessary. I might say thatl don't think of that state, but because of the circum ]\Ir. Long's parable^etween the disease stances-that exist. Incidentally, my re germs and- gasoline is quite appropriate. marks about dishonesty of the states were One is .contraband in thejnception and the merely facetious. I do think that we are other contraband in traffic. ' justified, in both cases,, in providing' the HON. JOE S. BEAN (Tennessee): ;. I,

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e^- FRIDAY MORNING SESSION 355 should like,to ask Dr. Martin a question nues CQlleeted by the'state.government for relative to the sales tax. ^ ;• the support of, let us say, road services, SPEAKER BEXKNAP: Will you ask your or for the support of policing activities of question, -and' then we will adjourn until . the cities or the counties or some other, local one forty-five. unit of government, and if that is the case JMR.- BEAN : I should like to know what, ..then a mechanism suitable to thiat purpose' you consider the most equitable manner of must be developed. , In anbther'^state, there • distributing the funds derived from the.- m^ be- need, for additional educational operation of a sales tax back to the respec- '.fundsJ :,.•''.• . tive counties and rriuiiicipialities of a state. , Coniirig to a second type of answer to the - JMR. MARTIN: I will "have to plead to •question, it seems to me that.it would ,be ignorance OU: that score. I don't know, but! highly desirable,: if the historical- ba.ck- I think, sticking tO/the general tenor of my . ground in the state permits it, that the original discussion, I rhay say that in my reivenu^^s be not earmarked for distribution judgment the answer to this question de on an}^ particular basis, but that the plan pends on *the situation in the particular of distribution of aids to localities be worked state. . . ; . out separately from an earmarking of par- .' Answering now, in terms of the approach • ticular revenues, and that all of the revenue to/the answer to your problem, and not in produced by your sales tax and income.tax . terms of answiering categorically th6 ques and property tax, if any, be placed in the/^ tion you ask, I think the answer must be general fund and distributed by orderly' made in terms of the background, in; the ; . budgetary methods—rather than detinitely state which has led to the enactment of the earmarking revenues- in .the statute when: it tax measure, and that certainly, no general is .originally enacted. '••'.'• //. answer can be. made for all states. In the . Thiere are riiany states in which the situa first place, in many of the states there tion, is such that that cannot be done, and might be no reason for distributing any of I recognize the difficulty. However, it the revenue back to the local subdivisions. .seems to me a method/that must, in, the In the second place, there may be, in some long run, be the proper .^^solution to- the states, an already established mechanism problem. ';;•-:'•<• , /.•'::• \Ji whereby It would automatically-be taken SPEAKER BELKNAP : Gentlemen, if there '-• care of. There may bey in another state, , is no\ further question we stand adjourned^ , a situation which requires additional reve^' - The meeting adjourned at 12:30 f.vi.

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r -March n 1935.

. HE meeting was called to order at which it has estimated values of .each kind two o'clock by Sendtm BcnG'. Qncal of caff^—for personal property tax purposes.' oj Texas. ... " It is not, an assessment for personal prop . CHAIRMAN ONEAL: The meetin.g will erty taxes, but it is a method of suggesting pleasecome to order.'- Gentlemen, if there the amount at which cars: should be as are any further questions vou .wish to ask sessed,.to the local assessor. IMr. Alartiri he is. prepared w answer. CHAIRMAN ONEAL: IS there furthbr ques- • .Ho?>f. "J, H. TH.AYER MARTIN- (Xew .tioh ? . Any further remarks by anyone on. Jersey): :,I \vish. to state how New Jersey this subject? ', .-. .plans .to. ianswer the .question asked just We now corne back to an earlier part of before lunch by the gentleman from Ten . the program. At this time Wei-Vi'ill have nessee. .H^ sought a methd.d of distributing the pleasure of hearing from the Honorable new taxes.without causing too rnuch rivalry: -William Sp^er, IMay.or of/Wilmington, between different units.oilocal government. Delaware; member'of the Advisory Board We hav^decided that'the answer is not • of the United States Conference of Mayors to distribute. it back by allocktion, but and present here as the representative of rather to use the new revenue! for state that Conference. payment cjf the cost of services previously financed.by the local property tax. Firstj ADDRESS BY WILLIAM SPEER , we plan to pay a certain sum per\pupil in r first wish to express the regrets of I\Ir. .every school district for the minimVim cost Paul V, Betters, the Executive Secretary of education. After sufficient moiVey has p.f.the Conference of ]Mayors, who" was to been raised to cover that, any surplus will represent the Conference but was called e*--^- be used to pay the cost of elections and other back'to Chicago. types of expenditure of that nature Which At the recent .annual confeirence of the functibn under state control. This! solu United States Conference of^Mayors, one tion saves a great deal of strifeover melthods of the leading speakers, in, a discussion of of allocation and tends to relieve ilocal the subject of public credit, made, the fol property taxes of those items for. \^-hich lowing statement: ;. local, authorities are not responsible. • ''We. eaiinot go qn with three layers, of .CHAIRMAN ONEAL: Gentlemen, is tpere taxes, federal,. state and local. What we 'anyone.else who wants to ask iMr^ iNI^rtin re.ally.should have is a-single tax-gathering any question? bureau rnaking.a single scientific system SENATOR WILLIAM H. HERNER (Ohilo) which collects for all arid registers the pro-; The speaker mentioned tlie 3 per cent tax ceeds.. Since that is;a difficult thing-to; do, on the value of automobiles. How is the perhaps.we can take one step towards-it ;••*' value ascertained? Is it cost price at :he now. That is by reaching an understand time, and ..if so does not the expense of ap ing between' the federal government, the praising almost use up the tax? state'governments and the local .govern ' Mi?, MARTIN: I can'answer for Ken ments as to sources of taxation,, so .-that tucky but not for Colorado. In Kentucky, we do not double and treble one tax on an the statute provides that the value shall be other in the same field. A conference might: ascertained according to the method that well be called at which all these groups are the tax commission uses in ascertaining the represented for the purpose pi trying to value of automobiles. The tax . commis agree oh a division of taxation; and %e sion alrea;dy has an automobile bluebodk in might make some progress towards a scienv •s*<>)>, • 356 J FRIDAY AFTERNOON SESSION 357 tific handhng of the whole question of The ten largest governments in the United . public revenues." ' States are mai^e up of the national gov Because this statement represented' the ernment, five cities and'four states. To un;animous viewpoint of municipal execu include all of the states required the list tives in attendance at that meeting, I say, ing of 163 governments, of whicK 1 Id^yere with all the sincerity-and forcefulness at cities.. New Mexico ranked 107 on the^list my command, that the cities of the country and was separated from Nevada by 56 hope that constructive and comprehensive cities; Among the hUndred-odd cities more plans_will result from this meetijig and frorn irnportant fiscally than Nevada are South others which rhust be held iii the future, Bend (Indiana), Rbckford (Illinois), if proper and adequate solutions are to be Quincy (Massachusetts) and Reading secured of the serious problems under con (Piennsylvania). : This mode of ranking sideration. And in .this effort, I assure you governments indicates that eight cities are • the major cities of the nation will give •more-, important fiscally; tha;n .the states'"" their wholehearted supix)rt and cooperation. which contain, them. And so the size and It seems desirable that the contribution importance of the financial problem of the the municipal people can make to. these cities thus becomes evident. . discussions .centers largely around two points: First, .the importance of finance ••,:' Revenue Problem and^taxation as represented'by the cities ^ . With this as a background and/turning: in the scheme of national and state econ to the immediate city revenue situation we omy; and second, a statement of the prob find • that,. beginning w'ith the depression, lems now being faced which, sooner of cities have been the viQtihis of a squeeze. later, must be satisfactorily disposed of. On the one hand, the necessary increases in • local, relief, work relief, and other idepres- The. Cities' Rank sion appropriations, in- spite of .state and f • The traditional-manner of ranking gov .federal emerg;ency funds, have been little ernments has been on the legialand acreage short of appalling. On .the other hand, the . basis. .vWe regard as our most important , normal sources of revenue to which cities; , unit the. federal government; the state is have been accustomed have,' in large part, ranked second, followed, by the city, the been drying, up. Property taxes, which village, the county, the-township, and sb have accounted for the bulk of municipal forth. Territory seems to be the basis for incbme, have in many communities declined governmental prestige; If, however, the substantially because of increased de criterion of compiarison is changed from linquencies and reduced levies. Meanwhile, area to finance, and for our purposes reve many subventions irom the states have de-. nue, and if we weigh the scope and char . clined or disappeared, and for the most acter of governmental services on.this latter part new grants have been conspicuous by basis, a new relationship is apparent. their absence. Thus, the typical American This basis for ranking governments is .city has been in the position of having in rather iruminating, and is indicative of creasingly expensive jobs to perform with the importance of the city'tax problem in constantly decreiasing revenues but of which national finance. the expenditures could be met. ' ''• ., .Comparing the financial importance of In part, the difficult revenue problem goVefrimental units on the basis of revenue facing municipal gov£rnments.is the but- receipts, using 1930 figures, we find, of growth of the process by which city revenue course, that the federal government is the sources are chosen. In the.American eco-c^ most impbrtant political unit. In 1930 it? liomic situation, thd federal government revenues were, almost seveii times greater ••; takes first choice of' revenue sources, the than those of New York City, the second Ftate chooses irom what is left, and local largest government in the United States. government must accept whatever rneaiis of ', The State of New York ranks third, Chi raising money neither of the larger units of cago is fourth, followed by Pennsylvania,, government -find worth • having. For the Lbs Angeles', Detroit, Philadelphia,. Gali- most part this has nieant local dependence forriia and Michigan in. thfe order named. on propert^taxation. The difficulties of the .

:\ • 358 THE BOOK OF THE STATES •:% •situation are.enhanced^for the''time being, ' some grants are niad'C in the various states .hot only by the fadtors which have been . for streets, for,education, foi: health ^york, pointed out above, but also^by the current, and for other specialized purposes, as well partly successful campaigh. for overall tax as fbf'the unrestricted support of municipal limitations which seeks, reductions in prop . activities.:.. erty taxes, without any- provision, for re- A plain: fact confronting the cities is that ;placement of the necessary.revenue/ both state and federal governments have ijwaded most of the areas of possible reve-. • Possibilities nues and have thus cut down- the oppor- . Speaking broadly, ^-there appear to be tunities of local areas to finance themsdves : three separate, though closely related, ave adequately. These upper levels of gov^rn- nues of escape from the difficulty,'none of . ment generally have assumed that, in the ' which, alorie, can be regarcle'd as a com mainy local government can be fmanced on. . plete solution. Only one .of these possi-. an adequate scale through a reliance upon . bilitiesisopen, in any considerable measure,. that oldest American tax form, the general . to achievement by municipal action alone— property :tax. • . .and that is so. only in part. That possi .. \Ve do'not wonder, therefore, that under ; bility is improvement in the administration existing conditions municipal government of*^f5r'qperty taxesi both as to assessment financing, especially., .during: depression . "..and.tis-to'collection. This .attack on the .ti;nes, becomes difficult. Xot S(r difficult ; revenue problem, while siisceptible of utili is the problem.of the state and the federal zation'in part by local action, is not in governments. .Taxes are collected; by these every case available to cities as such;, since units at the source every time a transaction . in a great, many instances either' assess is made. ' I^ is an interesting G^nmentary ments or collections, or both, are .admin on the relative revenue-raising capacity oft. istered by counties. .. . • local and federal governments that, federal- • The second, means'^^3.^hereby. the city's income taxes collected in 1934. are greater revenue situation'can beTelievecJ is thrpiigh than in 1933; ."Meanwhile, local revenues state or even federal assumption of finan from property faxes have continued'to drop. . cial responsibility for certain activities, '•^s a matter of fact, income taxes are paid • hitherto financed by local revenues.^ by. that very person who sometinies, be . Legally, education is a state function; a.nd| cause' of such payment/ must allow his prop ••.there is good reason for'the state .govern-. erty, taxes to "go. delinquent. . This same ment to assume increased financial responsi situation appears in such taxes as are levied bility for support qf common schools .jn on gasoline. The same people who cannot many of the states. Aggin, the ^/o/e high ••pr.do not pay their property taxes buy way traffic which.is routecl over city thor- ' gasoHne, often a necessary-cb^-imddity in . .oughfares necessitates in most parts of the their business. - •;;.:, country substantial "city expenditures' for maintenance, repair, and regulation. These Tax Competition financial obligations might well be more Of course,'if solutions for the municipal largely assumed by the state. • Such a pro reve^iue problein. are not found in the three gram, needless to say, should be accom general directions jiist fnentioned^ there is panied by cei^tralization of motor vehicle no other recourse other than to go into tax and gasoline taxatiori in the hands of the competition with, the states and federal states, as hideed is already.the case in most government—-for essenti

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^ FRIDAY AFTERNOON SESSION •\359. dividual steps only le^d to additional con tention this misconception of our taxing fusion in a system which already is super- syst-Sm and its overlapping. . chaotic. But in many: cases there is no .. •/ • • • ' • • •.•• '•'.•-• other choice. ' ' One Administrator—0)ie Collector One of the chief difficulties in solving The time, I hope, will not be far distant g' municipal revenue problems is that, tradi when the federal government will become tionally, the\population has come to regard the agency.to administer and collect .the government as a set of maiiy independent bulk of the taxes for all governments in the units, whereas in fact, government is a unit. nation, and to allocate these, funds through It exists.to satisfy the collectiye wants of proper budget techniques- to the various the people in the communities governed. a'gencies of government in proportion 'to Hence it matters not which' particular unit their need for funds. Only in this way can in tlie hierarchy performs a function so- a tax system based upon capacity to pay long as that function is most efficiently and b'e developed. The problems of municipal most economically executed. Nor does it finance cannot really be solved until-the follow that the unit which, can most effec •functional and financial relationships be tively collect the taxes is. the unit which tween urban and rural units, and between should retain the proceeds of«such taxes. national and local governments .are settled- Traditionally, in .American public finance, on the basis of fundamental prihc'iples the'Course of development/.has been that rather, than on judgments of expediency. the. unit which could effectively/collect a Until there is but one unit of local:govern- tax has also, as a rule, regained the pro ment in every'one spot, and iintil: govern ceeds. It has only been ^nthin recent years ment service is rendered as a unit instead that the states, led by New York, have of by the piece, fiscal conflicts and diffi been willing to recognize their obligation culties will remain. The solution lies in co to provide a portion of the funds for.local ordination and integration of governments government. A few commoYiwealths have as well as in the coordination and integra beguri to'share with local,, gqv-ernments a tion of fiscal systems. ' . portion of the state-collected taxes. If la.rge^ improvement-4n-^-he municipal revenue situation depends, as T have at Misconception qj Taxing System- tempted to show, on the coordination of Much has been made in Washington, and state-and local revenue •systems, including ,;by critics of federal policy elsewhere, of state assumption of state functions hitherto "the spectacle of cities which appear hat performed locally, staite. grants-in-a:id of in hand -for federal moneys." Cities are particular activities; and state administra caricatured as mendicants asking for funds tion of locally-shared taxes; then the-sig- to' w:hich they have no vestige of claim; nificance of interstate and federal-state they are asking for other people's money; confiicts for municipal neveriues becomes Of course, this is an entirely misleading obvious. It is my feeling that there must stateinent of local-federal relationships and be"carieful coordination of state "and munic- the fiscal problem. It should be remem iparrevenue programs; arid/ if state reve bered that Washington is the revenue col nue programs are wrecked by fratricidal lector of moneys needed not only for the strife with other states and wnth the federal national service, but also for any functions government, the difficulty of municipal im ••( - which it may undertake within'^local areas. provement by coordination, with this wreck Just now the federal; goverrhment is is .clear.; ' ' ' > carrying , on yast, local relief and public- In the contest between the states and improvement undertakings , as emergency between the'states and the federal govern functions./ it is meeting needs wherever ment for sources of tax revenue the munici-, they. are.; It is urging cities .to work with- palities are standing on the side line and tte general government in various pro- watching sources, of income, in which they .grams.,: In: prosecuting its national, pro should l3e sharing, ^dissipated in the fight. gram, Washington- is returning to cities State administrative efforts, which might certain portions-pf the revenues collected well be devoted to assisting rhunieipalities in these industrial areas^ I caJl to your at with property tax administration and de-r

•••' -i 360 THE BOOK OF THE STATES ,v sources of evenue in. which thfe tail so that it could riot be used again. ities woiild shar;, are now being It happened that the town of Mashpee, wasted in a large measu:e as a result of an adjoining* town, a.tage,|so the town of comprehensive study and investigation of Barnstable voted to pay ajbounty of 25c the overlapping, duplication, and lack of on each muskrat killed. T^e person kill correlation of ta.xatiori: by the federal and ing the muskrat was topradiice the tail of state governments." The riiotion having the animal; and the countyjtreasurer would ' been .adopted, the. chairman of the corn-- give him his 25c, record ft, and. burn up. smittee, the late James W. Collier of Mis-f

-":, ^ • • FRIDAV AFTERNOON SESSION 361 sissippi, appointed a subcommittee on i and limitations of the federal and state gov- doublei taxation composed of.:Mr. Vinson, ernments under our dual form of govern- Chair;manj Mr. Gullen of New York, Mr. ment and their respective tax systems. It Lewisvof Maryland, Mr. Chindblom of llli- endeavors to show all cases in ivhich dilpli-. nois, and Mr. Crawther of New york,: cate or double taxation exist between the Subsequently, Senator Harrison, Chairman federal and state governments, which were of the CtTmmittee on Eiriance of:the United some 326 in number at the time the report States Senate, appointed the following sub was published. The revenue derived from, committee: on double taxation: Senator rthe various taxes by the federal governrneht,. King of Utah, Ghairman, Senator Barkleyf the states and their various political sub- 6f( Kentucky, Senator Byrd of Virginia, divisions is shown as far as data were then Senator Reed of Pennsylvania, and Senator available. A number of approximations La Fo^llette of Wisconsin. ,/ were made iq^ order to give figures on. total In consideration of tlie importance and ta:x burden. Similar data were, shown as scope of the investigation to be undertaken, to the expenditures and the purposes for the subcommittee agreed upon a plan of which expenditures were made.' The in- procedure, the first step in which was the vestigations ma.de showed the enormous in- preparation of a fact-finding report to set create in the tax burden, as well as the shift- oiit the necessary data relative to federal, ing of that burden in recent years. Some state, and local taxes, the duplications investigation was made in respect to the therein, the revenues collected,, and the dis tax systems'of various foreign countries, position of such'^revenues. The purpose was the results of which are included in the to publish this report as a basis for the con •report. sideration of. the problem by the Congress . The report obviously justifies the^ conclu-' as well as for public examination and sion that there are many instances.of dupli analysis. It was decided to defer any defi cation in taxes ^between the federal an,cl" nite proposals for the elimination of con state governrnents, some of which could flicting taxation until after the fact-finding and should be removed, that the burden re'port had been studied and discussed. At A)f taxation on certain specific objects has the request of Mr. Vinson, Mr. Collier, reached the point of diminishing returns. then chairman also'of the Joint Committee-^ and that our present tax system is not only: on Internal Revenue Taxation, authorized ' complicated and cumbeESome, but in many ;me, as chief of the technical staff of that instances inequitable. / •committee, to collect the necessary data^j The publication of the ^preliminaiiy re- for the report under the direction of the .port by the committee did not conclude it$ subcoinmittee. .interest in or study of this most important Inasmuch ^s the report was expected.at subject. Honorable Robert L. Doughton, the opening of the next session of^the Coii- : now Chairman of the Committee on Ways gress in- December, 1932, only six months and Means, recently reappointed the sub- were availalÎe for its preparation. committee on Double Taxation for the present Congress. The committee ,cqnsists Double-Taxation Report •; of IVIr. Vinson of Kentucky, Chairman, ISIr, _ However, the fact-finding report was McCormack of Massachusetts, Air.. Lewis completed and was printed and ready for, of Maryland, Mr. Reed of New York ^ and distribution in the first .part of January, Mr. Jenkins of Ohio, with Mr. Dough ton. 1933. The report Avas entitled "Double taking part in the deliberations of the.com- Taxation," and it is hoped that it has served riiittee as iex-officio member. a useful purpose.: It evidently created con • The staff of the Joint Committee on In siderable interest, as the first edition of ternal Revenue Taxation-is continuing its"*^ 4,.SbO copies was soon exhausted. The work. The statistics in respect to taxes preparation of the report involved a.'Avide are being brought up to date aiid riiade more field of investigation and required consider- accurate and complete. .A study arid coiti- able labor. It contains'some 325 pages pilation of th^ constitutional provisions of and numerous statistical tables. ... the several stateswith respect to taxation TR^ report describes the taxing powers has been made setting out rripre fully their . / .'_••." . '' - •• '. " ' . - . • ^ - " '• • ' '•»••"• ' *• _ ^62^^ THE BOOK OR TB^ STATES , ; ' / powers and limitations. During the êar'IocaJly from fe'es^ tolls, and publicly owned 1934, in 38 s^sions of state legislatures— :.and.operated utilities, v only nine of which were regular sessions— In spite of the fact that the British Nar over 400 laws with respect to taxation have tional. Government collects the bulk of the "been enacted. No diminution has been taxes, nevertheless a large part of the ex- noted, in the number of objects subject io r- penditures are made by the local authori- double taxation. Sales taxes in various ties, since funds are made available to therri ^ forms have been imposed by the states and; by the Crown as: already^"stated. In fact, there seems to be a tendency to shift the there are approximately 15,000 local goy- ... burden from real property to other sub- ernmentalunits, composed of county cou.n- jectS: of taxation. Taxation of natural re- cils, town ^councils, borough councils, rural sources seems to be growing in favor. In district councils, and parish councils. It short, the staff of the Joint Committee is in results from the system thus briefly de- a position to publish promptly a revised • scribed that th^ taxes^ in England are uni- and up-to-date report on Double Taxation; form and are administered efficiently and' when the opportune time arrives. ^^; . economically in all parts of the island, and, on the other hand, expenditures are largely English Experience -^made by b.cal authorities wô are thor- .. During the past Slimmer, I had the op- . oughly cognizant of local conditions and portunity of visiting England, in company local needs.. No one. believes, o; course, with representatives of the Treasury De- ^hat we can transplant the^.Bntish system. partment, for the purpose of investigating i" aÎ its aspects to this country, but, on the tax system of that country. A study of the other hand, it is well worth wWfe.to con- •the::British.system is very helpful.to those' sider the tax experience and results ob- who are inteftsted in the conflicting taxa- tamed in that country;.^ .: tion problem, for in England no double It seems pertinent to this subject of co-- taxation of any consequence exists. In ordination of taxatfontostate certain facts- ;: spite\of the fact that the^^per capitaaax.' which have a direct.or indirect bearing on burden in Great Britain is nearly one-third the subject, greater than in the United ^ States, that . . , / c * burden seems equitably spread M not un-. ;, important tact:s . ;. ., .duly repressive oh business. In my opinion, Firit, it isjmportant ;to keep in mind the the same total burden in Great Britain totartaxburd'em. For the fiscal year ending would be unbearable if they employed bur June 30, 1934, the total revenues of the uncoordinated, overlapping arid duplicate fed^^^l government from taxes and customs system of taxation. . Conversely, I believe,, amounted to $2,986,000,000. For the same if our tax system were coprdinated and the period, it appears that the state and local federal government and the states iitiposed governments received a total revenue of •their taxes': in accorc^nce with a harmonious approximately S6,400,000-000. The total plan, that the present total tax burden in....^per capita burden, therefore, was slightly.. f? this country would be'much more easily .,]." over $74, Twenty years' previously the ..borne. ;"'federal revenues amounted to only $735,- In England, appro.>»mately two-thirds of O0p,OOO,.and state and locarrevenues to the revenue is coU'ected by the Crown and roughly,.$2,600,000,000. This gave, for only one-third by'the:.local jurisdictions.'. In 1914, a per capita tax burden of only $34. this country the reverse is' true, and about . Thus, in .twenty years the tax load has been one-third of.the revenue is collected by the increased nearlf'UO per dent on each man, national goyernmerit and two-thirds ' by woman and child.. the.state and localgoyernments. The reVer Second, in respect to outgo, the federal nue collected by the^ l6eal authorities in' e.xpenditures in 1934 were $7,105,000,000, England is supplemented by grants-in-aid while state and local goverjiment .expendi- from th? Crown, The only real tax im- tufes may be estimated at apprpximately posed b} the local authorities is the real $9,300,000,000. This indicates aper capita property tax, knoNynas "the rates," although expenditure of $130. In other words, in • it fS true that some incomqiS collected . the.present situation, where so many emer-

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;. . •• FRIDA YA FTERNPON SESSION 363 gency expenditures are necessary to aid ess. to be required to file' returns and re- . recovery and to give relief, the per capita /jports or to pay taxes in/i91 different in outgo exceeds the per capita revenue by / stances in that one month of. the year. It about $56. By way of comparison it might /. is not difficult to visualize the force of ac be stated that the per capita tax burden/ countants necessary to, do this work and in'Great Bfitain is about $99 and. the pen the number of lawyers necessary to keep the capita expenditure $115, so that in that corporation advised on the requirements of country the tax burden is greater, but the jBxistirig lawv • expenditures less on a per capita basis./ . Third, the total public debt of national, Cooperation '• :. state and local government^ amounted tO' Returning to the matter of Congressional about $46,650,000,000 on July i,:last, /This . studies of conflicting taxation, frorh which is a_ per capita debt of. about $3 70/ In I have somewhat/ digressed, I believe. it is England the per cupita, debt is approxi safe to say that the committees of the. Con mately $990. In the United States about gress deahrig with taxation will cantinu- 16 cents of every tax. dollar goes to the ally keep themselves informed as to.the payment of interest, on the public debt; .' existing facts/in connection w:ith this sub in England, about 3.3^;cents of feveryta x dol ject. It is my personal opinion that actual .\"- lar goes to interest charges. ' results in eliminating the evils of donflictV Fourth, as far as the federal: gbvernraerit ing taxation can best be. accomplished by is concerned, internal revenue receipts are . the fullest cooperation between these fed-' on the increase. Total internal revenue r-e- ^ eral committees and the state governments ceipts for the first seven ifionths of this..^ as represented by this assembly and. itS; fiscal yea:r are $334,000,000, or 24 per cent, ;comhiittees . .At least this seems true unless abovethecolleUiohs for the corresponding the Federal, Constitution is changed, for seven nionths of the preceding fiscal year. under that Constitution there is practically The principal increases are noted in con no bar to: the federal goverhment from levy nection with the income tax, estate tax, ing all forms of taxes'and practically no tobacco ta^, and liquor tax. The only de bar to the state governments except in, the crease in revenue of any consequence is in • case of import duties. In other words, no connection with the stock transfer tax. legal obstacle exists to prevent the present . Eifth,. instances of duplication of taxa- ' state of jduplicatjon of taxes on the same 'tion^on the same objects by the- federal gov object or to a further increase in such dupli ernment and the state governments are in cation, j : • . ' .' creasing under the pressure for more Furthermore, without a' constitutional revenue. In 1-932 we found 326 instances amendment, no. practicarplah of direct leg of. double taxation between the federal and islation has been devised whereby the Con .state governments. A rough count in the . gress can secure consistency and lihiforniity /spring of 1934 shows 883 instances of this in state taxes. nature. The increase in duplication is It seems to follow, therefore, that in the largely due to the imposition of liquor, taxes present situation the only immediate hope and sales taxes by the states.^ is for cooperative action by the federal and Sixth, aside from the increase of the tax state legislative bodies." There is real need, btirden in.recent years; there appears to be for this icopperation. an enormous increase.in the number of re , It ,i§imy sincere .hope that actual co turns, reports, and records required of the operation in taxation bet>yeen the federal taxpayer by the various federal, state and and state governments .will soon be a fact. local taxing units. The cost of making Personally, I look forward to the time when these returns and reports.and of keeping the committees of the Congress whom I the necessary records adds materially. to serve will instruct me to proceed with the the gross tax burden without increasing the investigation of methods of improving the revenues of the governments. Onlexamin- present' tax. maze. There is certainly no ing the federal and state tax calendar for lack of jwork in the tax field. In addition March, I find it would be quitfe possible to the problem of conflicting taxation, much lor a'corporation doing a nation-wide busi-r can be done in the field of simplification, •n

364' ^ THE BOOK OF THE STATES

,•;/:' ' 0 . '• .^Q .;.•. •• •;,.•• :• •; • ..,.<-; and much in the field of uiiifdrmity in state debt last July was about 27 b.ilUorr: The debt of the states and local governments It is perfectly obvious from the existing was about $19,600,000,000.; That is ^off faets. j^hat the tkx biirden must be heavy set by other assets of the government, . for some years to /come, it is especially HON. R. BEVERLEY HKRBERT (South necessary, therefore, -to spread J.his burden Carolina):. I would like to-ask Mr. Parker as equitably, as possible. With low rates if he can give us any idea what^those assets : of tax, conflicts and inequities are not were estrm'ated tcrbe worth, aside -from the seriously felt; With high rates, the same foreign debt and aside, from the public conflicts and inequities become almost un buildings. What values are there iii money bearable./This Assembly is to be con aidvanced for the home owners' loans, or gratulated on starting and continuing a other liquid assets of the government? movement which can not fail to be of final MR.' PARKER: I can't recall offhand, benefit to every citizen in the country as You can get accurate infijrmation on that well as to every governmental unitvtherein. point from a release of the Treasury some CHAIRMAN ONEAL: I desire to thank, two or three months ago, which jwent very • you oh the part of the Assembly for having thoroughly into that question. All I can come here and given us'this report, ;:'} recollect now is that it was approximately four billion dollars. ' - , •«• Discussion » CHAIRMAN ONEAL :. NoWi if the members r""'| , JUDGE JAMES M,G?iAHAM (Illinois): of the Assembly have any resolutions that The. speaker mentioned the fact that there they want to introduce and have referred to . was a public debt -of $46,000,000,000. I the Committee on-Resolutions^ they are in' . wx)uld^ like to inquire if that includes goy- order. A ' .ernment loans such as the HOLC and.other The resolutions 'were preseuti^d to- the . loans of that character, . . • . . Chairmart for reference ta the Resolutions.. MR. PARKER: It does include that, Committee, i . * 'JUDGE GRAH.AM: That isn't fair, is it; HON. HENRY LONG (Massachusetts): I to call that a public debt? rhove that we now adjourn.. . - MR. JPARKER: It is always set up in the The motion was seconded and approved. goyernment accounts that way.. The public The meeting adjourned at 4:10- p.hi.

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•/:' -. /?k3» Saturday Morning Session : ' .:-^ A%ch'2,J9J5. •; : ;

HE ^meeting was called to order at would not feel comfortable if I faiJed to 9:30 by Senator Toll. ; record my dissenti fj0 T SENATOR TOLL: You will recall that Speaker Belknap assuni^'fiie cfiajr. at yesterday's session, in connection with the address of Mayor Speer of Wilmington, PRESIDENTIAL/ADDRESS BY Delaware, Judge Graham of Illinois re-" ". WILLIAM B. B>^LkNAp quested to be recognized, but on accountiof .> I happen to be the first speaker on the complications in the program at that time ; program, to give you' my annual" address. it was impossible to do so. As the first It;has been my good pleasure to.be Presi matter to be taken care of this morning dent of the American Legislators' Associa I wish to recognize Judge' Graham of the tion for three years. .I./'hope and believe Illinois delegation, X" that Mr.^Toll, and the rest of you, are JUDGE JAMES AI. GRAHAM .(Illinois): I going to find somebody to take my |)lace, \yant to compliment the authpr of the as I do not înk it is healthy for one man manuscript. It wâs very cleverly arranged, to hold office too Jong, and there is cer his position, was very well fortified by facts tainly plenty of talent in this organization. . and cogently argued. If one were to con I have been very proud and am very cede his premises, he could hardly avoid proud to have held this positjon. The or his conclusion. The point to his paper ganization has gone fotwatli more than you Vwas that we had too riiany taxing and col who have come here for the first time can lecting agencies,; federal,, state and . local,-^;Tealize . ' •; 7 and he urgfed^that one, instead of three or tnore, should fi^ve control. His conclusion . ; Progress : .. • ,{• •was, in substance, that he hoped.the fed- Hgral government vtould collect all taxes and \Ve still have a very long wayto go. lMy distribute them among the states. That guess is that we will always, have a^ long was the point to which I tookêxception way to go if we are a "live" organization. and concerning which I wanted to put my Those of us who have watched from th.e ' prot^t on 5ê. . . " . beginning are very thankful and can but " The writer of the paper, omjtted a very marvel to see how far we have come. We important, a controlling factor. It is not . have seen the Interstate Reference Bureau ., alone a, question of the economical collec grow from liothing but an idea to the place', tion and distribution of taxes^. There is a where it serves hundreds of legislators-an ver3' important political question mixed up nually with information needed for the pro- ifl it,—^the effect ..it would have Bn our sys- ductibn of better legislation. We have seeri ' tem of government. .. STATE GOVERNMENT grow frorn something; This procedure, if. followed, would take ;. little more than a pamphlet.to one of the. the taxing power from the states—the col most'used and respected magazines in the lecting and disbursepient of taxes—and §ive nation. ' it to the federal government, a lohg stride We-have seen the growth of regional • backwards. Let me emphiasize that home meetings, truck and bus conferences aiidi,,: rule—state sovereignty, if you please—is other meetings, arid we have seen the states "^ the real secret of political liberty. • take up that idea and carry it through in For that reason I could not give my as- their own way, w;hich is, after all, what we ' sent to the logic of the very excellent paper want. We have seen' pre-sessiori confer which \yas read jbefore us yesterday and I ences started, and I want to say to those

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FLAGS <)F THE FORTY-EIGHT The promenade oj the May flower Hotel in Washington, was converted into an avenue oj state banners - on the occasion oj the Second Interstate Assctnbly. ,.;,.. . SA TURD A Y MORNING SESSION 367 of you who have never tried a pre-sessidn 'if I should accept and be elected it wouldn't • legislative conference that you have no idea, I be two months until my children would,be what a help it-is to a legislature to ge^ the ^ ^coming home, in tears-, saying that thechil-, members together before the heat is^j gerir : dren at.school had said their father was a ' erated and while there is still some light. \ liar, arid had proved it by showing it to . ' .Certainly, if we have done nothing but start '• them in the newspaper." . the idea of pre-session inferences,! oun Of course one of the outstanding objects . ^whole existence has been justified. ' • • -5 of this Association is the desire to effect , The Interstate Assembly, born two y&ars cooperation both between the states and ago, has shown healthy growth and'the- I between the states and the nation. I think work of the Commission on Conflicting we have already awakened a very real Taxation, which it created, is sorhething sentiment'in that direction. • that we will feel more and more proud of as time goes on. It is going to take you, Behin^ the Scenes who have not worked with the material . I want to answer a few of the questions " they have gathered together, some time to that have comje to nie from some of the appreciate ihe significance of ^^^hat they people who have been here for the first- have aceumulated^ in^.the way of tabular - time, and sotne who have been here before, facts and supporting text material. as to what this organization really is, I have no doubt there are men here who have. Respect for Legislators • ^no more than a-general idea as to the. Along with these more tangible achieve-, mechanics of the American Legislators' As ments we have worked to rebuild respect sociation, and there are others'n^^th whom for legislators. You know,' and the law its project is rather' a nebulous idea. "\Vhen makers, both national and state know, that you go home you are going to be asked •, it has cdmQ to be the fashion to make a who, what and why. ' . ' "' joke of all lawmakers.' This disrespect Senator Henry Toll is the man who is has become a very'dangerous thing in our responsible for starting the organization, civilization. One of. our best public writers , but he, his Board of Managers, and his staff • . has said that it is the seed of the growth have honestly tried to make it a ..democratic of an idea which will destroy all "democracy, organization and have tried to thrbw upon ' that by the time the newspapers and the the members -all the responsibility they." press, in general, have achieved their ap>- would take. ; •. parent goal of destroying all respect for All of us have fought to keep the Amer anyone who holds public office, the.people's ican Legislators' Association free from » faith in ^government will be entirely dead • propaganda and partisanship. I don't |>now v and the governments will disappear. That whether you realize how hard it is to get is a pretty strong statement, and yet if away from this idea of propaganda. The you; will think ,it over I believe you will American Legislators' .'\ss.ociation has, I agree that there is a very real danger in the think very rightly, felt that it is a service • continued derogatory remarks about legis organization to and for legislators. There lators. • has been no attempt to sell ideas to the gen- . -• It' might interest some, of you to know • eral public" in America. We have enough that i was informed, on very good evidence, • propaganda organizations in this country , that in one of our largest cities people were to supply the'whole world.. That is not looking for the highest type mayor they what, we need. What we need is what I . could get. A committee of the best citi-. think we have,.a highly professional group zens was forined to try to persuade the in-\ of men. interested in the betterment of their dividual selected to.run. The first sixteen profession. . ' men approached. all refused to be candi When it comes to the point where we have i dates, and all gave the same reason. Every to deal .with controversial subjects, we have , man approached- said he was unwilling to : tried, as far as possible, to divorce them subjett himself to the abuse of the press-. from the American Legislators' Association As one man remarked, "I l\ê a happy; through the mechanism of the Interstate honie, I have a wife and three children and Assembly and the various commissions'ap- 368 THE BOOK OF THE STATES pointed by it. When a report is issued, in to have a ver^^ considerable say in how favor of some particular proposal, it is not things should be done, „ • sent from the American ^legislators' Asso- However, with all-due respect to the Spel- ciation but it is issued through^ some spe- man Find,*'! feel that if we are to main- cifically'named group such as the Inter- tain our self-respect, we must go to our state Cohimission pn Conflicting Taxation. . own states for financial backing. It is the These groups must take personal responsi- states' business and the federal govern- bility for what is said or written since we; ment's business to support this organiza don't pretend to involve'people who have tion, which is filling a need that is not met / •never individually committed themselves . by our governments at present. : ;on the subject.. . ' Therefore," I arri going to urge, upon you as seriously as I know how, to try to help The Coiincil of State Governments us get the proper appropriations from your . Our experience with the First Interstate state. One-man with whom Iwas talking Assembly made lis reahze that in order to at breakfast this morning said, 'T don't maintain the necessary continuity and sta believe our state can afford to do. this, but bility, we must bring into our Kr,dup. some I don't believe it carrrafford not to do it,'' of the administrators \yith whom we are con .•\nd that has been my attitude. Many of stantly associatedin our own state capitals. the states are in grave financial difficulties, Therefore,. the Gouncil of State Govern- but you cannot afford to be without a good; "ments took form and we are making an docto." when you are sick, and without ay earnest effort,to associate with us in this good .lawyer when you are, in trouble, and broader organization the National Associa you ^cannot afford to be without the serv tion of Attorneys-General, the National ices *of this orgariizationûn'der'the present Association of'; Secretaries of States, and governmental condition;-. the various other associations of state I do not wish to create the impression . officials which-, are trying to better 6 state that this is a request for charity. I put it government. , up to you, as members of this organization, ' You all know the terrific turnover in the to see that it.gets the support to which it . membershipof state legislatures. You real- is rightfully entitled. You are giving your . ize that before the next Interstate Assembly time and your energy, and many other meets, many of us may be in the political people are giving their time and their Great Beyond. Yet we niust keep this energies," to- this organization! , Certainly organization going, continuously. We have the'nation can afford to pay the mere oper been very fortunate in getting such men as ating expenses, if people will give of their Mr; Long of Massachusetts and Mr. Graves time and energies as they have given and • of New York to rhaintain active interest in are giving without any compensation. this movement, and such men'^stipply the We are asking that the states appropriate necessary continuity.. : an average of $2,000; .each, annually, in order that we may feet that we can say Financing • definitely to the states, "This is your own All of this was originally financed by pri organization, you are paying for it, and vate subscription, but I want to say frankly you are going to.get out- of it what you that most of our activities in recent years put into it." have been financed through the great gen So. much for the me~chanics—the things erosity of the SpelmanyEuiiil. It has been going; on behind the scenes. They have a wonderful thing to see how, generous the never been hidden .from you 'but some of •Spelman Fund has been with us and how you have never taken the trouble to co.pie « completely they have allowed us to form around back of the curtain and see how we our own plans. The administrators of this were working and why. ' fund have never embarrassed us In anyway by making suggestions as to how the or : Plans for the Future ganization should be run. So often,, wh^n As to the futurd; I want to say th^t I. ,.you-take money from some private or serni- would like to see this Assembly made.an public. source,- that source claims, the right annual affair. But more, immediately, I SATURDAY MORNING SESSION 369, want.to see several regional secretaries put X have tried this morning to give you. a in the field. You know that no legislator friendly talk on what we are trying to do ever reads his mail. If he did-r-well, if and why we are here. I want to thank you he reads his mail he is no legislator because sincerely for your presence. It has been he can'^dp both. The only way that we a great pleasure to be your President and can mould a real organization of state legis I hope to meet all of you many times lators is by personal conti^t. again. I am now going to ask a man who What we need is a man in New England is taking a real interest in this work to and a man in the southern states and other talk to us. He is Presideht.of the National men in regions throughout the country who Association of_. Attorneys General. I. want will go from state capital to state capital . to call on General Ernest L. Averill to come : while the legislatures are in session, keep up and address the Assembly. " them together and in agreement before they get into snarls. If some legislator is going ADDRESS BY ERNEST L. AVERILL - to introduce.a bill, the. secretary for his It is indeed a pleasure to have the oppor region can bring to his attention the fact tunity of meeting with you. I have had that information on that particular piece of occasiori to recaill the First Interstate As-, intricate legislation may be obtained "from sembly, for at that time I was a member the Interstate Reference Bureau. These • of. the Connecticut General AssemWy. I secretaries can encourage the states that recall very distinctly attending that con have not done so to provide themselves ference, called by.the American Legislators' with a state legislative reference bureau. Association. The meeting was smaller in All of such types of personal service are ^numbers than this but the idea was there; vital if we are to reach top-notch efficiency. it has grown, and it is a wonderful success. I want to see us bring out a Book of the "The powers not delegated to the United States every year. However, instead of States by the Constitution, nor prohibited one small.volume, made up.of a good deal by it to the states, are reserved to the states of reprinted material from our very excel respectively, or to the people." lent magazine, I want to see a number of It is this, principle of our system of gov volumes every year, serving as a states ernment which-prorppts us-lo gather in this man's jByea r book. You will then have on Interstate .'\ssemblv. There appears to be your dfsk in the legislative chamber a ref- general anxiety ^mong the states" because erence book in which• you can find the th' e pi •^.vailin. .,. «g tendenc. , y of- th, e federa, .j l. gov- various names and offices and arrangements 'ernment is to infringe upon the j reserved • in other states, so that you can be rnore powers of the respective states. This is not intelligent legislators with less loss of time. an unnatural phenomenon.; It is the tend I hope to see a great development of ency of all - governmental agencies to ex regional meetings on vital subjects of legis pand and develop until stopped of limited lation. by the people who support the government. I want to see the..enactmient of interstate Sometirhes the judicial branch of thie gov compacts with respectlo rnuch of the evil ernment may supply the limit through an competition between states. I want to see interpretation of the constitution.' the organization of pre-session legislative con ferences. in every state. I want to see States' Rights a development in the idea of binding more If the' states are to preserve their re closely together the administrative officials served powers, they must .recognize and be with' our American Legislators' Association, wilh'ng to assume'the responsibilities which in line with the objectives of the^ Council this section of our Constitution implies. It of State Governments. .Arid I want this will not suffice that we declaim in favor Assembly to have available the furids which of "States'; Rights." The states must see are reguired. to make studies along other to it that the reserved powers are.actually, lines, of state conflicts, as it has "made in utilized. to the e.xtent dernanded by the taxation; It also ought to have funds to people of the respective states. - make studies of necessary legislation where One serious question we rhay all ask our no con. It is such gatherings as this which should public health, motor vehicle regulation, fdrnish the-inspiration to the legislators of high\yays, and criminal administration are the several states, ,the governors and the but some of the many subjects which find " administrative ofi^cials to strengthen the their way into the office of the attoêy state governments _and resist all efforts to •general. ' ' .; • ; usurp their reserved powers under the Con In most states these officers are elective stitution. Should the states desire to divesvest officials, and the turnover.is large. In look . themselves bf some of these powers, fetle t ing over the 1,935 list of attorneys general. . the, transfer be made openly, knowingly, . we find but two who were in office seyen and as the Constitution itself proyides^—by years ago. iNIany have graduated to the amendment: - bench, some have gone to other.positions in One cannot attend a gathering such as • the government—others have resumed pri . this, meet the representatives of all of the vate jiractice. other states of the Union, and discuss prob^ This mortality is probably equalled if - lems of state government with thern with not exceeded" in the other lists of elective out feeling that he has received an educa officials. It is an added reason why there- tion. But why should not the administrative should be available somewhere a permanent officials of the several states have some; con record of their official activities. A con tact throughout the year? All state offi- tribution of extraordinary value to the "cials should welcome the experience of strength of state governments would be others who. are engaged in similar govern '. made if this information could be.lodged mental activities. , . in one place and"made available to the ad ministrative officials of the several states. Attorneys Generdl It is not contemplated that all states Speaking specifically as to the offices ot • should be standardized. 'Frequently, opin the attorneys general, it; is most unfor ions of attorneys general'wiU differ. „It is tunate that there never has existed a cen- •proper that such should be the ease. It is^' . tral clearing house for opinions of" the the information, which is valuable. When several attorneys-general. It is only, by supplied, it still remains the responsibility chance, many times, that it is discovered of-the administering officer to place his own that the question, which demands solution interpretation upon the question presented. has already received the attention , of a Too much emphasis however, cannot "be. neighboring attorney-general, • or perhaps placed upon the necessity of furnishing to one who is hundreds of miles distant. our state administrators a greater' oppor No occupant of that office is big enough tunity to consider and Aveigh the opinions, to master all of the legal problems pre-: reasoning, .and suggestions of the-other state sented for solution. The reasoning, the administrators. thought, and the expression of others in like It is the hope of the Association which position should be eyer welcome. \I represent, that through the Council of To the office of attorney general come State Governments such a plan may be some of the problehis of every department worked out. It is one forward step in ffiio f state government. Many questions are , furnishing the.service to the taxpayer which of such importance and of such far reach he so richly deserves. It will help to. de- ing effect that the utmost care should be . velop .the. strength which is needed to en given to the decision. If a„closer. contact able our states to administer their reserved should exist between the legal departments powers wisely and adequately, and to with of the several states, similar problems could stand any effort-designed to impair such be solved by the combined ability of sev rights.: „, . . .^ :- ::_ • eral officials' solution'..., SPEAKER BELKN.iVP: I am now going to •* y:-)-

SA TURDAY MORNING SESSION 371 call on'Tionorable Enoch D. Fuller, 'Presi can be established. . Arid such social cour dent of the National Association of Secre tact and understandirig is a prerequisite taries of State. It will give us great to a successfuTbusiness session; The policy pleasure, I know, to hear from ^Ir. Fuller. of meeting/in various parts of the country has the advantage of creating regional inter ADDRESS BY ENOCH D. FULLER est, although a central location might ^vwell It is a great pleasure for me to be here result in a better attended convention. today arid to represent the National Asso In 1933, our ^ National Association ciation of Secretaries of State. I bring you, adopted a resolution which coincides wdth as its Piresident,. the greetings of the. or 'the purposes of the Council of State ganization. , • ."•• Governments. The resolution dealt wath The Secretaries of State have a national conflicting . legislation, regulations, and organization with which active or former practices in the departmeftLs of. state. Co Secretaries of State may.becom.e affiliated.t ordination and better cooperatjon between The Association has-held seventeen annual the Secretaries'of the several, states wa^ conventions in various cities.of the United recommended. A committee of six mem States. Naturally, because of'the vaftous bers was named at that time,—each one of methods of election or appointment, our whom was asked to make, a survey in a .membership undergoes many changes from group of eight states, in order to determine year to year. Oiir officers are elected the duties, practices and. regulations in the annually.. The purpose of the Association. separate departments of state. A rqport is to discuss and formulate such plans as of this study will bferiiade at. our. next con may, from time to time, be; thought de'sir- vention, in August, 1935. •• ;, ,. able about these or other .departments of. The National Association of Secretaries state goyernments. • .. . of State will have my personal report oh In generaljjSecretaries of States' duties' the Triple Board meeting held in January,, have to do with k'eepihg the official records and on this Second. Interstate Assembly. F of the state; cooperating \yith the executive assure you that our Association will be glad department of the state government; serv to. cooperate with the Council of State ing as custodian of the great seal of the Governments aricF the American Legisla state; attesting official signatures, docu tors' Association on any constructive subr ments and records; issuing commissions; ject that might be suggested. recording bonds and notes; preserving his ; SPE.AKE.R BELKX.AP: At this time I'am torical, data arid records; determining the going to call on the Chairman of the Resolu procedure of the legisbjtive bodies; admin tions Committee, to make his report. This istering election laws; ^ipervising the regis is, of course, one of the very important tration of business corporations; and in parts of the whole meeting..^ . '. numerable, other admmistrative duties. Some secretaries have - camplete charge of ' T'HE-RESOLUTIONS:^ .. motor vehicle registrationW and regulation, HON. JM.\RK GR.AVES (New York): As as well asof-the state police systems. was to be expected, a great variety of resolu .. The suggestion of a joint conference of tions was iritroduced. The. Resolutions all the state officjals has been macle. My Committee has worked' rather assiduously personal opinion is that meetings of.smallkr at its task. We still have some resolutions groups of persons with subjects and discus which have'not been acted upon. There sions confined . to those in which the par fore, with the indulgence of the Assembly, ticular group is directly pterested, are we shall report on as many as we can at likely to produce better results than meet this time.' I think the consideration and ings where a wide range of subjects—mariy adoption or rejection of these resolutions of which would be on matters foreign to the will consume some little time and we ask interests of the groups—might be discussed. A closer interest 'in the business of the * These, resolutions are .printed separately "in session can.be maintained when the group the transcript. Those which were formally ap-' is smaller. Closer personal contact from proved by. the Assembly were collectively "reprinted on pages 100-lOS of the April iissue'oi f STATE a'^sociai'as ,well as a business viewpoint GOVERNMENT. .

\ •• 372 THE-:.BOOK OF THE S^A TES perrnissionlb come before you later in the JUDGE OSCAR LESER (Maryland): As I afternoon with the remainder of our report. understand it, ti^is doesn't prevent the The group- of resolutions first presented government from keeping on with its road originated with the Interstate Commission building program, which it started long be on Conflicting Taxation-. That Commis fore it had a one cent gasoline tax. sion, as y oil know, has been working during ' Ho?j. W. H. P'GARA (Nebraska): I the past two years, • It has held several would like to say ttiat the federal govern meetings, seven in number, I believg, and, ment has outlined its plan for road build after studying various subjects, it has de ing for the coming year, and as I under veloped conclusions which are merged into stand this the federal government, is asked the resolutions which I shall now present to to.retire the first of June, is it not? you.. The method of presentation which :. MR, GRAVES: Decidedly rnbt. . As the the committee has decided upon will be to gentleman from Maryland has very aptly get what are perhaps the least controversial pointed out, the federal government spent measures but of the way at the beginning. hundreds of millions of dollars on a federal The first one has to do with the gasoline tax. aid highway building program before it ever SPEAKER BELKNAP : I rnust intercede for, . imposed any motor fuel tax. The com-' a moment and ask for the report of, the pliance by the federal government with.this Credentials Committee, so that only those resolution:has no bearing either,directly or who are accredited, official delegates will Be indirectly on the_federal' fiighway aid' pro- recognized in the votihg. grani- .SPEAKER BELKNAP REPORT OF CREDENTIALS COMMITTEE : Is there any further Thc'report oj the Credentials Committee. discussion?. . : was read by Senator .Oneal,and. iirtani- HON. SIMEON E.LELAND (Illinois): I niously adopted} . would like to say a word against the resolu tion, I haven't any particular interest in SPEAKER BELKNAP: .Will you proceed, Mr; Graves? the matter as it relates to ,the finances of

.-•••'. - f. '- . .A ' ; :. • the highways, but as 'a tax prograni there .Motor Fuel Taxation is some advantage in.allowing the federal governrhent to continue this experiment MR. GRAVES: '^RESOLVED, that it is . until such time . as it can demonstrate the sense'of the Second Interstate Assembly ' whether it is more efficient in the collection that the federal government retire not later of gasoline taxes than are the states. than June 30, 1935, from the field of motor SENATOR GEORGE WooDWARb (Pennsyl fuel taxation ;and leave that field for the vania) : Sixteen states have already me exclusive use of the states and their locali morialized Congress to. this effect. ties." . ' .' HON. RALPH GILBERT (Kentucky): We • That, resolution is reported as being ni.ight consider this resolution with a little unanimously favored ..by your .Committee caution, hot so. much on its practical opera on Resolutions. I offer this resolution and tions as- its possible effects in pointing the move its ac|option. • .way to a uniform system of taxation. There SPEAKER BELKNAP: YOU have heard the is considerable thought that all sales taxes resolution that the' federal government should be national. The cbnllict of states shoulid abandon the field of motor fuel would indicate, that if it could be brought taxation. Is therie a second to that mo to a practical solution, the federal, govern tion?: ment perhaps would be the best agency for •' The motion was seconded by Mr. O'Gara collecting a sales tax. Now a gasoline tax of Nebraska. • is nothing but a sales tax. To adopt this Discussion resolution, which I am in fayor. of adopts .SPEAKER BELKNAP: Is there any discus ing, might throw some light on the ques- sion? The question has been called for. - tion when we reach itj of sales taxes in general; . VThc names oLaccredited official delegates iare HON. HENRY LONG .(Massachuseltts): starred in; the roster of partidpating members of; the Assembly at the -beginning of this There seem to me to be three reasons why transcript. \ this resolution ^ should be unanimously SA TURD AY MORNING SESSION 373 r^. adopted: first, it will permit local com The Resolutions Committee presents thig' munities to .get money from their own resolution and moves its adoption. citizens, who will be directly benefited; The fuotion was regularly seconded.; secondly, the simplicity of the tax, the com-, SPEAKER BELKNAP: IS there any discus parative ease with which it is administered sion on this resolution? I am going to ask and the smiall cost to the local communities; Mr. Graves for my benefit to tell rne, in his and thirdly, the very thing ^ve want above own words, 'just what this riesolution. im-^ all else, namely, to have the federal govern- • plies. ment retire from a field of taxation which MR. GRAVES: In 1934, ,when the. federal is purely local. government enacted a federal highway act SENATOR BEN G. ONEAL (Texas): I pursuant to which moneys were' made avail agree with Mr. Long entirely. The Chair able for. highway . improvements within man of. the United States Senate Finance states, it laid down a condition that no state Committee has recommended thtt the could receive any of this federal money if federal government gej. out of the field of it should thereafter divert any of the reve- - gasoline taxation. That recommendation ni^e received from the registration fees of was made shdrUy after tlie Int.er_state Com motor vehicles or from niotor fuel taxes to n^ mission on Conflicting Taxation had a con other phrposes of government. In othier ference with the Finance Comniittee, So words, if a state, after the enactment of that one body of Congresshas already gone on' federal highway act, should divert any record in favor of the federal government irigre of what I will call motor-user taxes to . abandoning this field of taxation and leav other purposesof government rather than to ing it to the states. spend them on^wthe highways of the state, SPEAKER BELKNAP: Are you ready to such, a state could not receive any federal vote on th|e resolution? Unless there is a aid;for highways. • close vote, we would save a lot of time by HON. WALTER G. QUERY (Sout^ Caro an aye and nay vote. If there is any ques- lina): .What-is the purpose of this resolu ' tjpn at all, Twill call for a roll call. tion? I underistand the'statement but what .Those in favor of this resolution will say does the resolution say? Do we want the "aye; "opposed "no." If anybody desires federal government to quit dictating how we it, he can .have a roll call. That not being shall use the money?. the case, I declare the Resolution adopted.. MR. GRAVES: Precisely. . MR. QUERY (South Caroiina): Tf that^ Federal Highway Act is the purpose of the resolution, it seems to'" MR. GRAVES: The second resolution is me somewhat out of place, because if the related to the one which you haVe just acted federal government gives us money for use upon; and it is to this effect: "The Second on the highways it should be used that way .. Interstate Assembly calls to the attention of and not for ordinary governmental pur - Congress and the state legislatures jthe poses. . .__^ . principle incorporated in Section 12 of the HON. HAROLD H. BARKER (Minnesota): Federal Highway Act. of 1934. The As- It seems to me that this refers to the sembly seriously questions the desirability HaydenTCaftwright Act, which provides of this form of federal control of state that in case you divert money you can only financialand adminisfrative machinery. receive two-thirds of the amount granted . "In this section. Congress undertook to by the federal government. They dp not direct the expenditure of state revenues as a do away with the allotment entirely but condition for receiving federal highway aid. give you two-thirds of the grant you would Further diversion of motor vehicle tax or have received if yoii had not diverted. It gas funds by state governments is in effect seems to rne the resolution should be cor prohibited. This provision constitutes an rected to have a corriect statement of fact. unprecedented federal interference with SPEAKER: BELKNAP: That is all stated state fiscal policy, an.interference to which properly in the resolution, but was not the attention of the Interstate Assembly brought out clearly, apparently, in the dis may well be directed. A copy of this sec- cussion. Now is there any further^discus- tion is appended hereto." - sion on this point? • 374 THE BOOK OF THE STATES

,; -'HON. HENRY D. WATENPAUGH; (Wyo vehicle taxes for road purposes, you cannot ming): I am opposed to this resolution. It expect the federal government to grant you / seems to me that the statement made by Mr. money for this purpose.'-' • -Long a moment ago is very pertinent to this Now personally, I see nothing .wrong with ^ 'resolution and is really an argument against that and I think it is perhaps unfair to motor fuel taxes,which have been used by adopt- a resolution asking the repeal of this . the states for the building of roads, and-.. particular section which is put in there for .:• properly speaking might not even be the purpose of protecting the federal funds. termed a tax. It seems to me that Congress In other words, it doesn't appear to me to acted very wisely in making this provision be wrong for Congress to say to a state", ''If ^ and that the motorist is entitled to a legiti-- you divert any or all of„your gasoline and. ,',.'" mate complaint if motor fuel taxes are taken motor vehicle money, then we will not give for general governmental purposes instead you any federal money^" \ of. being used for the purposes for which .If. I understand- the resolution correctly;, ; they Were originally designed. and.I believe I do now, I do not feel that SENATOR GEORGE WOODWARD"(Pennsyl the resolufion should be adopted, as I feel vania): It seems to me that the creatio; th^t there is nothing at all,unfair in this of special funds in any of oiir states is . provision of Section 12 of the-Act at which ; more or less;of an insult to the intelligence I understand this resolution is directed.: ;of the members of the legislature. In MR. PARKMAN (Massachusetts): The Pennsylvania, we have diverted, and hope to/ question of road building," the question of continue to divert, our motor money for ma;tching federal funds with.,state funds is any.purpose that we desire. something entirely separate and_.distinct_. •JUDGE OSCAR LESER .(Maryland):''! from -the section involved"hereT This sec think this resolution brings up a'very im-. tion in the federal Act is simply a vicious portant; subject. I agree thoroughly with interference on the part of the' federal Dr. Woodward that it is a vicious thing to government with the fiscal policy of the delegate revenues from a partic,y|ar source states and as such it seems to me the Resolu !i^, for a particular purpose. Revenues should tions Committee is quite right in approving go into the general treasury and be.ap-. a resolution which condemns that procedure. propriated in amounts suitable and ade JUDGE JAMES M. GRAHAM (Illinois): I quate'for the purposes involved. We do am very heartily in favor of the resolution. not; dedicate the gross receipts from the . The wholescheme on'the partpf the federal • tax on railroads to the railroads. If you government, sometimes referred to as the followed that plan, you would not g^t any fifty-iifty plan is an unworthy attempt on where.. '" '^ _. the pact of,the Xederal government to in • " •. HON. R^\RL R,' LEWIS- (Ohio).: As I fluence state policy by indirection.-. , understand it, the resolution condemns the • HON. wrLLi.AM E, ROGERS (Kentucky): .assumption by Congress of the right, It occurs to me that this principle is ' ;.• through control, of^grants-in-aid to deter- thoroughly sound. I think the jefeat of the ...•:'' mine state policies with respect to the dis resolution would be an admission that the tribution of income, from taxation in the sfates, through their respective la.wmaking -I several states. The thing "^t which the bodies, are not qualified to allocate the resolution is aimed, as I understood it, is taxes collected bythose respective states. . ' federal attempts to control slate policy,^^. HON. HAROLD H. B.ARKER (INIinnesota): arid it strikes at an evil that is apparently I agree with the general principle, of the ; growing in federal legislation, an assump resolution, that Congress should not tell the. tion on the part of the national Congress of states how they should spend money ap the determining of policies which, under ^ propriated by themselves, nor for that our dual form of government, should reside • matter furnished by the federal government, in the several state legislatures. ! but I do-not like to have that resolution tied HON. MYRON B. GESSAMAN (Ohio): As up with this particular provision of the. r read this, Section 12. of the Hayden- Hayden-Cartwright Act. In Minnesota, Cartwright Act merely says to a state, "If we do not believe in diverting money raised • you do not use your gasolihe and your motor ' by the motor .vehicle tax or the gasoline tax. SATURDAY MORNING SESSION 375 HoN.'SELDENjoHNsfON (Connecticut): governmenf'can do is to insist that the I have just one thought to add, and that is, amounts they are willing to match be spent ». \ this federal fund that*is distriJDuted arhong on highways. I call for the question.. ' the states comes from the states. It is, not HON. J. H! THAYER MARTIN (New a fund that is taken out of the air. The Jersey): New.Jersey collects some ot itsj federal government proposes to say that^.a gasoline tax from motor boat users. If particular state, having theoretically paid "New Jiersey chooses to diyert, as th^y call its proportion into the fund, shall not ^et it, some of.this gasoline tax from road.pur- that money back unless the state submits poses tb the benefit of the motor boat users to the interference by the federal govern- in iniprovingXwaferways, that is none of ment as to how that'money shall be sperit the business of "any other state in the Union within the state.; . ; .. or of the .Congress, of the United States. HON. FRANCIS J. MCCAFFREY (New New Jersey is very heartily in favor of: this .York): We may get a-bit of light,on the resolution.: ,. effect of this provision in the Hayden- SPEAKER BELKNAP: I am going.to put Cartwright bill if we consider its applica the question. Those in favor will say tion to the State of New York. We have ."aye'-; opposed, "no." The resolution is a comparatively good highway system, we carried. , ' . V are raising S100JOOO,000'a year from motor MR. GRAVES: lanvsure it is gratifying vehicle fees and motor fuel taxation. It to thepresident of the American, Legis would be an absurdity,to spend,$100,000,- lators' Association, as well as to th^Chair- 000 a year on our roads. We are ^penSing man of the Resolutions Committee, that a very considerable amount—I think we these resolutions are so thought-provoking more, than match the federal aid—but to and that their discussion is being ap- go on and spend,another eighty or ninety proached in such an intelligent fashion. The million dollars a year on our roads would next resolution is also sponsored .by the be an absurdity. If you apply that prin Interstate Commission on Contacting Tax ciple you. will'see the viciousness of de ation. It reacls: . creasing the grant of federal aid, in case all "RESOLVEDJ that it is the sense of the Q motor vehicle and fuel ta.xes are'not used Second Interstate Assembly - that no ad solely for road construction. ditional tobacco taxes be adopted by the' 1. SENATOR CLYDE W- CQFFMAN (Kansas): states for revenue purposes."; ••,". Just a' word in regard to this diversion of I might 2tdd that the "Interstate Commis funds.. I think it is of Course generally sion arrived at that conclusion from this understood that the primary purpose of a angle: traditionally, indirect taxes like the gasoline tax is.for expenditure on roads. tobacco tax and taxes on tobacco prbducts,: I'want to say that in Kansas, technically j were the field of the federal goyernment. we levy our ta.x: on the use of motor fuels The states have not been very successful on highways, and it is niy opinion that the. in-theadmiriistration of such taxes and per- federal government has a right.to demand haps should look, in' time, toward with- that this money be spent on. highways in drawal from that field. Although this reso order to get their grant, and T.shall vote lution does not require it, it expresses it • against the resolution. as the sense of the Interstate Commission HON. SIMEON E.LELAND (Illinois): The that no additional taxes on tobacco and purpose of' taxes is to raise revenue and tobacco products be levied. , it isn't to raise revenue for any particular The Resolutions Committee offers this activity which the legislature decides to resolution and moves its adoption, add to, the act imposing the tax. There is HON. HENRY F. LONG. (Massachusetts): nothing any more sacred about highway May I""ask Mr. Graves a question? Did funds than any other fund and sound fiscal the Resolutions Committee mean by the. considerations require that funds should be use of the words "additional taxes" the put into, the public treasury and that they adding of additional levies in the states should be spent out of it according to. the that now have tobacco taxes, or did it needs and requirements of the government. mean that no new states sboulcl come into In this particular case the least the fedffal the tobacco tax field, and does it also mean

•«*o 376 THE BOOK OF THE STATES that the states now levying such taxes-can federal government to get out of certain do so as long as they don't add any addi fields of taxation by saying, "Stay out of tional levies on tobacco? that and we will keep everything, that -we MR. GRAVES: The Resolutions Commit have." They have had the' tobacco tax tee inherited this resolution from the Inter field since 1794 or ''96, and the liquor field state Commission on Conflicting Taxation. just as long. We find the states going It is a little difficult to Undertake t6; say into those fields. The federal government what the Interstate Comriiission may have did not go ipto the gasoline tax field until had in mind, but by "no additional tobacco most of the states had gone into it. The taxes" I infer that it means no new ones same thing is true with electricar energy and no increases in tobacco tax rates. : I ^taxes;. • • ^.; • ' : infer, also, that the Commission realized I am calling your attention to all. the that ;Until there was a better integration recommendations to show you.that it was and harmonization of the federal and state an attempt to balance our program and ' revenue.systems, the\states now in the to that the Commission arrived at these con bacco tax field would of course remain, clusions on more than one ground. We and .there is no suggestion or compulsion considered the historical situation ^with that they withdraw from that, field. reference to taxation in these fields. We SENATOR MCMILLAN LEWIS (Missouri): considered also the use of the revenue from t am in hearty accord with this^ agreement those commodities that are* taxed. In de but I would like to say that in our state veloping the subject that way we arrived we have ,n6 tax on tobacco and, I want at the four conclusions, or-recommendations; to repeat, I am not in favor of tfie states which went before the Resolutions Com going into the tobacco tax field. If ,you mittee. I feel that to get a broad view of pass this resolution,** however, it will work thework of the Commission, this statement an injustice on the states that do not have' should be made. a tobacco tax at present. SPEAKER B ELKNAP : What is your pleas- . SENATOR BEN G.; ONEAL (Texas): In ure with regard to this resolution? view of the fact that the Interstate Com It u'as regularly wovcd and seconded . mission on Conflicting Taxation is being from fJic floor that the resolution be • •brought into the discussion, I b&lieve that adopted. in fairness to the work of that Commission SPEAKER BELKNAP: IS there any more ,the several recommendations made by them discussion of Jt? should come in her^at one time; The re HON. WILLIAM E. ROGERS (Kentucky): port of the Commission suggests that the" Tobacco is the chief crop of the farmers federal government get out of the gasoline in my state, and certainly we jndorse this tax field and cease levying taxes on electrical resolution.: ."^ ^ energy;. The report then suggests that the . HON, SIMEON E. LELAND (Illinois).:' states get out of the liquor tax field and There is nothing in the evidence on tobacco out of the tobacco tax field. taxation to indicate that the burden..Bfva.,. We \yere seeking a way to avoid conflict- : th.is" tax isborne by theTarmer, nor is there ing taxation. We feltthat.if we'couFd'^find any evidence, so far as you can gain from, a reasonable basis upon which we could the tobacco companies or other people, as. ask the federal government -to withdraw . to the effect of tax rates upon the consump- ; from certain fields and leavevthose definitely tion of tobacco products. It is generally to the states,, and then ask the states to. believed, and believed clearly on all the stay out of other fields and leave those defi reputable evidence that can be assembled, nitely to the federal government, we iH'at tobacco is one of the products that a woukLbe accomplishing, to a degree, what man will use whether or not it is taxed. Its we started out to do. V use is not affected by the amount of taxes If we take these recommendations piece imposed upon it. meal, I am afraid that the delegates here The level of tobacco taxation -in this will, not understand just how the Commis counti-y is very low compared to the level sion arrived at. its conclusions and. recom abroad. The per capita ^tati6tics for the mendations. Manifestly, we can't ask the . vield of tobacco taxation in the United "^v

SA TVRDA t MORNING SESSION 2>n ,««i*51^ States' are based largely upon misconcepr the Congress of the United .States request tion of' federal withdrawal as applied to ing the - speedy publication of a second per capita figurA in states having small edition of the report on Double Taxation of" •populations, and upon the erroneous, con- the Ways and ' Means Subcommittee on cluSiipn that tobacco consumption, in the Double Taxation and that copies of that rural staties-is equal to that in;the urban' report and oth^r reports of; the Subcom states which do not today irnpose tobacco mittee be 'made available for use of tiie taxes, i^ Hence estimates of relative tax ef members of this Interstate Assembly and of ficiency of state and federal governments on the respective state governrrients and legis- a per capita basis are untrustworthy. , The lattires," movement to restrict the field of tobacco >-. That is a; report which Sir. Parker told taxation is in large part a movement not us was in the course of preparation. It to restrict the field biit to keep down the sometimes happems,. that reports-of this rate.» 11 seems to me the resolution ought nature,.although prepared, are side-tracked to be defeated. for the .printing of other publications,-and HON. ERNEST L. AvERiLL (Connecticut)j: all this asks is that the printing be speeded I can rather understand the difficult posi- up and distribution be made at an earlv tionwhich the voting members of the Con date. necticut delegation will find themselves in. HON. W. H. 0'GARA:(Xebraska):. Twill Would, it not be possible for the Resolu second the. motion for the. adoption of the tions Committee to. redraft the resolution resolution. so that it will embody the suggestion that v SPEAKER BELKNAP:! don't believe we it is a policy in the question of conflicting need much argument on this and I am ; taxation,—that as soon as possible, and in going,to put the question. Those in favor cooperation with the federal' government, of this resolution will say "aye"; opposed, the states will withdraw from the taxation "no." The resolution is'unanimously car of tobacco while the federal government is ried. . " . ' • withdrawing from other fields-of taxation MR'TGRAVES : This resokition that I am - which the states feel should replace that about to read I think is pne of a non- • -''tax?-.-.- ••. ,^.;.;...• •-.•;-•• ••':..-'\:' :'[^-\..., controversial natuce, " RESOLVEDj That in .SENATOR GEORGE WOODWARD- (Pennsyl order to facilitate, negotiations, understand vania): I want to reinforce what Attorney- ing and harmony of state governments with General Averill has said, because in Penn onis another and with the federul govern sylvania next week we are going to vote ment, it is the sense of the Second Inter for a tobacco tax in the Governors pro- state AssemlDly that the Congress of. the. . ^ram, and in order to save the face of Penh- United States should consent to a compact . sylvania I don't see why we shouldn't have or agreement among any two or more states a'little political stratjggy with this and use for the establishment of a Councilof State .; it as a good quid pro quo with the federal Governments." government. Our tpbacco'^ax is a very- Before there is any.discussion, from the . great trading point. floor, I would be. pleased if Senator Toll SPEAKER BELKN/\P; I; am going to ask • would say a few- words to you as to the unanimous consent to postpone any con desirability of having this resolution passed. sideration of this matter until after lunch. . SENATOR HENRv W, TOLL: AsMr. In the mearitime, we shall proceed with Belknap, explained in his remarks this other resolutions. - morning, the American Legislators' As MR. GRAVP:S: Please be assured, ladies sociation' started its operations wnth two and gentlemen of the Assembly, that we distinct objectives. . One was to develop a are riot going to run out of resolutions and professional organizati(m.. of lawmakers. if any of you have not had. an opportunity The other was to attempt to"bring the state to speak, you will have plenty of opportti- governments into closer contact with one nity before the afternoon is over. another. Of course, the American Legisla-- The Resolutions Committee reports this. tors' Association began this attempt to. de .: resolution and moves its adoption: "RE-. velop closer contact primarily through the t^ K. SOLVED, That this Assembly memorialize legislative branches of the government, but: 378 THE BOOK er THE ST A TES as soon as we began to get down to real ments between the states shall be binding work \ye discovered that the legislators without the consent of Congress: There • alone could not establish an effective and fore, this is, in effect, a request to Congress • .. satisfactory contact between the state that it give its consent to the formation/^ ..' governments. :. of a Council of State Governments by such" When we began to get into this matter states as may desire to participate in it. of^taxation, we immediately realized that MR. GRAVES: Pleasie observe that thi$ ./ to try to have the legislators confer on resolution indicates no compulsion on the / „ , , this matter without inviting the participa- part of any state to join or enter jnto a. •^jj tion and the counsel of the fiscal officials compact or agreement to be a part of the! of the states would be relatively ineffective, Council of State Governrnents. It could • ..and that, also, a conference with the gov- start with two or. three or four and • others ernoi^ of the various states oil such a prob- could cbme into the Council of State. Gov ^ lemAvas not. only appropriate.-but highly ernments if, as, and when they thought it" . important. The Pennsylvania legislature^ to be to the advantage of their states to passed a resolution requestiiig the Associa do so, . tion to organize a regional conference on , SENATOR- A. CROZER REEVES (New • bus and triick regulation, and immediately Jersey):« I jiist want to read to. you a it was realized that to have simply l^egisla- paragraph from a New York newspaper . ' tors without the motor vehicle administra which appeared this morning and which dis tors and the governors would be an evident cusses the. method that the Governor of New detraction. All three groups must be repre Jersey has adopted in calling together fiive sented if we are going to have effective states to control crime. . That, conference • contacts. between the state governments— is in session today. " 'New Jersey,' says the legislative, the administrative, and the Governor ittoffman, 'has taken a step in . executive officials. And so the Legislators' this direction. The Senate adopted a v Association proceeded to organize an agency Resolution creating a Commission on Inter- in which the executives and the administra state Cooperation to recommend to the tive officials could participate in the.spon; legislature the initiation of compacts on sorship and the conduct of these efforts to various subjects, .'ihcludifig ;crime. The . secure closer cooperation and contact be4 Resolution is now before the Assembly and tween the state governments. That organi-\ upon its passage I shall sign it. Upon zation was set up under the title of the( creation of the commission T shall urge an • Council of State Governments. immediate study of the proposals of the Now I think there, is no thought in any- crime conference.'" ofte's mind that this should 'be anvthihg • .. So -far as New jersey is concerned, I am more than a., very, loosely knit sort of • sureit is heartily in accord with this resolu- . agency for. contact between the state gov tion. I would like to second its adoption. ernments, but the necessity for some type ; SPE.AKER"BELKNAP: Is there any fur of official or quasi-official agency seems ther discussion on this? All those in favor' . fairly apparent and T believe that there is of the resolution will say '*aye"; opposed, hardly any one who has given thoughtful "no." The ayes have it, and the resolution consideration to this matter over any is carried. ' period of time who does not agree that Announcements there should be some sort of quasi-official . SPEAKER BELKNAP-: The Chairman of agency under whose sponsorship meetings the Resolutions Committee has one more .of this character may.be called, and under resolution before we adjourn. whose sponsorship research \York such as MR. GRAVES: If we can get this one put is being performed by the secretariat may of the way, then we will have the decks . be carried: forward. For that reason, be cleared for some, really important and lieving that if the state governments are to genuinely interesting resolutions this aftej- • engage in cooperative enterprise there must noon. , . '^ be; a cooperative organization Of some sort, "BE IT RI^SOLVED, That all vacancies in this Council was set up. The constitutional the membership of the Interstate Commis- provision is that no-compacts or agree sipn on Conflictiij^, Taxation created^y re

«jj s' • \ SATURDAY MORNING SESSION. 379 tirement of its members from public office Spfeaker of the Interstate Assembly who or othenvise shall be filled by the Speaker holds'office by virtue of his. positic'in as orVthe Interstate Assembly." . , President "of the American Legislators' As-: The First Interstate Ass^bly which sociation. rriet two years ago authorized^he creation I move its adoption. • It n'lav be a littlie of a Commission on Conflicting Taxation bit embarrassing for the .Speak

ay March. 2, 1935.

\RY. meeting "was called to order at laws of incorporation, and we ought to have 2:20 p.m, by Sp'cak&r Belknap. some uniform law so one state is not bid- SPEAKER BELKNAP: jSIr, Graves, ding against another for manufacturing iji-. if you are ready--with some other resolu- • dustries, and, of course, the question of "" -^tigiis, we wi'll. proceed to a discussion of divorce is perennial but it certainly ought «. theifi^c^.-.,/ • V to be tackled by the American Legislators' MR. GRAVES: We are indebted to Sena AssociaMoh.. .•• tor Woodward of Pennsylvania for this SPEAKER BELKNAP: YOU have heard the Resolution and. after Ihave read it I am resolution. I doubt that there is need .for going -to ask him to explain, briefly, .why any inore discussion of it. I am therefore proposes it. going to put the que.stion. Those in favor ';Ri;S0LVEi), That for the Third Inter say "aye"; opposed, "no.'-' The resolution state Assembly theofficers of the.Assembly ''is unanimously carried, broaden their program to include subjects ISIR. GjEiAVEs: The next Resolution ought Of, interstate conflicts, to the.end that the to be relatively simple for you'because all interest* of our members be maintained and it suggests is that the federal government enlivened." • spend forty thousand dollars in the SENATOR GEORGE WOODWARD: Today interest of ^ the American Legislators'' As it seems to me has been a real day fOr the sociation. The resolution reads: "RE •Asseliibly, because the legislators' have SOLVED, That the member^ of fhe Second definitely, participated in the program. The Interstate/Assembly do hereby urge their,, more we can transact our own business respective delegates in Congress to support without.the aid of any of the' executive the proposed appropriation of _$40,000 to departnient, the better I like it and I think, the Interstate Reference Bureau for the the more we promote our own dignity and . current year; and be it further standing. That is one reason for the resolu "RESOLVED, That a copy of this cesolu- tion. - . . tidn be sent to each member of „Congr€ss The other reason is that no matter how- from the several states.'' scientific our program may be for ta.xa- The Interstate Reference Bureau sup tion, >ve all realize that necessity knows no plies the funds r which support the Inter- law. The federal government.is up against state Commission on Conflicting Taxation. it financially and we can butt our heads and the other activities- of the American against the stone wall and not get any Legislators' Association. It was to- this where,—they " cannot yield a penny. of Reference Bureau that the State of New revenue to us at thfs time.' Therefore, it York made an appropriation two-years seems to me that if we spend too muflh ago and is making another appropriation time on a very interesting but perhaps thisTyear,.because the. State of New York academic djscussion- of taxes^ we will some believes that this movement is promising what weaken the intere;st of ;0ur ^nember- and certainly worthy of financial support. shijp. There are many subjects of inter The State of Massachusetts also gave state conflict which we understand; even some money; I can't give.yoti the names of better than taxation, in which \ye,are very afl the states that have made appropria : much interested, and which have been con tions. It is believed that the federal gov spicuous by, their absence from the pro- ernment should contribute a modest sum,—• grarn. . . modest when you consider the size of the I think we would like to have uniform problem with which the American: Legis- 380 '

••'•l'^^ SATURDAY AFTERNOON SESSION , 381 lators' Association and itS' several offspring imperative to a final solution.of this problem are dealing. And that is the purpose of that there be adequate and complete fiscal this resolution which the Committee offers data along the lines indicated. and moves be adopted." The motion was regularly seconded. The motion was. regularly seconded. * SPEAKER BELKNAP;. . You have heard '• SPEAKER BELKNAP: Those in favor will the resolution. It has been, moved and say "aye"; opposed, "no.". The resolu .seconded. QThose in favor say "aye"; op tion is adopted. .. - posed, "no."'The resolution is unanimously .; MR. GRAVES: Those of you who heard icarriied. / ' ' •; Professor Martin yesterday will recall that . • MR. GRAy.^s: The resolution which T he emphasized the necessity of having more am about to read had its origin with the adequate and complete data with respect, ->. interstate Commission on Conflicting Taxa to tax levies, expenditures, the purposes tion. The Commission believes it is heces- for which expenditures w^re made, debts ijsary to set up the agency, which is piroposed and the purposes for which debts were in i in this resolution.'rto'study the very im- - curred.- A series of four resolutions has portant problem of multiple taxation. Not been prepared dealing with this subject." only because I want you to see what large "BE IT RESOLVED, That it- is the sense and handsome Assemblymen we have in of the Second Interstate Assembly that . New York, but.because my voice needs a each state should provide fqr the tabulation rest, I am going to ask the Acting Secre and publication of complete statistics of tary, Assemblyman Wadsworth, whose dis--^ state and local taxation, e.xpenditures and tinguished father fnany of you know, to debt; and be it further read this resolution to you. "RESOLVED, That it is the sense of this, . HON. JAMES J. WADSWQRTH: . . body that each state should cooperate as "RESOLVED, That the Second Interstate fully: as possible with the United States Assembly request that the Interstate" Corn- Bureau of the Census in.perfecting.the re mission on Conflicting Taxation organize / porting on a comparative basis of • the a Tax Revision Council to study: statistics of state and local' government; 14, The problem of multiple taxation by and be ;t further . competing units of government. 'RESOLVED, That it is the sense of the "2, The closely related problem of deter- Second Interstate Assembly that each state mining the functions that can best be per- should from time to time make a thorough formed by the federal government and" going investigation of its own state and those that more properly fall to the states local tax systems. In order to facilitate and their subdivisions. this investiga;tion as well, as to render pos "The. Assembly requests that the Council, sible intelligent appraisal of the financial with the assistance of such advisory com- activities of government arid effective statfe ••îifiiffeesârid technical'staff as it may deem and local administration, each state should \ appropriate, conduct a joint investigation provide for the continual analysis of it^ and report its recommendations. The As fiscal affairs; and be it further sembly suggests that it •would be highly . "RESOLVED, That it iT the sense of the appropriate for the said 'Council to be Second Interstate Assembly that respon composed of: ' sible state officials should consider initiating "(a) Seven "offivialsêpres^ntative of' and advancing their financial statistics and the federal govcrnment^hd^Qi^y: . reporting, by. developing work-relief proj "The General Counsel, the^ Assistant ects designed to bring together a compre General Counsel in charge of tax legislation, hensive picture of state and locaI~tevenues. ': and the Director of Research and Statistics To insure comparative results from such of the.JTreasury -Department: the Chair studies, the Assembly requests that the man of the Subcommittee on Double Taxa Interstate Commissiori on Conflicting Taxa- • tion of the House Committee on Ways and tion provide staff facilities for outlining a Means and one other Congressman desig general plan for Use in each.state," nated by the Chairman of the Coriimittee The Resolutions Committee: movesi-the on Ways and .Means; and the Chairman of adoption of this resolution. It deems it the Subcommittee on' Double -Ta.xation of / ^

382 -.; THE BOOK OF THE STATES ;iv.-» 'the Senate Finance Committee and one think it was qiiite unfortunate that I, as other Senator designated by the Chairman Chairman of the Resolutions Committee, of the Senate Finance Committee; did not make more preliminany remarks '•(b) Seven, ofjicials representative oj when the gasoline tax and tobacco tax • state'governme7its,mme\y:: ,._L resolutions were presented. . i> - "Legislators and administrative officers of - The Commission on Conllicting Taxation - states, designated by the Interstate Conv- has, been working for two years. It has mission on Conflicting Taxation; not been. possible, and I don't; think we " (c) Seven officials representative of should expect, to develop a complete, com local units oj government,- namely: prehensive program for dealing .^^^th this, "Four legislative and executive officials conflicting tax question. The Commission of rtiunicipalities appointed'as follows: one has arrived at certain definite conclusions, by the United States Conference of IÎayors, all looking'toward a final solution, and the one. by the_ American Muriicipal Associa Resolutions Cominittee has recommencled ' tion, one by the International City Man for adoption four of those conclusions; in agers' Association,'and one by the AIu- . the form of resolutions, which should be nicipal Finance Officers' Association; and considered somewhat together, •. three officials of counties and of units of . \ OnCvis the proposal that the federal gov-, rural- government other - than counties, ernment retire from the gasoline tax field : 'designated.by the Speaker of the Interstate. and leave it to thee.xclusive jurisdiction of Assembly. , • the states. Tied with that is a proposal ; "The term for which each appointive that the states >. should not. extend their memljer of the Council is designated shall tobacco tax laws. In other words, Ave ask extend-to rjanuafy' 1 of the nextodd- ' the federal government to give up the motor . . numbered year and" thereafter until his fuel tax and we ask the. states to refrain . successor is appointed. The. Secretary of from enacting new, or enlarging old^ to the Interstate Commission on. Conflicting bacco tax laws. It is a question of give Taxation, shall be, ex officio, the Execu and take. , . tive Secretary of the Tax Revision Council, .* The third item is'that we ask the federal and shall make arrangements for its organi-. government to give up such taxesas it Hiay zation meetings. . \ be imposing on electrical energy, and as a "To the end that the organization of this. quid pro'quo the Commission on Conflict-" Council may be consummated at the earliest ing Taxat'ion proposes that states and local possible time, the Chairniari and the Secre governments should refrain from imposing tary of the Interstate Commission on Con- heavy taxes on beer, unless they impose ,flicting Ta^âtion* are hereby directed to" "such taxes for" regulatory purposes. •confer'with Congressional officials, with Now if''you' will notice, in these four the Secretary of 'the Treasury, and, if op resolutions, there are two ^ concessions to portunity offers, with the President of. the be made by the federal government and United States; and they are authorized to two concessions to be made by the states— make such changes in. this plan as they may a fifty-fifty tmde. so far. as number ...is con- deem proper in the light-of such confer 'cerned. So faf...;is,.moj.\eyJs_involved, the • ences." . ' sâtesjdlLget the best of it. • . ' • I move the adoption of this resolution. Your'.Committee on Resolutions con SPEAKER BELKNAP: YOU have heard the. sidered whether we should \\Tap these all resolution. Is there a-second? , up in one resolution and presentit to you. The motion was regularly sccnndcd.'-' ~ "We decided that the better policy'would be ' SPEAKER BELKNAP: Do you desirevtp ' to present, and permit .you to discuss them debate this question? All in favor of the singly. Yo\i have adopted the one on the resolution, say "aye"; opposed, "no." The gasoline tax. Therefore, .if we are to be ' ayes have it and the resolutio'n is carried. consistent we will adopt the others or else MR. GRAVES:- Now that we.have worked recall t-he vote on the gasoline tax. I think along so harmoniously foV'a few minutes, ' I have nothing further to say. . _ * • •perhaps we should revert back to where' I again move.the adoption of the resolu we were when -we adjourned-for lunch. I tion on the tobacco tax,.%hich reads: SATURDAY. AFTERNOON SESSION .383

.''RESOLVED, That it is\ the. sense of the the resolution. The Chair is going to ask Second Interstate Assembly .that no ad " the Chairman of the Interstate Commission ditional tobacco taxes be adopted by the on Conflicting. Taxation to explain this states for revenue purposes." resolution. , . . SPEAKER BELKNAP :' You have heai'd the SENATOR SEABURY C. MASTICK: We dis- resolution. Is there a second? vGUssed this resolution all one day in Chicago, The motion ivas regularly seconded. - and weighed "every word in the resolution. SPEAKER BELKNAP: DO you wish fur At that time the Eighteenth Amendment ther discussion? Those in favor of this . had not yet heen.repealed and many ques-" ..resolution will.say. "aye"; opposed, "no." t ions were arising about the taxation of The Chair is in doubt and will.jcall for a beer." There was.a disposition oh the part roll call vote. • ' of many states to levy a very heavy tax on . There JQUoivcd'a roU call vote by states. beer which would ;have raised the price for SPEAKER BELKNAP: Gentlemen, the re retail consumption,' the effect of which sult of the vote: 59^S ayes; 23]^ noes. would be to encourage the bootlegger, and The.resolution is carried.. at the" same time to deplete tTie federal MR. GRAVES: I will remind you again revenue. . - that the gasoline tax and the tobacco tax- I would like to interject in this explana are companion resolutions. You, have tion a restatement of \yhat was'said by adopted both. We still have the electrical;- Commissioner Graves. It "was a- case of 'energy tax. which the Interstate Commis give and take. We did not feel that we sion on Conflicting Taxation urges the could go to Congress with the idea that federal government to abandon, and we' all we wanted was something from them, have the beer tax on which the advice is -and that we had nothing to give in return. that states refrain from imposing high beer We felt that beer, under the general-scheme ta.xes except for regulatory purposes. If of. our government, was more under the you will permit me to make the sugges control, of the federal government and that tion,. I think in voting on. the one you the higher the tax in the localities, the lessi .1^ should consider how you intend to vote on could, be the tax for the federal govern the other. It is, as I see it, inconsistent to ment, and I repeat, the more encourage vote ^or one and vote against the other. I ment-for-the bootlegger. .. will no'W read the electrical energy resolu That was the reason for inserting the tion. word "heavy." .We put "heavy" in be > "RESOLVED, That it is the sense of the cause it wasn't precisely definable. . New Second Interstate Assembly that electric York decided $1 a barrel wasn't heavy. , energy taxes which have long been sources Other stateshad other ideas. If you should of state revenue should be reserved foi* the make it two or thriee or four dollars a .bar exclusive use of "the states." \ rel, that WQiild be heavy. It is a question I move the adoption of that resolution. of defining: when short becomes long. You The motion was regularly seconded. can't do it. It all depends oh the circum

SPEAKER BELKNAP: You have heard the stances,- s.' resolutir.n which has been seconded. Those The reason for the second phrase, "un in favor will say "aye"; opposed, "no." less they imposed such taxes' for regulatory The ayes seem to have ii. The ayes have "purposes," was that certain states still re- '. it and the motion is carried; - . tain their prohibition statutes in one form MR, • GRAVESH We nbw come, to the or another and we feel we should not re fourth item in this general schedule. "RE strict them if they desire to, impose taxes SOLVED, That it is the sense of th^ Second for genuinely prohibitory purposes. In Interstate" Assembly that .states and local other words, we tried to respect local feel governments should refrain from imposing ing^ on^ this matter just as much as we heavy., taxes on beer, unless they impose could, at the same time taking the stand - such taxes for regulatory purposes."-. that , we were giving something to the" The Resolutions Committee moves the federal government,—-some .consideration adoption of that resolution. . •<- ifi return for asking them to give up some SPEAKER BELKNAP: You- have heard thing to us. ' . " . 384 THE BOOK OF T-HE STATES • While, as Chairman of this Commission, some states the sale of beer had already I haven't any desire to impose our ideas been legalized, but other liquor had not '"" . upon any of you -gentlemen, I do Wish to been considered. That was one of the accent the fact that unless w'e are not only things which caused the Commission to take willing to give and take among ourselves, these, up separately. We anticipated there. but willing to give and take with the federal W'ould be conditions in some states with government, we are not going to get any-, reference to beer that would be more uni where. . versal than with what we are pleased to HON. SIMEON E. LELAND (Illinois): Is call hard, liquor, and .1 think the federal • this tlie only resolution that the Commis government proceeded on that theory. sion has on the subject of liquor taxation?" Congress, looking a| beer, in a little dif Do you have another one? ferent light than liq^uor, le.^alized it, as far .MR. GRAVES: The answ-er is no, we have as the national govirhmentlwas concerned, . no other resolution, because Senator Mas- before the prohibition amendment, was re , ' tick told the Resolutions Committee that pealed,- and many of the states have acted he was not sure.the: resolution on liquor along the same line. taxes represented the present views of the I don't think there is anything incon Interstate Commission, having been adopted sistent in dealing with this question at this before reiDeal occurred. time and ,'m leaving the other open, if - JMR. LELAND: -ii seems to me that;leaves Senator Mastick thinks that the other . ^' •: this resolution in a rather peculiar position. question is one that should be open. The ^ It antedates the day when W'e returned to purpose of the Commission was to take a -^ the pre-prohibition era, it imJDlies that w-e definite stand and try to blaze the way, • are vvilling to,trade with the .federal govern before too many states had ievied heavy ment the right to tax beer in return for taxes on beer. > ^letting the states have the right to tax Now the federal governmeht is going hard liquor. It seems to me thM as the to tax beer. It has ta.xed drinks of that ' resolutioTi stands it doesn't get to the heart kind since the last part of thej eighteenth of the problem at all, and that any-;resolu- century, just as it has taxed tobacco. Un tions on the question of liquor, taxation less we are ready to express ourselves now, ought to embrace all of the kinds of liquor heavy taxes will soon be effeciive in all that are involved. .states. . . • . \ ;.. . . Since this resolution doesn't go the range The Commission and all of lyou here of the entire liquor problem, it seems to me realize.th^t'nothing we do will change it should be recommitted either .to the existing laws, but if we can have anything rResolutions Committee or to the Interstate to do with molding public sentiment to Commission until such time as they are ward atdivision of taxation, we have to prepared to submit a resolution on the start somewhere. That is our purpose here,- . subject that really meets the issue. as I see it. I riiay not represent tbe.view- • MR. GRAVES: I can simply say to the point of the entire Commission but T think • gentleman, as I said before, that the "Com that after having met."~~With them at six mission on Conflicting Taxation was not different sessions, I' know to a considerable sure that its. previous hard liquor resolu e.xtent what their ideas are. That is the tion represented the views of. the Commis purpose of this resolution, gentlemen, and sion at this time. . This one on beer does. ;I hope since you have gone along with us . The adoption of it doesn't imply, as I see . •' on the other three, you- can go along as a it, that the inferefice would .be that by matter of consistency here, granting the federal, government the right HON. OLIVER E. J, SCHICK (Missouri): .to tax beer, hard liquor, is to be reserved' to I come from9vIissouri,; a state which houses the states for revenue purposes. If we soriie of the largest; breweries in these .adopt this beer resolution we merely have United States, but personally, I am of the not as yet taken a position with respect to opinion theit taxes on beer should be levied the taxation of hard liquor. by the state and municipal governments- '' - " • SENATOR Bi-:N G. ONI-IAL (Te.xas)*.: When because it is a great source of revenue for < . this was adopted by the Commission, in them. I realize that too high a ti'x takes .

1^ SA TURDAY AFTERNOON SESSION 385 beer away from the working man and I am ; Section 10 of Arti'de.I of the Constitution rather inclined to feel that the federal tax of the United'States; and. • on beer today is probably a little too high. WHEREAS, There have now been estab The resolution, as I see it, would not lished agencies which provide such ma prevent any state from placing a tax on chinery of. cooperation, namely, the Amer- beer and would leave it open to the states ' ican Legislators' .Association, which has to place any kind of a tax they desire. I been officially sanctioned and endorsed by rise.to make myself clear on this point, • one or both branches of forty-six legisla that while the wording of the resolution tures, and the Council of State Goyern-- means very little to me, I for one would ments, which has been organized by said be opposed to the adoption' of this resolu association; and , • tion because I feel that Missouri should WHEREAS, It is to the interest of the get sonie revenue benefit from products people of each of the states that"their gov- rnanufactured by the breweries in our state. , ernment officially . participate w-ith the , SPEAKER BELKNAP: IS there any fur- governments oi.the-Other~statesan,Jthie,.fo.rr_„, ther discussion? I will put the question. raulation of their cooperative policies, and in Those in favor of this resolution will say -their other deliberations, in order that the: "aye"; opposed-, "no,^' The secretary will interests of. such states may not ,be disre call the r^l. garded; therefore be it • There followed a roll call vote by states. RESOLVED, That this Second. Interstate . SPEAKER BELKNAP : The vote stands 49 Assembly recommends' that appropriate ayes," 23^ noes, and the motion is-carried. Agencies oh Interstate. Cooperation be I want to call on the Committee on formed in each state; and be it further .Agencies for Interstate Cooperation, the • RESOLVED, That the Executive Director Chairman being Honorable Ralph .Gilbert of the^Ameriean Legislators' Association of Kentucky. Is Mv: Gilbert here? . and the Council of' State Governments HON. WILLIAM E. ROGERS (Kentucky): communicate this recommendation to the jMr. Gilbert is absent and he left his re Governor and; Legislature of each of the port with me to read. several states. • REPORT . ; COMMITTEE ON AGENCIES rpR INTERSTATE. COOPERATION .•To provide these Agencies on Interstate Cooperation with an effective directing and .Your Committee on Agencies for Inter coordinating' agent, your Committee state Cooperation considers the question of strongly recommends the establishment of cooperative agencies as one of extreme irn- regional secretariats in the manner which portance and has drawn up the following the -American Legislators' Association arid. resolution which, it how presents to the the Council oL State Governments have Second Interstate Assembly: set forth. The Committee reports that . such a RESOLUTION ' regionail • secretariat would promote co WHEREAS, Confusion, "competiiion and operation between .neighboring states with conflicts constantly exist between the states regard to policies and activities relating of the Union in their laws and in their to such public problems as may arise administrative practices, concerning many from .time • to tifne and which require subjects of government with which the uniform or reciprocal action on the' part, states are vitally concerned'; and of other states included in the region- """WHEREAS, It is desirable for the people It would devolve upon the regionaPsecre- of all the states that such disharmony and tary to make a constant study of,the pos chaos shall not continue, but that the gov- sibilities of regional and nation-wide ^bo- . ernments shall strive together in accordance operation between the state governrnents. with enlightened standards and mutually Vour Committee feels that the establish- accepted policies; and ' • merit of such regional secretariats is vital WHEREAS, The necessity . for official co to the development of harmonious. state operation between the state governments is relationships and that such secretariats; recognized by the compjact provision in would prove to be effective agencies

1 386, THE BOOK OF THE STATES "^ for improving interstate cooperation. the fact that only five: legislatures met in Your Committee recommends that this regular session last year^ as compared with meeting of the Second Interstate-Assembly 43 in 1933, the Interstate Reference Bu formally^ commend the American" Legisla reau handled more inquiries. This increase tors' Association and the Council of State in the number of inquiries can probably be Governments" on their recent publication, e.xplained by-the fact that the Interstate T/ie Book oj the States. '. The periodical Reference Bureau has become better known, editions of this book will represent the only and also by the fact that there were.many compilation in the country of current facts, special sessions held during 1934. and features pertaining exclusively to state As in the past, most of the inquiries .government. Obviously, this publication came from legislators and officials in those will "facilitate cooperation among the states., states with poorly.staffed reference bureaus, . Finally, your'; Committee recommends while-in the'states where the legislative «3jj that, if.and wh(?n .the Aiherican' Legislators' reference bureaus have the corifidence of Association and'the Council of State Gov the law-makers,. ancl^.._where'" they have ernments are requested to fender.any t>'pe adequate staffs,-the"jnquiries came through of service for such national associatiims pf the reference.bureaus. - .' state administrative officials as the National The following tabulation shows the Association of Secretaries of State and the source of inquiries received during 1934: National Association of Attorneys General, such requests should be granted in so Legislators. ." 143 , Local officers S far as the present staff arid facilities permit. Legislative, refer- •. Federal officials 25 . ence bureaus 49 Newspapers 29 SPEAKER BELKNAP: I am going to ask the Secretary to read a telegram we have State officers 65 Other research here from Governor Winant,.since it. bears Commissions ..•; .6 associations^ 215 on this resolution. 537 SECRETARY WADSWORTH :' /' The above-tabulation does not.include "Honorable Henry. W. Toll: ;. approximatel}' 100 requests for information . "Regret that I find it impossible to which have been received? over the tele join with yoii again. T hope very much', phone and by, personal visits. . that you will get before the group the .. ^ The subjects of the requests for informa idea of perriianent interstate commit tion covered the entire gamut of "govern-" tees in the assemblies o.f the respective mental problems. It would be difficult to . states, the need of a .regional secre- name a problem which at some time or - tafiat to implement iittfrstate action other has hot been; the subject of an in • and the usefulness of^ a centralized quiry. Where once a large portion of the • reference bureau, such a? has alrei\dy"" -requests were for in formation concerning -; been esta;blished in Chicago. taxation and revenue, at the present time "Signed: JOHX G. WINANT." ' . the field has been considerably broadened by the nation-wide interest in various SPEAKER BELKN.-VP: Before we go into. -phases of social legislation and the problem a discussion "of this resolution andj;ep()rt, of liquor control. Since the November I want to call on Mr. Hubert R.GallaglTer~-^leGtioii,__at4 which time six states repealed of the Interstate Reference Bureau re their state prohibition .laws, we have re ferred to in this report, for.a five'lliiriute ceived a number of inquiries requesting.in talk on this work, in order that" you may formation on the! control of intoxicating be better quahfied Voters. liquor. Information concerning practice in other states was immediately furnished REPORT BY HUBERT R. GALLAGHER to the; Governors and to the special :legis- During the year 1934 the Interstate lafive. commissions studying the problem. Reference Bureau has assisted in securing In,addition the volume of requests received information in response to 537 inquiries. ^Mostly munidparreferencc bureaus, bureaus of These requests for information haye come governmental, research, research agencies in uni from legislators and public officials in forty- versities, municipal leagues, and. taxpayers' asso seven states—all except Nevada. Despite ciations. .

€• SATURDAY AFTERNOON :SESSION 387 in this office for information concerning report was presented to the General Coun the sales tax, old age pensions, and un- sel of the Federal Trade Commission. • employment insurance has led to the prep Considerable time also was devoted to aration of research bulletins which have the work of the Committee on Economic been circulated to the Governors, as well Security and conferences were held bet;5;veen as.to the inquiring legislators. members of the staff of our research'divi The great bulk of the 537 inquiries wliich sion and the staff of the'Committee on were received during 1934 have been Economic Security. ' , answered by.reference to some source of Personal contacts have been made also information from which accurate and up- with the Department of Justice, the TWA, to-date data could be secured. The Inter=-_^ and the United States Civil Service Com state Reference Bureau endeavors, as far mission. iNIembers of the U. S. Senate and as possible, to serve as a clearing house of House of Representatives have.called upon information, rather than as an; agency of the Interstate Reference Bureau for infor original research. However, during the mation and assistance.- past few years a considerable body of in formational material ha^ been built up and Assisting Interim Committees and many of the requests can now be:answered Special Commissions directly from our files without. referring the requests to other soiirces of information, Among- the special, groups. which have The issues of STATK GOVERNMENT which been furnished information are the Cali- have been published during the past six ,ffisfc)r.nia Code Commission, the Governor's years contain'the~aniecsiiSmayjIiq"ui.riei---.^^^^^^ in Washington, the whicwhirharprpreK^frThprnmnnrafivetableh are'received. The comparative tables s special legislative, committee of mnin(e in and compilations which have appeared in its Utah, the Commission, to Study jNIethods columns have Been especially useful, of Public Utility Regulation in North' The year 1934 was marked by tWo im Dakota, the Delaware Commission on Un portant developments; -. employment Insurance, the Colorado Com First, the number of inquiries received mission on Interim Committees, as. well from departnients of the federal govern as the various state liquor control commis ment. -- ; . sions. Here again the conferences were Second, the number oit legislative interim hold with various members of these com committees and cOnimissions in the various missions, and the Interstate Reference states which were served by the Bureau. Bureau was in continuous communication: Not only were requests received from the with these commissions up to. the time of research staffs of these cornniittees and com the submission of th.eir final reports. By missions, but a large number of state of .maintaining eontatt^^;with the Interstate ficials availed themselves of the service for Reference Bureau tlii^^ekcomriiissions were the first time. advised, of jDrpgresS'ljeing/macle in'other As the services of the Interstate Refer states. . .;'• v.: . ' ' ence Bureau become more widely known, Legislative Council •='« it will undoubtedly be ealled upon to serve more federal departments, as well as the Throughout the year thelnterstate Refer state officials ence Bureau maintained very close contact ".IK with the Kansas Legislative Council, and., there was a constant interchange, of- re Service to Federal Departments search material between the staffs of both The time spent- in answering inquiries organizations. . In addition the Interstate "^^from federal departments ranged from five .r^eference Bureau has been supplied with minutes dictating a letter and sending a studies prepared by the Kansas Legislative table, or a research bulletin which would Council for distribution to inquiring legis- answer the question in full, to ten days lators and state officials in all the states, spent in one of the states making a special It is hoped that ultimately the Interstate study of public utility legislation for the Reference Bureau will, serve, not only as a Federal Trade Commission. This study clearing house for the Legislative Reference was conducted-in'the field, and the formal Bureaus of the various states, but also

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388 THE BOOK OF THE STATES that it \vill serve as an informational switch various subjects. In addition, we.have board for other legislative councils—as answered many inquiries which they have they may be created. . received from outside sources. • The Interstate Reference Bureau has ccp^'nuc-d to serve the legislative reference The Press \- directors and state librarians during the In addition to the inquiries from regular* past year. Members of our staff have, channels which have come into the Bureaii visited the offices of the Legislative Counsel via tel'^'graph, airmail; special delivery, and in California, the Legislative Reference Di I regulai 'mail as well as postals, telephone rectors of Arizona,. Colorado, Nebraska, calls, and personal visits—the Interstate New York, Oregon, Pennsylvania, Wash-\ Reference Bureau has frequently been used- ington, and Wisconsin,, as. well as the State \ as a reliable source for impartial informa- Librarians of California and Wyoming.; \ tion on governmental-matters by the press ynd various national periodicals. During Legislative Rcjcrcnce Bureaus the past year the wire services, such as the . Tl^re seems tq be considerable interest Associated and Unite^l I're^s, have called •i'^- in the development of legislative.reference upW lis almost weekly .for information in bureaus in the, states which do not have theXfield of state, goyerhment. Such na them\at the presient time. Our staff has; tionally known papers as\the .Vfw York. supplied copiesôf a model bill to establish Sun, Chicago Daily Xcws, Chicago Tribune, a legislative reference service, estimates of Christran Science Monitor, the Journal of cost, and information on personnel and ConimcKcc, and the Birminghain Post hRve services to be performed by a bureau to made xeqiiests of us.-- Time magazine, the legislators aiid state officials in Alabama, •, Literary LDigcst, and Colliers\ have • also Florida, Kentucky, New Hampshire, West availed themselves of our services. Virgi.nia, Utah, Oklahoma, Missouri, and Smaller Vewspapers, frequeiitly those Wyoming.. In fact, a request for informa which service the state capitals, have asked, tion of this type was even recbived from for assistance. Among thesel are the Buenos Aires. . .^^ Arkansas Qasctte, the Southwest Times In cooperation with the publications, Record, (Fprt .Smith, Arkansas), the Rnt- division of the American Legislators' As land (Vermont X'T/cra/rf, and the Minne sociation, thirty-si.x research bulletins, were apolis St dr. sent to the legislative reference bureaus, Furnishing the press wjth^mp^rtial and Governors, and a selected list of legislators. accurate information is one means of creat-" A number of these bulletins'were preJDared • ing a desirable attitude towardi problems of /• in the office of our.Bureau and others were legislation, and for that reason we nave en prepared by specially qualified authorities couraged the news services, the editorial at our request. In addition to these bul writers, of the leading papers, and influ-, letins, the Bureau has undertaken to act ential journalists to make use of our facili as a clearing house for bulletins of a par-^ ties. . . • ticularly valuable character prepared by Special Service to Governors other organizations, distributing them to The Interstate Reference Bureau has not legislators who have e.xpressed an interest only furnished Governors of the different in the various subjects, and also to each , • states "with copies of research bulletins and legislative reference service. publications, but it has also prepared a Cooperation with National Govern special digest of previous Governors' Ales- sages- This digest was- especially useful mental Organizations to Governors in the preparation of their •^ Throughout the year the Interstate 1935 Messages to the legislatures, In adr Reference Bureau has been used as a fre dition the- Bureau has answered a number quent source of information by the national of requests t from Governors for informa governmental organizations located at 850 tion' on various topics, and where pos East 58th Street, Chicago. These organiza- sible it has furnished advance material to . tions of public officials have; called upon us Governors who were faced with on numerous occasions for information on problems. siTURDAY AFTERNOON SESSION 389 , For instance, as soon as information was to your organization relative to amending received, that Governor Merriam of Cali the industrial cîhTpenâtionJaw of the fornia had called a special anti-crime con State of Oklahoma. T w'ish tcrTakFThh ference on the subject of interstate rendi means of expressing my appreciation for tion we, imrnediately furnished him with • the number of pamphlets and the wealth of copies of recent studies which had' been information which has been forwarded to made on the subject. Similarly informa my office on the subject in question." tion on liquor control legislation was im Harold H Haas, Assistant Legislative mediately sent to the Governors of those Counsel, Sacramento, CaV "The ramifica states which recently repealed their state tions of your.organization certainly open up prohibition laws. And when Governor Mc- a mine of information to the inquirer in time Nutt appointed a special committee to of need. We appreciate your care in these study, the gross income tax law data was matters." sent to him. Information was sent to Dr. Irvin Liavine, Chairman, Commission Governor Davey of Ohio in the form of a to Study Methods of Public Utility Regu model law to establish a state bureau of lations, 'Grand Forks, N. D. "I am investigation, identification, and statistics, most appreciative 'for the courtesy ex and to. Governor Blood of Utah on.stale tended to me in sending the information police. contained in your valued, letter, together Conclusion with -copy of Indiana law which arrived under separate cover. The information- . The appreciation which has been ex so sent will be most valuable in our work pressed for the services which the Bureau aind r certainly will avail myself of your has performed has:been a.real source of kindness in.-extending.to us the service of satisfaction to the staff. The following your Association for further information sampling'of e.xpressions—ta>ken from' the from time to time during our investigation." many which have been received—âre indic- a,tive of-the attitude of the governors, legis SPEAKER BELKXAP: Is there any further lators,' and state officials who have been discussion desired on the resolution prepared aided by the Association's facilities: by the Committee diT Agencies for Inter • Governor Louis j. Brann, Augusta, state Cooperation?" If not, I will put the Maine. "The special session of the Legisla question. Those in fawr of this resolution ture is called for Tuesday next to act- on for establishing agencies on interstate co liquor legislation in this state, and the in operation will'say "aye"; opposed, "no." formation which you forwarded" will be The resolution is adopted, unanimously. ' very helpful." . / Senator Eirfiest T. Eaton, Polytechnic, Do you wish to adopt the complete re Montana. "I have been negligent in send port of the Committee now? Will some ing you my expressed sincere appreciation one offer a. resolution approving the report for the wonderful help that you gave me of the Committee on Agencies for Inter as a result of my letter to you last Novem state Cooperation? ; ber .yvhen I was preparing for the special HON, HENRY F. LONG: I offer such- a session. The material that I received was resolution. . of greatest help and I feel that your As-. The motion was regularly seconded. : 'sociation i& giving a remarkable service to SPEAKER BELKNAP: It has been moved the state legislatures of the nation, I was and seconded that the report qj^this Com enabled through this, material.-to'^give to mittee be approved. ' Those in favor say many' members of the Senate and House" "aye"; opposed, "no."" The ayes have it information that was up-to-date and just and the report is unanimously approved. what was needed for their guidance," I will now call on the Committee on Fi " Senator Albert^Wald, New York City.' nance for its report, of which ]Mr. Burgeâ "Thank you for your letter of January 19, is Chairman. I am delighted with the rapidity with which V. you respond .with tangible information." REPORT OF COMMITTEE ON FINANCE • Hon. W. L. Morse, Henryetta, Okla. Your Committee realizes and begs leave "A. short time ago-1 addressed an inquiry to call the attention of all legislators and 390 THE BOOK OF THE STATES state administrative officials-to the fact that sand-($2,000) dollars, approximately the in order'to develop and perfect organiza amount required to secure the-services of tions of the scope and significance repre two clerks. Your Committee believes that sented by the Council of State Govern the value of the work done by these organi ments and the American Legislators' zations Is" far in excess o;f any such amount. Association, adequate finances must be . Your Committee recommends that each provided. House of.-each legislature should appro :,. We beUeve that the. Assembly delegates priate funds during the current sessions to^ are acquainted with the fact that the financ provide traveling expenses for their dele ing of the Assembly and of the services ex- gates to the next rrieeting of the Interstate - tended to the states by the Aiiier|can ^ Assembly and that fhe funds appropriated L-egislators' Association and.the Council of by the legislatures of the states whose mem State Governments has largely been/through bers are serving upon such standing com . grants of: the Spelman .Fund, W/e fnlust, mittees of this Assembly as v/ill hold how'eyer, recognize that the Spelma'n gtants interim meetings should be sufficient to de are made for limited periods of timje on the fray the traveling expenses of such mem distinct understanding that they We for bers to such-interim meetings. , demonstration purposes. Certainly t^'e As- SPEAKER BELKNAP: YOU have heard the ' sernbly, the Association, and the Council • very able report of the Finance Committee. have amply demonstrated their value, and Do you wish to approve this report? the time for greater legislative support of HON. J. H. THAYER OklARTiN (New "their work has arrived. This fact has^ in the Jersey) rT!—move"tha't"The report be ap- past two years, been recognized by six provedr"™'^ states, which are at the present time at The motion was seconded and carried tempting to do their share in the support unanimously. of these organizations, their appropriations SPEAKER BELKN.AP: I w-ill now enter varying from $500 to $5,000 per annum. tain a motion that the resolution which the This year seven additional, states have simi Committee offers be adopted. larly demonstrated their belief in the value MR. MARTIN : I move it. be adopted. of these services^by considering appropria- T/ie motion was regularly seconded. . tion bills in their leg'islatures. Therefore SPEAKER BELKNAP: It has been moved your Committee recommends that the As and seconded that this resolution be sembly delegates do all in their power to adopted., ""Those in favor of this motionj secure both federal and state appropria will say "aye"; opposed '"no." The ayes tions for the support of this work. have it and the motion is carried; To this end, your Committee recommends . We will now proceed with the resolu- . that Congress be urged to pass the Reso , tionsof the Resolutions Committee, and I lution which plTDvides for an annual ap • thjnk we w'illhave plenty of entertainment. propriation of. forty thousand dollars to the SENATOR HENRY PARK^LAIVT (Massachu Interstate Reference Bureau, which bill has setts): I am sorry that the Chairman of been favorabfy recommended by the Com the Resolutions Committee is not here to mittee on the Library of the National House present some of the most controversial reso- . of Representatives. .; • lutions still remaining for this Assembly to Your Committee further recommends that debate and consider. The" next resolution each state do its share or^more than its share before us is the- last of the program recom- . in the active financial support of the Amer mended by the Interstate Commission on ican Legislators' Association, the Council Conflicting Taxation, and if we can dispose of State Governments, and/or the Inter of that we can get on^ to other resolutions state Reference Bureau. It is recommended • that were o'ffered from the floor and have specifically that'each state appropriate for been presented to the Resolutions Com this work an amount in accordance with a mittee. The following resolution concerns classification ..which has been workedvbut the income tax l^^ld. for each state by the American Legislators' "BE IT RESOLVED, 1. That the Sec: Association.and which calls for an average ond Interstate Assembly recom.mends fed expenditure by each stat^ of two thou eral enactment of legislation allowing credit SA TURDAY AFTERNOON SESSION 391 against the federal individual income tax items suggested is: the inclusion of dividend for state individual income taxes and other income in the federal tax base as completely state,and local taxes of a personal nature as other income. Probably that alone would paid or accrued; • come very close to meetings the necessary "2. That a graduated plan be used to replacement of revenue. . Other suggestions allow a substantial credit for lower incomes are: the amendment of federal and state and a smaller credit for larger incomes, for constitutions to allow the taxation of tax . example, about 75 per cent of the aggre exempt securities; a reduction of personal gate of the credits'^for taxes on incomes exemptions; and lastly, an allowance of below $IO,000-and'25 per cent on incomes: the exemptions and credits for dependents above :? 10,000. The percentages selected in terms of the tax and not In terms of the should provide a total credit of approxi income of the taxpayer, ." mately $150,000,000. SPEAKER BELKNAP: You have heaird the "3. That the additional federal revenue resolution as offered by the Commission on to replace the federal credit allowed to tax Conflicting Taxa;tion arid the very able ex payers' for state taxes be secured by some position by the gentleman from ]\Iassachu- one or more of the following: setts. Is there any further discussion? "a, inclusion of dividend income in the SENATOR BEN G. ONEAL (Texas): Is federal tax base as completely as that offered as a resolution of the Commis other income; sion on Conflicting Taxation? Aren't you : '*b. amendment of federal and state con- - mistaken? You don't mean it is offered stitutions to permit the taxation of •"lik e the other resolutions we have had here, " income from tax-exempt; securities do you? . . and of salaries of officials and em SPEAKER BELKNAP: This is a separate ployees of the federal, state and local resolution. It was not one of the' resolu governments; •--• tions drawn at the same time as the others, "c. reduction of personal exemptions, in but unless I am very-much mistaken it was cluding elimination of the earned in- acted on by the Commission. ; come credit; . MR. .ONEAL: But Mn Speaker, it was "d. allowance of personal exemptions and not a recommendation to he passed. As I credits for .'dependents in terms of .remember the resolution, it was recom • • ;• tax."'--. •_, mended for consideration and was not , -If I may give a word of explanation, this passed by-the Commission on Conflicting -resolution extends to the income tax field Taxation as its recommendation. The the principle of the estate tax credit with others were recommendations passed by the . which you arq all familiar. If carried out Commission. Am I not correct in that? in legislation, it would enable individuals HON./C. H. MORRISSETT (Virginia): in the various states to pay part of their That is correct, according to my under federal tax bill by the presentation of re standing of the situation. That was the ceipts showing the payment of state per position of the Commission.on Conflicting sonal income taxes. The. $150,000,000 Taxation, that this was recommended only . figure mentioned, is the figure arrived at for consideration. .. as necessary in the form of credit on the SENATOR HENRY PARKiiAN: It does not federal tax to meet the amount now rjgîsed seem to make .much difference but I stand in the income tax states through their pres corrected if I presented it in error,: The ent rates. Those rates now raise approxi Commission on Conflicting Taxation met mately $76,600,boO in the twenty-three in-, and considered thisând by a vote that was . come tax states, and it is necessary to have, not unanimous, but by a vote of seven- to a federal credit of $150,000,000 if they are one it was decided to recommend the reso to be applied to all the;states. . lution for the . consideration of the As The third part of this resolution provides sembly.. • for a suggested number of methods by""" HON. MYRON B. GESSAMAN (Ohio): In which the federal government could replace order to get this .before the Assembly, I' the income lost to it by, allowing credit, to move the adoption of the resolution. the. states as suggested. One. of the various T/ic motiojt was •regularly seconded. 392 THE BOOK OF THE STATES r^ HON. HENRY F. LONG; I don't know ment or a group of states, should-coerce whether I should be permitted to come up states into having some kind of a tax law here.on the platform with all these people which, if left to themselves, they might not who are oppose'd to my. viewpoint. The consider proper or feasible. It does have seven votes for the resolution are well rep the element of coercion because it has the resented here—they stand against: the one element of temptation, and all principles go which ,nbw appears before^ you. . when there is the temptation to secure .Let us give thought to .the whole, prob money from some other sources than those lem. Within the four corilers of'this reso that hurt in the giving. lution there .is more, I feel, thari some of My third objection is that the resolution. you sense and! want briefly to outline what undertakes to say that-the federal govern it is. First, and perhaps foremost, is a con ment shall give up, by this credit, $150,- tinuation—or perhaps an expansion-ôf th.e 000,000—to be replaced, in.the terms of the credit device.which is found in the 80 per resolution, by the methods suggested, -^y cent credit of the federal estate tax statute. this you descerid into a principle which is In that there is enclosed the kernel of the very deep, namely, the principle that the thought that tax laws should be used for bigger incornes are, in large part, obtained other purposes than to raise revenue. In . from international or at least national other words, in our inheritance tax credit sources. It seems to me that this overlooks there lies^mbedded the theory that because th^ fact that many accumulated fortunes the federal government encompasses the are not necessarily international or national whole Lin ion, death duties laid by the fed in character, that a great many of them exist eral go\'ernment will tend to deter people by virtue of descent, .a great rnany more froVh moving from one part of the country exist by virtue of very large deposits of to another in order to avoid diminution of natural resources, and others by furnishing their Avealth at death. It is not, from the at small cost a necessary article to the multi- federal goyernment's point ,bf view, a basi .tude. I cannot agree with the principle cally important revenue, source but it more that a person with a million dollars should or, less gives expression to the thought;, that, have different treatment than a person with through revenue laws, there should be :a one hundred thq.usand, or that a person with spreading or perhaps, the coinplete* destruc one thousand should he treated differently tion of personal fortunes. from a person with ten thousand dollars. , \Vit|i that particular theory, which could Therefore, you have the third question of be pei-jbetuated by this resolutioii, I cannot whether or not you will subscribe to the: agree:'. Revenue laws should not be used doctrine that there should be a separation for any social purpose, for any purpose in tax treatment between large fortunes arid which would undertake to carry into opera small fortunes as expreêd by income. tion, by legislative acfion, the distribution This, is more than triple-headed, it is of wealth or the destruction of large for really a hydra-headed problem, and it tunes or^ the discouragement of individual reaches into the very vitals of "our state initiative. If opportunities abound for constitutions. I am one who would, if 1. capital acquisition it is but thewiay of the had the opportunity of voting, continue to dullard to seek a cure; if acquired wealth" vote^gainst this, but at the same time I is a disease, we cannot succeed in "êradi don't believe that anybody should vote in cating it by methods employed by the de this room on this particular proposal unless structive mind. From that point of view he sees the entire situation as it is. I.can I am opposed to a continuation of that par say in all fairness that if you will read, this ticular aspect of this resokition.. resolution carefully- and consider it incon My- secBnd objection, and. it is an impor nection with the aspects of taxation as ap- tant oiie, is that while the phraseology of it '^lied in your state, you will find more is very intelli.gently stated, there neverthe— -dynamite in the worcls of this resolution "less is concealed in the words the definite than in any other single document you have temptation to—or coercion on—states to seen written on a single page outside of the levy income tax laws. I don't agree that Ten Commandments. . âny body, whether it is the federal govern SPEAKER BELKNAP: I am going to ask SATURDAY AFTERNOON SESSION 393 Senator Parkman to take the chair, I have Mr. Long has neVer come around to my controlled myself, to a greater or less degree, point of view. I sincerely respect his point . all day without doing very much talking. I of view. I simply differ with him: There have done a little more than was perhaps is no way of arguing any of you over froni - '"' dignified for the. Chairman but I simply . ctnesideof this question to thie other. About must talk on this matter. - •"^•—:•—-•:'-"'-'-; fifty per cent of it is intelligence and 50 per Schator Parkman assumed Jhc chair. cent is emotion and you can't change emc)- CHAIRMAN PARKMAN: The Chair recog tion by argument. nizes Mr. Belknap of Kentucky. I want to^say this: Kentucky Has no in- -> HON. WILLIAM B. BELKNAP: Those of conie tax but we are going to have an in you who happened to have the good for-- come tax and I think we would be better off tune to hear some twelve or fifteen hours if we had an-income tax today. I am j'ust-^^. of debate before the'National Tax Associa as unpopular as anybody can be among my. tion : on this question—this very funda friends at home when I say that but we mental question of whether the fedieralgov- must face it. Income taxes are coming, in " erhment :Should in any .way control taxa every state in the Union sooner or later, so tion—may remember that, in New Orleans, T feel that there is no real use of talking ; after the Pfe^sident of the K'âtional Tax As about compulsion on the part of the federal sociation, yiv: Thomas Walker Paige, had .government. listened to argument for a long tirhe,- the . As-for IMr. Long's argument that we. are kernel of which was that if we were ever going to'treat different people differently, to abolish the federal estate tax we ought no worse confusion could be had than we to do it now, Mr. Paige got up and said, have right now in treating people differently "That argument is fallacious." He said, by the varying state and federal income tax . ''The dgarest wish of" the human heart' is laws.^^This resolution is an effort to bring ultirhate salvation. biiFntine'bf us want it somelifcer out of the present confusion on low. income taxes. It is.tryirig to keep our better I That endecTOie argument and we voted business minds from spentling more time to uphold the report. of this committee, thinking where they ought to live in order whiG-li^was lat^r3dopted--by-C^ngr-ess-âi^d— --t-o~avoid income taxes than they do about ' ihas-^beenln operation for a number of years. attending to their business, People were '•'. I think it was Emerson who said'thkt con moving hither and yon to get rid of the sistency is the bugbear of small minds. In inheritance tax and after we changed the the. riiaitter of taxation, you simply must, law people .sat still and tended to their jobs ;.'jueet. things with a practical point of view, and' they are going to do the same thing if I 'wish we never had to have the federal we can get this income tax law straightened > • government come in and have an,y say con out. cerning the method by which the states It. is such a long story that I can't take raise their taxes. The committee started the time to go into it in detail. I have a out with the idea that in inheritance taxa •great deal of sympathy with Mr. Long.'s » tion the federal estate tax should be abol position that this is a difficult problem to. ished. We met for a solid week up in the vote on at a time such as this and T don't Adirondacks and. fought the question back- say that those of you who vote '-yes" here 'ward and forwardj and at the end of that may not' go home Md;vote'"no" in your , time/all of the nine men on that commiêe legislatures,- I don't say that after doing had absolutely faced about and recom that you may not come back and vote mended that state death ta.xes be credited "yes" here again next year and then >^ against the federal estate tax up to 8Q per hyme and vote "no'' again. When any pnVb- cent of the latter. The committee agreed lem is as difficult as this problem is, what unanimously that the only way to protect you are doing when you vote on it.today the states from each other was through this is to say that such.is your feeling; today. 20 per cent that was left to the federal And I think that was'the idea back of the government, It kept the'states which had Commission when, instead of passing it as started cutting the throats of the inheritance they passed the other resolutions, tfiey tax states from cutting their own throats. adopted it for your consideration. .1 be-/. 394 THE BOO^ OF THE STATES lieve that passing^this.resolution would be a You have been, very kind to the Com step forward in focusing attention on this mission and have adopted the four recom- problem. , rnendations that we made: You have SENATOR BEN G. ONEAL (Texas): .1 shown confidence in! us. I hope that con would like to say a few^words. « fidence is justified. I hope.that you will -T ,!^'^^^^^*'^N PARKMAN :• After Senator continue to feel that way about us^ , Oneal .speaks, and the Chair ^thinks that I Want to ask your pardon for having speeches on these questions ought to be intruded myself so. often today on this, limited to five minutes, I am going to ask. but I rather think ye should be careful the Assembly to listen to Professor Martin because what we do hjere, we hope, is going in order that we may have a little bit more to have some influence outside. . than faith to act upon. CHAIRM.AN PARKMAN: I will return the. MR, ONEAL: You probably didn't under chair to IMr.. Belknap of Kentucky. stand just why 1 rose, when this resolution Speaker Belknap resumed" the chair. was offered here, and asked for an explana- SPEAKER BELKNAP: You have.heard the t\ion of what the committee brought in, and remarks of the gentleman from Texas. I realize exactly how the misunderstanding What is your iurtHer pleasure? Is there arose, but here is the way that the Com- further discussion on this point? I would mission on Conflicting Taxation sent this like, with yoiir permission, to ask Profes- out the other night: "Be it resolved, That, sor Martin to say something to us concern the Interstate Commission on Conflicting ing this, resolution. . Ta.xation recommends for consideration fed-, IVJR., JAMES W-ÎARTIN : The reason the eralenactrnent of legislation allowing a: 'Chair could not remember my attitude on credit against the federal .individual in this thing, is that I have never expressed come tax, etc." When r voted for that, I . an attitude. I shall not at this late stage didn't vote to bring the resolution out here of the game, undertake to do that, but I for a settleriient of the question today, by do want to point out two or three con your vote, so far; as the Assembly is coh- sequences of this resolution pro and con. cerned. .* :<• i In the first place, it seems to me that the I think Mr. Long is correct when he says philosophical question you are up against that he is the only one who voted against is a very simple issue. Are you willing, this resolution as it is. The resolution for the pu'^pose of achieving a certain originally offered that evening in the Com- measure of uniformity in income tax pro- mission was as they first presented it here, - cedure, tohave the federal government lend, but that resolution wouldn't have gotten some coercive infiuence in bringirig>abOut 'over a five to four vote. Then they asked that uniformity? That, it seems to Trie, is if we wouldn't let them bring it out for the philosophical question involved. It your consideration and it was changed to does not seem in my mind to involve the •fhis form.' question of coni:«^catioh that two gentle- Here is the report: of the research staff, men^have thus far suggested. I say that over fifty pages on individual income tax, because the federal government and the which tjiej^ spent months in preparing. We states are equally solicitous as to the preser ^got it ^'êdnesday of this week when we vation of each other, and we have seen no niet here. Wêhaye very little time and my marked tendency, for the estate tax credit Q. position stated^ then: Was othat I was not to tend in the direction of confiscation. prepared to vote'fpr^his, or to vote against • Moreover, I suggest that the conse k. Maybe the mentality, of the Commis quences Mrt Long sees in the issue' are not sion does riot work ,as fastâs.yours,, but as much present in this situation as they I dori't believe, in view of the moiithsîd are in the estate tax situatioih. The estate months that the research staff spent in get-- 4ax is a. tax. on capital or accumulated ting up over 59 pages of text material, [to \vâlth ;• whereas the income tax is a tax on gether with tables, and the time the Com wealthaS^4t^comes iuj so to speak. Unless mission spent, that you, unless you have ybu corifiscate^êvery iDit of income so a fel taken .time to reiad anid consider this, are low has to eat up his^capital, you can never prepared to pass the resolution. do away with capital or^ctually reduce SATURDAY AFTERNOON SESSION 395 inequalities in the disti-il/ution of wealth they do riot by any means do precisely, between differerit individuals by income the proposal- as it stands \yould result taxation. . roughly in offering a credit to the state of I wish to refer, also, to the character of .'\Iabama double the amount of state in the offset as well as to the eharacter of come tax now raised in Alabama. That is the coercion. The original form of this to say, Alabama would profit to the extent proposal was that state individual income of approximately 100 per cent increase. In taxes be offset against/ federal individual Massachusetts, on the other hand, the result. income taxes. That particular proposal .—if they took all of the credit in each in- has been considered in other connections , stance—would be 41 per cent less than the from time to time. , It involves the same total income taxes now levied in Massa philosophy^ that the estate tax' credit in chusetts. In some states the differences volves, as'far as it goes; But it does not woui'd be greater than that; I took the first go quite so far. The introduction of "other two examples coming to me of a positive state and local taxesof'a personal, nature'' and negative, character. Those are fairly into the offset picture modifies this part of extreme instances, but they are not the the philosophy by making it possible for most extreme. ' states that do Hot have personal income The. proposal to graduate the credit so taxes to take some.advantage of the credit. that a larger credit would be offered on- That was deliberate on the part of the .. small incomes than would be offered on Comniissicn, because the Cbnmiission be-' large incomes would serve to carry out the lieved that the element of coercion should primary objective of the entire plan, be reduced to a minimum. It does not hamely, to integrate the state income taxes entirely eliminate the element of coercion,; with the federal income taxes. At the and you should have that In mind in vot " present time the federal income taxes are': ing on the issue. Certain taxpayers in 'Very sî'^htly graduated until you get up states which do not impose income taxes to ra'. .or high levels.. You will find, in will receive just as much benefit from this . our report, an indication of the character credit as will those in states which do im- of the. graduation. which shows that we 'pose income taxes;—:Gertain other individ-- really have no high federal tax rates on uals could not take advantage of the income moderate incomes: The state income taxes tax credit, under this alteriiative plan, be that are already levied usually behave dif cause th(fee individuals would not have in ferently. This graduated credit would en comes from sources which render them courage states to reach a maximum rate liable to personal tax levies. by the state under ten. thousand dollars so as to take but would-have sufiici^ht incomes to make up all credit under ten thousand dollars them liable for income tax payments*to arid have ia comparatively. flat rate above, -the federal government. So there is an ten thousand dollars, thereby hooking the element of inducement in this proposal to fates of the states into the rates that are impose personal income taxation. As has now proposed by the federal government • been suggested, that element is very defi and working out an amicable arrangement nitely reduced. so far as the rate issue is concerned. Those .1 should like.to point out certain distri are the pros. . *"? butional consequences of this program and The con that seems to be most prominent suggest the reason for the graduated offset. is-that, if you graduate the credit, there The bendit is being offered to the state will be some iricreased difficulty in makings in proportion to the distribution of per the application; .that is, administrative sonal incomes among the states. Now the probleriis for state and federal tax depart personal incomes may or may not be dis- ments will be iricreased -by that method. . tributed in a form that would please some SPEAKER BELKNAP: I don't know how people. For example, under the arrange long you gentlerrien are going to want to ment that has been suggested by the Com- • discuss this thing. We could very readily mission, assuming that the present per go on discussing it until midnight or mid sonal income tax statistics collected by the' night tomorrow or midnight, Monday. federal government reflect the truth,.which HON. HENRY F. LONG: In order to .

- ty. 396 THE BOOK OF TlfE STATES bring this to a head, I am going to move vious question. The previous question is that this question be referred to the hext^ the adoption of the resolution and it is not Interstate Assembly. debatable. HON. J. H. THAYER MARTiiN -(New SPEAKER BELKNAP : You have heard the Jersey): I second the. motion. motion for the previous question. Those -MR. LONG: May I substitute another in favor of the motion for the previous ques motion which I think everyone would agree tion will say "aye"; opposed, "no." The tO', that this be referred back to the Com ayes have it. We will.put the previous mission on Conflicting Taxation for farther question, and. that is not debatable as I, consideration, * ; . understand it. The previous-question is MR. MARTIN: I second the motjion.. on the resolution. / " HON. P., E. WARD (Ohio):, Itis-acoh- T/icrc jolloivcd a roll call vote by states. dition andNnot a theory before'the: people :SPEAKER BELKNAP; In announcing the of the United (States and the several states vote, I want to_^ note the number of states at this time. T can't see that this;organi- voting: 25 states voted with 3.9 ayes' and zation has any\ value if it is only a research 30 noes. proposition to put off from year to: year a HON. HENRY F. LONG: Would you please, decision on so important a matter Jas this. also tell, of the twenty-five states that voted, I think it-is important that-some decision how many of the states voted in favor and be arrived at. upon this particular prob-' how many against^the resolution? lenl now. . .: . SPEAKER BELKNAP: It is thirteen to SENATOR WILL 0. WALTON (Alabama):' twelve as to states—a very close vote. I don't want to consume five or ten minut^s^; MR. PARKMAN: The next resolution has but I want to state frankly to this Assembly ..been reported out by the Committee on" that I am in perfect accord with the state Resolutions without recommendation. It, ment made by the gentleman from Ohio' is offered by Senator Woodward of Penn just a moment ago. In my honest, candid sylvania and concerns the tax exemption opinion this is the most important' thing qf public securities. • ' . that has been ~ before this body. . I "W.hereas, there is ah alarming growth have the greatest respect and admiration in the volume of tax exempt governmental for the distinguished senator from Texas,, securities; and '- and I would feel the way he does if I were "Whereas, any plan for the alleviation of voting to enact this bill into law today.' .1 .'federal-state conflicts is seriously hahdi- think we have become unduly alarmed, capped by the" necessity of higher rates on about this situation. I want to repeat that a narrowed tax base, which in many in- iri my candid opinion this is the.most far- stances cannot be accurately estimated for: reaching resolution of this Assembly. It budgetary purposes; therefore be it will pirovoke more honest, candid thought "RESOLVED, That the Second Inter throughout the United States .than .any- state Assembly deplores the growth in vol thihg'we will do at this Assembly. ume of tax, exempt securities and salaries SPEAKER BEL^KN.^P: The gentleman from of public officials and employees—federal^ Ohio made a motion to accept the resolu state, and local, and recommerids that these, tion and the gentleman fromMassachusetts, "tax exemptions should: be removed to Mr. Long, offered as an amendment a sub broaden the tax base, secure a more equi stitute motion, I will be forced shortly to table distribution of the tax load and to put the substitute motion. The substitute . promote the use of money in :industr.y. Tnotiori was that this resolution be referred rather than, to provide an inert refuge for back to. the Commission. . . moneyed capital.']' . . ; . .; MR. WALTON: Then at this time I move SPEAKETR BELKNA'P: You have heard the to lay on the table the riiotion or amend resolution. What is your pleasure? ment offered by the gentleman from Massa HON. LARRY DOBELL (Montana): I move chusetts. its adoption. ' ' ," The motion was regtUarly seconded.. , The mdtiuh ivas regulafly seconded. SEN.ATOR J. V. WEBER (Mjnnespla): In : MR. DOBELL: These features are carried order to settle all debate I move the pre-. but in jhe; bill now before Congress, intro- 'li

SA TURD A Y AFTERNOON SESSION 397

: duced in the Senate by Senator Ashurst of . MR. WARD: I am not an advocate of a ""Arizona. It iCBHore the Senate now. sales tax, I opposed the sales tax through SPEAKER BELKNAP: Those in favor of two.sessions of the Legisla;ture in Ohio, but . the resolution, say "aye"; opposed,."no.'' due to the emergency situation we found The ayes have it and the resolution is ourselves in, eventually a sales tax had to ; carried. : be passed. It has been in operation only. . MR. PARKMAN: The next resolution re a' month. Under the Ohio law, 180,000 •' lates to interstate conflicts and the use of retail merchants are collectors of the sales ' interstate compacts for the removal of theni. tax, and the boundary line difficulties and This is also reported, a*s I recall it, without the ma.:l-order projDosition are something recommendation, that we are unable to deal with effectively, . • . "BE It RESOLVED, That it is the Even if a measure like the Harrison Act sense of the Second Interstate Assembly should be passed, I know no way in which that the Congress of the United States we could deal with the situation effectively. should pass a general enabling and con The national government can collect a senting act respecting compacts negotiated sales tax much more cheaply, without any.. between two. or more states affecting inter such total number of tax collecting agencies state tax conflicts and not affecting the fis as we have even in.my state, since they can cal interest of the federal government."- administer it on a national basis. It would 'SPEAKER BELKN.AP.: You have heard the- avoid all boundary line difficulties and all resolution. What is your pleasure? ; mail-order house difficulties. I; think if"^ // wasrcgularly moved dud seconded i'hat there is any tax that the states have adopted the resolution be adopted. ,\. up'to the present time which should be SPEAKER. BELKNAP : Those in fayor' say yielded to'the federal government it. is ' "aye"'; opposed, "no." The ayes have it the sales tax. . - and the resolution is adopted, MR. PARKMAN: I really .feel that this MR. PARKMAN: Here are a couple of is as important a matter as is going to be tough ones; the first, the. resolution on acted iipon by this Interstate Assembly and ; the sales tax .offered by Mr, Ward of.Ohio. we ought to allow opportunity, for-:bofh This is reported out by the Committee on sides of the question to be presented, even Resolutions without recommendations, though briefly, and I move that debate on • "In view of-the fact that some, twenty- the matter close at five-thirty, twenty min^ six states have been forced through emer- utes from now, ten minutes to be allowed to • gency conditions to resort to sales. taxes, each side,: and that all speeches be limited and in view of the complications in the ad to three minutes. . ministration of such-tax measures due. to The motion was seconded and carried. state lines and interstate commerce limita- : HON, W, H, O'GARA (Nebraska): As I ; , fions, it is the sense; .of this Second Inter stated yesterday iin my remarks, untold, bil state Assembly that the federal government lions will go into the hands of the federal should impose a general emergency sales government and the states will be-bulldozed tax upon,a national basis allocating a sub into doing certain things if we are going to stantial portion of the revenue therefrom get any of it back. Many of the states,such /. upon an equitable basis ;to the several as Nebraska, as yet have not passed a sales states,"/ . _; tax and we are not in faVor of passing a HON, J, FREER BITTINGER (Ohio): I sales tax until we haye. reduced the cost of move the resolution be adopted. ' government. There would be no reason for SPEAKER BELKNAP: What is the pleasure the federaP government to reduce, its costs . •of this Assembly? I wish somebody would while these untold billions flowed into their . move to limit the debate, hands, Isincerely hope this resolution will HON. P. E. W.ARD (Ohio): I am willing not be passed, ; •to limit the debate, but as the author of the HON. SIMEON E,LELAND(Illinois): It resolution i would .like to'have a word to seems to me that this resolution is rather : say.' •; :• . •:/ ••^' •; • anomalous, considering our objection to SPE.-VKER BELKNAP: The Chair will rec- having the federal government tell the states ognize you. . ' > ' what they ought to do.in the determination

I.. 398 THE BOOK OF THE STATES of fiscal policy. Now we turn around and paying their taxes, I don'tthink yoii* should try to tell the federal government what it tackle the pooîan. Less than a year ago, ought to do. If you listen to any economist the Senate.Committee on Banking and Cur- who knows anything, he Will tell you the, ^ rency heard evidence that the nineteen part most undesirable thing you can do in this ners of Morgan had not paid one cent of depression is to impose sales taxes, that income tax in the calendar years; 1931 and the ones that are imposed are regressive, 1932., They are hiding behind tax:exempt that they rest upon those individuals who government securities and until you repeal can least afford to carry the burden. Now, • that:and~get-at_the money where it is,-and . in order to*help yourselves yoii want fur tax the man who can afford to pay it, I ther to retard industry and trade by putting don't believe in taxing the poor fellow who . this on a federal basis. It is not only can't afford to pay it. wrong in principle but it certainly is incon HON. J. FREER BiTTiNGER (Ohio): I sistent with the policy of this Assembly. have opposed the sales tax too, i)ut that is HON. HENRY I^. LoNG.(]Niassachusetts): not the question involved. The members __I am/against the general principle! of ask- are discussing something the resolution îng the federal government to l^vy a tax- doesn't provide for...^ The resolution pro which the states may, for some reason, not vides that the federal government impose a wish to levy themselves. I think the Ohio^ •sales tax and distribute it back to the states, . statement was a good illustration of why " and I think every member of this Assembly this resolution.should not pass. The,gentle- should vote for this resolution. .man sharply criticized-the matter of legis HON. OLIVER E. J. SCHICK (iNIissouri): lative enactment in 'Ohio, which was under It'seems • to me that if a sales tax were compulsion, and which apparently-^from enacted by the federal government with a- -his own statement—was one that was very just allocation to the various states, itwould ill-devised. The admission of how bad their do a/Way with, much confusion which or administrative procedure is in Ohio, was dinarily results from an individual state sufficient, in itself, coriipletely to. defeat sales tax. It would place business on a more this resolutj'jn. • \tT>^ or less competitive basis. Ljider the indi I am more particularly, interested from vidual state sales tax today, business men . the point of vievôf not wanting the-federal are often confronted with certain obstacles gpvernrlient to interfere with 'sales' taxes which throw them out. of. the running on /which bring withiVi their sweep the matter competitive bids on various large materials. of a nTa'nufacturersy tax or wholesalers' tax For this reason, if the collection of a sales as well as a retail ta\f. It is unquestionably tax by the federal government can be true that there is aVery sharp line of de worked out and a just allocation of the marcation between WYiat the federal gov rnpney put into,. the plan so that it would ernment can do in saless taxes and what the be justly distributed among the states, I. states can do, and in my opinion there is a would be heartily in favor of it. Basing field for both of them in\that form of taxa my opinion along these.Imes,! am going tion. But on principle alone I don't be-" to vote • for the adoption of this resolu lieve this should "be donfe. The federal tion. , ", .• • government has not. hg.d anV experience in • SENATOR J. V. WEBER^ (Minnesota): sales taxation. There IS, here, an attempt, The Minnesota State Legislature recently, clearly to give up something- which the memorialized Congress to allow state taxa-' states ought to retain themselves, and also tion of interstate commercial busiiness. We the attempt to stimulate competition be realize that can't be done, but it seems to tween the states as to who canV grab the hie through a federal sales tax we arrive most'out of the bag into whicK~are^ dumped at the same conclusion. One of the chief the proceeds of a. federally administered aims of this Assembly is to inculcate in peo sales tax. ple's minds the idea, of tax consciousness . " HON. LAI^RY DOBELL (ivrontana): I am and; it seems to me, there is nothing we can opposed to a sales tax for two or three , do to create tax consciousness in^yie minds reasons. .The main one is that until you of. the people of this nation as will a fede^— haye the people who can afford to pay taxes "ally administered tax. It seems to me we SATURDAY AFTERNOON SESSION 399 arc.never going .to arrive anywhere until ; Overcome the problem thejndividual'state we inculcate in "the minds of the people of sales tax has to face. In view of that, I this nation the proposition that tax paying e.xpect to support this resolution, believing is an-important problem, and I agree with that it will.untangle many of the knots and the gentl(;man from Missouri, and the gen solve many of the problenis that most of tleman from Ohio. I am going to support us are to face. this resolution. . •^^ • SEN.ATOR HENRY PARKMAN'(Massachu HON. P. E. \VARD: Just a word further: setts): I want to take three minutes to ex Whether or not the sales tax in Ohio was press my own views on this subject. I a good type or whether or not it is Wjell- was originally a strong advocate of a fed administered, every sales tax state (and erally administered state-shared sales tax there are twenty-six of them if I am cor and I have become a convert, after consider rectly informed) has this difficulty. We able study/to the idea that it would be the are surrounded by states on every side, all worst thing that could happen to this coun- but one of which have a sales tax, but tryr^- I have, come to that conclusion for nevertheless the state is flooded with ad a number of very definite reasons. In the vertising, material/coming from across the first place, I believe that the sales tax is es- line and from Chicago—"Buy your goods . sentially bad in its incidence on the p*ebplefit* . from us and avoid the sales tax." And they It is a regressive tax bearing, more heavily will avoid it regardless of whether there is on people of small incomes, and for that a sales, tax in their state or not. They \vill reason, if for no other, it should be only avoid it in both states. Illinois has a sales anemergency tax.. '. tax but all the goods which their mail-order On the question of distribution, the argu houses ship to Ohio'and Indiana and the ment in favor of the federally administered . other states avoid that"^tax and the pur state-shared sales tax founders because the chaser avoids it as well. • . •, political situation which exists .in Congress As long as the present emergency condi makes it impossible to" distribute, the tax tions exist and billions of dollars have to in anyway that is fair to the people of the be raised for relief, we are going tohave several states. The purchasing power of the a sales tax with, us. If there is any "place citizens of one state varies so widely from that a. sales tax can be levied, imposed and . the purchasing power.of the citizens of ari- collected with the least expense and the other that money would be drained out of least waste, itjs certainly in the hands of one; state and poured into another inegui the federal government. I think a two tably. The joker-in the resolution of the , per cent tax imposed by'the federal gov gentleman from Ohio are the words that, ernment would .produce as much, without it should be distributed on an equitable the present avoidance and evasion,^ as a basis. Actually that is impossible-It seems, three" per cent tax levied by the individual to nie that, with all. the inconveniences and states. • • . / ^ all the problems of interstate commerce, ,HoN. RALPH L; "RAMSEY (Georgia): of administration, of border difficulties, of Georgia does not now/have a sales-tax mail-order house difficulties, those should • but it probably will adopt one soon' It be regarded as a necessary evil of a tax •" Is-â question in the mind" of everyone as that essentially should be an' emergency tax to whether the sales:tax is just the kind and that, the very-existence of those diffi of tax we want. I think most, people ques culties is the surest safeguard of the re- . tion that, certainly in the beginning of a peal of state sales taxes at the earliest op study of a sales t$x. portunity. I therefore believe this reso It is evident that all states are going to lution should,-not be adopted. .•-/. • have a sales tax- of one kind or another. r SENATOR GEORGE W. WOODWARD .(Penn- , Now if that be true, federal administration sylvania): May I ask Senator Parkmah .ôf the tax would get rid of many.problems one question about the Canadian ex-; that we, now have. Those border states perience? Haven't they succeeded in their that do not have a sales tax will of course sales tax? . • profit because of "the state that does "have MR. JAMES W. MARTIN: IMay, I answer one. A federal sales tax "would certainly Senator. Woodward's inquiry? One part 400 THE BOOK OF THE STATES of the answer is that there is no distribution SPEAKER BELKNAP: It is.time to put the to the several states, that is, the Canadian question! The question is on the adoption sales tax is a central government tax and of this resolution which you all have in it doesn't have that hi:»*dle to go over. mind. Those in favor of the resolution will in the second place, '.he Canadian sales say "aye"; opposed, "ho." We will have tax conceals the inrid*:iice so that in no case to have a roll call. can it become a tax that will bring about . There followed.a roll call vote by siatcs. sales tax.consciousness. The same thing • HON. Lucy S. HowoRTH (Ivlississippi): is contemplated in this resolution. " While the vote is being tabulated I should In- the third place, in my own judgment like to make a statement on behalf ofMis- the Canadian sales tax results, in levying, sissippi, Mississippi has a sales tax which; niore tax on the taxpayers. The consumers I, together with the majority of the legis pay a heavier tax in the long run, in most lature, enacted and which we think is very instances, though not perhaps in all, than successful. I voted against this particular the actual amount that the federal govern^ resolution because I do not believe in the ment of Canada, the Dominion Govern resolution, nor does our tax commissioner ment, collects. I think that would be true ' approve the plan as outlined in this reso- . in this case, because as you come down the lution. I am making this statement simply .. line each fellow will add to the tax as well because the debate seemed^ to hinge largely as to the original price. ui5trn the effectiveness of sales taxes and I • There is one other point I would-like to did not want my own or ISIississippi's at suggest: If you levy a sales tax which titude on the sales tax misconstrued. amounts, in toto,. to more than-, twice as SPEAKER BELKNAP: : The result -of the much as tîe present state sales taxes amount .vote: 38 ayes, 35 noes.. The motion is to annually, the State of Ohio would lose ; carried. The vote by states: 13 ayes, 12 some ten milliofi dollars as compared with a .rôes, and one evenly divided. ; very modest estimate of the revenues froni I want to call on Speaker O'Gara of the recently enactied Ohio:tax. .The Ohio Nebraska for his report of the Committee - Tax Commission estimated some fifty-eight on Plans for the Interstate Assembly;- The . or nine million-dollars from the tax. I have Committee is prepared to report, I believe. reduced the estimate to forty-three .and a third million, to get my result. If the Com REPORT OF COMMITTEE ON PLANS mission's estimate proves to be correct, the • \ FOR THE INTERSTATE ASSEMBLY ' . loss to Ohio would be _mUch:greater. Your Committee on plans for the Inter HON. JOHN A. CHAMBLISS : I just want state Assembly recommends that the exec to say that I am going, to vote for this res utive boards of; the American Legislators' olution because in Tennessee we have a Association and the Council of State Gov low purchasing power and a low standard ernments be empowered to select the time of' living, generally speaking. I want to and place for the meeting of the Interstate say frankly to you. gentlemen who came Assembly in 1937. from the states of higher standards of living -' And yourComrriittee further recommends thatl think it is an unfair idisadvantage to that the meeting of the Third Interstate Massachusetts, to be speciliG, for Tennes- Assembly be held in the National Cajaital . see to profit by this as the allocation in or in the city where the headquarters of; . evitably is going to be by population and the American Legislators' Association are- ...we would get more than what T would re- located. • • garc^ as ourialr- share. Of course, if you Your Committee suggests that those.hav- gentlemen want^'it so, we are in. favor of ing in charge the program for the Inter it, biit I think it is only fair that you under-, state Assembly consider the inclusion in stand the case. I. won't say, this situation that, program ()f a full discussion of the would prevail in all the soilt-hern.states be Iijuropean system" of taxing real property cause some of these other gentlemen might and of the. adoption'by the several states of not like that, but the states where the a system of real property taxation, which standard pf living is a little lower are most will be based upon ability to pay. likely to benefit from this action. ' '' Your Committee on plans for the Inter- •; •

.o SATURDAY AFTERNOON SESSWN 401 'state Assembly suggests that the program and what are not essential governmental of the Third Assembly should include three activities; therefore be it . r-; or four subjects of current legislative in- "RESOLVED, That pending the develop .' terest/ '.•'•', ment of a more comprehensive program to . Your Committee further suggests that harrrionize conflicting tax laws and to avoid liquor and crime control, social security and duplicate taxation, it is the sense of the such questions of vital importance as may Second. Interstate Assembly that legislative, .'arise during the next two years be con bodies in enacting revenue legislation, and sidered for the program of this Third Inter administrative officials in interpreting such state Assembly. statutes and in developing administrative SPEAKER BELKNAP: You have heard procedure and forms of reports, strive for the report of the committee. What is your simplicity and uniformity." , pleasure? . HON. WILLIAM H.'HACKETT (Connecti It was rcgularl\\nwvcd, seconded, and cut) ; I move the resolution be adopted. the report was adopted. The motion.was regularly seconded. SPEAKER BELKNAP:. Will the Senator SPEAKER BELKNAP* It has been moved read the remaining resolutions? T think and seconded that this resolution be. most of them can be voted on without adopted. Those in favor say "aye"; dp- discussion because I think they explain posed, "no." The ayes have it and the themselves. resolution is adoptecf, MR. PARKJSJAN: This is a resolution of • MR. PARKMAN : Here is one offered by a " fered by Judge Les_er of Maryland relative gentleman from Tennessee, former Senator to the right to tax private property on Chambliss, who has. been reading a book governmental reservations. "RESOLVED, written by Freundj and also, something by That it is the sense of the Second Inter- Professor Frankfurter. The Resolutions ' state Assembly that the federal government, Committee was not able to give this the through Congress, should grant to the sev consideration it deserves. eral, states., jurisdiction to tax. privately • "WHEREAS, Many.problems of adminis owned physical property located in gov- trative law arise Jn consequence of the .ernmerit reservations situated within the ""various functions the states find it necessary , boundaries of such states, and to tax indi to deal with and it is the sense of the Second viduals residing: on such reservations on Interstate"~Assembiy that a specifiCj con their incomes or intangible personal'prpp- crete, definite and practical approach be erty unless it is shown that they are taxed made' toward coordinating these functions thereon elsewhere." . which are of immediate concern to states ; SPEAKER BELKNAP: YOU have heard the which are adjoining or find it necessary to resoli'tion. Is there a motion to adopt the control identical or similar functions; now • ; resolution? therefore be it It .was regularly moved, seconded; arid "RESOLVED, That there be considera- the resolution was adopted. . tion given in the.near future to discussion, MR; PARKMAN: This is a resplution of- publicity, and research Avith respect to ' fered by the Tax Commissioner of Massa the following aspects or functions of state chusetts, Henry Long. In its original form governments and such others as may be of ••• I was not able to understand it and I am like concern: not able to understand it much better in "(a) Passage of enabling acts empower-, its present forhi. /~^ ing the fixing or .establishment of a code "WHEREAS, Taxpayers are compelled to of ordinances or administrative regulations spend large sums in complying with widely which are sanctioned by the legislatures different requirements of different taxing within the orbit of the. enabling act, the. jurisdictions and',--; .action of some national organization such "WHEREAS, The honest taxpayer suffers as the Amerfcan Automobile Association • because hisjess scrupulous competitor takes and also / the state officer in immediate advantage of the lack of uhiforniity'in the charge of automobile licensing to establish interpretation of substantially similar stat comity as to licensing; j utes, for example, rulings as to w^f^t are "(b) Passage of enabling acts empower-

-r- 402 THE BOOK OF THE STATES . ing the fixing or establishment of a code commissioner chooses to come within the of ordinances or administrative regulations scope of those regulations, those regula- which are sanctioned by the legislatures ' tions shall be in force in your state. within the orbit of the • enabling act, 4he The same thing will be âpplicable to regi:-, action of the National Conference of In lationsw'ith respect to automobile licensing. surance Commissioners and the state officer It would enable the highway conlrnissioners in charge of the regulation of the business to agree with other highway commissioners of insurance; on automobile licensing. Mr. Long, or "(c) Passage of enabling acts empower- someone, mentioned here the. problem of .; ing the fixing or establishment, of a code plant disease control and inspection of of ordinances or administrative regulation? plants, shipped from state to state. The ' which are. sanctioned by the legislatures, same thing would be true there. In other : within the orbit of the. enabling act, the* words, unless your, own state chose to bring action of the United States Cdmmissioiier itself within the scope of these regulations, of Agriculture and the state officer in ch.irge it would not be within the scope of the of plant inspection and disease control; regulations. ."(d)""'Passage of enabling acts empower Now.all I any asking is.that some consid ing the fixing or establishment of a code of eration and sorrie investigations.be given ordinances or administrative regulations with respect to this. As Mr. Parkman has which are sanctioned by the legislatures rather jokingly said, I ain v^r- J much in within the orbit of the ena,bling act, the terested in, and I commend to| your at action of the United States Commission of tention, Ernst Freund's Power Over Per Agriculture and the state officer in charge sons and Property, 2a\A such books as of the grading and classification of agri- Hart's Prdlnance Making. Powers, and _ cultural products for sale in market." also Carr's little book on Delegated Legis-. I wish the gentleman from Tennessee latibn. Carr's idea is to withdraw as far \Vould tell trie what that means. as possible the detail of administrative regu • SENATOR BENJAMIN EJHARWCIOD (.Con lation from legislative action and to put necticut): I move the resolution be laid on it in the hands of adminisj;rators in the -the tabje. various states within this orbit—and Mr. The-motionum regularly seconded: Parkman was more or less making fun-of my Word—fixed by the state 3'egis.lature. SPEAKER BELKNAP: It has been moved and seconded that the resolution be laid* SENATOR J. V. WEBER •(Minnesota)V on the table. ; VVoiild it not be better, in fewer words, HON. W. H. O'GARA: Has the gentle to ask this Assembly to go on record as . man who offered the resolution the right favoring doing away with all state legisla^ , ; to be heard? ; " vtures. and putting everything in the hands , ; HON. JOHN A. CHAMBLTSS: This is an of department heads? " .endeavor on my part, and I think Sn entirely MR. CHAMBLISS: Oh the other hand, as innocuous endeavor, to suggest to you I look at it, it gives the legislature a pe gentlemen and to the Interstate Assembly culiar dignity that it does not have w^hen \.- an idea with respect tocoordination between it undertakes to deal with detail, and I' the states in a very simple way and in a commend especially, to the Senator's at-; manner that can be accomplished through tention, Carr's little book of foi*ty-five or- administrative regulations. To be specific, fifty pages on delegated legislation. and to give you one of the things I intended, SPEAKER BELKNAP: May I ask what is to operate, let us take the insurance laws. your pleasure on this resolution? I have ' As you all know, we have standard provi heard a motion to table and ;it has been sions regulating insura;nce. What I want seconded. Those in.favor will say "aye"; to do is undertake to have statutes passed opposed, ."no." The noes have it. The • in the various states providing that if, and question is,on the adoption of the resolu when, the National Conference of Insur tion. Those iii favor will say ",aye"; op ance Commissioners agrees on certain'~proposed, "no." The ayes have it and the yisiohs with respect to the regulation of resolution is carried. 'insurance and your-particular insurance SENATOR PARKMAN:, One. more resolu- J h "SATURDAY AFTERNOON SESSION 403 "v tion, offered by the representative from been exploded. For that'reasbnT thought, iMassachusetts, jVIi-. O'C^nnell. that this Commission might be able to "WHEREAS,-The problem of securing a /devisesome kind of new%xs>5tem whereby fair contributipn to the cost of state and the load would be spread m^^re equitably local government by owners of intangible than it is now.- ^ •. 'K... property has not received recent comprehen The second part of it'.provides that: if sive study; and any state—as we are contemplating doing "WHEREAS, The distribution of the to^ mw'—^^goes back to the system of< taxing load has been materially altered by the de* intangible, property at local property rates velopments of the. past few years; and or otherwise, surrounding states could, enter "WHEREAS, The problem is one directly into agreement to do the.same t-hing so that involving interstate; competition and con- the state first taxing intangibles, wouf^ not flict of tax jurisdiction; and lose a great many people and much 'prop "WHEREAS, The present system of taxa erty by removal into other staffs where tion has been found to be obsolete, there the tax can be escaped. '• / fore be it • SENATOR PAUL:D, GRADY (North Caro . "RESOLVED, That the Interstate Corn- lina): I heartily agree with the resolution. mission on Conflicting Taxation either di- What we are trying to find is a small-gr<)up rectly or by reference is hereby requested of folks w'ith lots of money and vefy^'êw to investigate carefully the entire problem votes, and that is why I want the res9lu- of the distribution of the tax load between tion adopted, to see if we can find therti.. owners, of intangible property and other ^ . SENATOR WILLIAJM A. DAVENP^RTN persons wjth a view toward formulating (Massachtisetts): Here is a t'hdCight .fchat a new tax system", under which ta.xes will be goes.with this resolution: At the pre^'ent assessed according to. the theory of "ability time there are-billions of, dollars •ivort'h of' to. pay;, and in particular to estimate the intangible personal property in the United feasibility of securing the joint action of States which-pays no tax at all because it two or more states in order that states im- doesn't bear dividends. It is time that^wasL - posing taxes on intangible personal property investigated. I am hot in favor of "soaking.-. or the income therefrom may be protected the rich," neither am I in favor of "soiking.";^ from the competition "Of other states, and the. poor,": and I believe the sales tax is ^1 in order that the possibility of relieving real method of "soaking the poor." In,our state.^^ estate tax- burden by this means rnây be; we have some sixtêen billion dollars (in in- -'; canvassed." ^ ^^,_,. tangible personal property and only b,6twe§® - // was regularly moved and seconded- four and five billion dollars of that paysany that the resolution be adopted. tax...'The rest of.it-lies dormant and the SPEAKER BELKNAP: YOU haye heard the owiier of it4_s exempt from taxatibri^because resolution. Will the sponsor of this resolu he has no income. It is time thi^t source tion kindly explain..it? • was reached for taxation, • , < HON. RAYMOND F. O'CONNELL: The.,: SPEAKER BELKNAPJ, What is-jhe pleas thought I have in mind m presenting this ure of theÂssernbly? It has li&en moved resolution is this: Our present system is and seconded that this re59lutioh. be such that in ^lassachusetts our t^xsystem adopted. Those in favor wilj

•^v.

-0- • ' -•' , .•'.'•,•, M/i- March 2,-1935.

r^HE meeting was called to order at ADDRESS BY HON. W. H. O'GARA ; nine o'clock, by Speakerêlknap..^ It is true the unicamer&l legislature .is I• SPEAKER BELKNAP: Pdon't know whether the people here are as relieved as an experiment in the state of Nebraska and Mr. Toll and I. are that this day, full of: there are causes for this experiment.- I various arguments, has come to a success might say, among other causes for its adop-*" ful and happy "close without any fatalities. ition, that those who have observed legisla:- We have cpme to a very enjoyable part of tion realize that about twenty per cent of the Assembly's program and I am going the rhembership of the two houses—where to turn the task.of toastmastering over to a you.have the bicameral system—do all the man who is a past master as a toastmaster. work, so we concluded in Nebraska that Dt^ Luther GuHck, Director of the Insti we would only send that twenty per centj and that is one of the reasons for our uni • / tute of Public • Administration of •New cameral legislature. York.,-. \;' '• . ". V ', ;••,•'•' •:•• However,^ the real reason is Senator ^•TOASTMASTER GULICK: I don't know hether an introduction of that sort was Norris who is the best loved and the most iendly or not. I was'happy to finish this dearly hated man in the state of Nebraska, al without being shot. The very first dis- 'a man whom, we look up to, a man whom, cvfesion which my colleague and I engaged many frown upon. He has. theories and 'i'wasvvith" reference to school elections in ideas of his own: • His reason for the uni is native staê, and I think it is quite re- cameral legislature was that he felt- markabjie that he is here at all. You kriow. a better class of men and won'ien would be they shoot people ir^connection with the chosen with a smaller house.. "He also ob election of school trustees in Kentucky. It jects, strenuously to that committee which is a very poor year when they don't have is supposed to destroy a lot of good legis at least three or-four or five school trustees lation,, that is, the conference committee shot in the elections down there; But we of the two houses. I haveobserved, how ^re not only surprised to hayeUhis one ever, that the conference committee very representative from the legislature\pf Ken often writes into a bill things that should tucky with us, but also to have \another have been iri.it in the first place. representative here, in spite of their. com-^ ing from.such a dangerous state. \ . The Nineteenth Amendment Out in the state of \^'êbra5ka—^r don't Personally, r did not favor the unicameral know whether it was. entirely on account legislature and I had two reasons for not of the legislature or for-other reasons— favoring it. However, since the baby has the people recently decided to have only one been dumped in our laps we propose to chamber in the legislature. I think we nourish it. One reason why I objected was should not proceed with the discussion to because of 'the Nineteenth Amendment. night without hearing a few words about Now you. may wonder why I object to the that very interesting experiment in Ne Nineteenth Amendment. I don't object to braska. Therefore I want to ask the Speaker •it, but we find in rural regions that the_ of th^ Nebraska House-^Representatives, farm wornen do;not go to vote, particularly '< Mr. O'Gara, if he will favor us with .a short, in the primaries, and therefore the cities discussion of the: essential, point of view and towns, eyen in the state of Nebraska and the objectives and the hopes', of the where we do not have the large cities you niew Nebraska-experiment. have ftere in the east, are controlling our 404 SATURDAY EVENmG SESSION 405- elections, and with the unicameral legis called the four horsemen in the Nebraska lature we- know the cities,and towns are legislature. There were just, four Demo going to control legislation in Nebraska. crats and the rest of the 133 were Republi cans. During that session we had to, \ Other Objections redistrict the state on legislative lines. I. remember one day \ve were at work when ' Also, we are lik\:ly tO: build up an aris Dr. Hofmeister, one of the Democrats and: tocracy of legislation, an aristocracy of a good old. German, well educated, but government if you please. It may not seem speaking with a decided accent, said, "I that, will come about, it may develop object to the vay you iss-ruinin' a good gradually, There have been a few of us Democratic district." . • ' ' farmers who have been recognized, either .•\ young »Republican la\vyer from Omaha for our ability or our persistence, I do not answered, "If it is a Democratic district know which. I am a farmer, I have/never how do you account for the fact that the. done anything else but farm until a half stream running through that district is.. "(dozen years ago when, like many farmers, called the Republican River?" V I retired because of ill health and the de "Veil," he said, "because it iss so damned pression. The chief clerk in our legisla crooked," ture is a farmer. We do not want to have So I know we are going tp have fun when the cities'and towns rUn the rural regions, it conies to redistricting the state. which I fear they are going to do. I fear I have overstepped my time. How : Another objection I had to a iihicameral ever, among the resolutions proposed this _ legislature was that I felt, with, a small afternoon there was one we neglected, and house, we should, haye fewer well- I am going: to make a motion we thank experienced members. I was Jri favor of a Mr. Belknap and .Mr. Toll arid all those . four-year term with staggered elections,— associated with them for the fi.ne time they, the odd-numbered districts electing one have given us down here and for the really year arid the even-nunlbered districts two wonderful success of this meeting.: * years later. Under that system, you would To.ASTMASTER GuLiCK: First wc Want to keep a group of experienced men at all thank you very much for what you have times. I.sincerely hope thatjf any of the . brought to us. Second we want topiit your states that are represented here decide to motion, because I know we are all very .- have a unicameral legislature, they will enthusiastic about the work thege people build it upOn this plan. I think the two- have done. All those in favor will'say year uriicameral legislature will be a failure. "aye." I never heard ariythirig more unani I wrote to Senator Norfis and asked him mous than that. I hope that will be to outline what he thought should be done recorded arid carried back to the secreta.riat in the way of smoothing the path for this to refer to during • the moments of mental one-house legislature. He sa:id all we had brain fag that follow a.conference of this to do was to set up the districts and go sort..' ;.• • •• • ' ;'• •••• •',••••' ahead. Hovvever, . when the unicameral The next speaker was for many years one committee was created, and the Speaker Of the .best congressional representatives of , was elected as the chairriian of that com the state of Kerittitky. The people in. mittee, I appointed a subcommittee of three Kentucky thought so highpof him' that to go mto the statutes. We foimd thatyn ^-^^y redistricted a part of the state and order to smooth the road for the new urii •>brought him back home where they could cameral legislature, there were about 125 have him in their own legislature. Sir, changes riecessary. it isa great pleasiire to have you here this evening. It is an*honor to .be able to in Redisirictmg the State troduce Mr. Ralph Gilbert, a member of We have not yet "reported out of our the lieglslature of Kentucky. He brhigs committee the bills for ; redistricting the before us the first part of the topic of the state arid we know when it comes to that evening, "The Effect of the Federal Eco- part of it, we are going to ha,ve plenty of nomic Security Program on the States." trouble. In 1920, I was one of what we' Mr. Gilbert! 406 THE BOOK OF THE STA TES

. ADDRESS BY RALPH GILBERT ' yesterday I heard a distinguished Senator seriously advocaje an average unemploy For a number of years I was in the habit ment wage of 80c an hour. If 8Gc an hour • of speakingin the House of Representatives was the unemployment wage in my" section, of the United States, where nobody listens a vast majority of both business and pro "anyhow, so if any of ypu would; like lo fessional men would seek to get-ôn public retije, it will be neither a novelty nor an relief. That is one reason why there must embarrassment to me. be localization, and in my humble opinion, . An accurate and intelligent discussion of as a son of the South, if it i§ administered this subjectwould require not only a pro found economist but an inspired prophet, : on the northern scale, as all relief has to this -.. because the federal economic security pro time been carried on, it will not benefit the gram has not yet been passed, and I am states of the South. supposed to tell you what it is going to do , AVhile relief is not a part of the economic recovery or security program, it is an ih- ' •; to us when it is passed. . . troduction to it. The splendid county Considering the matter seriously, al which I have the honor to represent in the though briefly, while I am not an economist, Kentucky Legislature did not apply for any.-^ I know as a: matter of common sense that relief. In fact, it made it definitely known its greatest effect will be to nationalize this, that it did not want any outside assistance. ' most local problem. If it is an incentive, With •; pur local committee we had found to economy to collect money locally, it is some seventy families who would need as-.' a far greater incentive to spend it locally. sistahce during the winter. Later, we had .iNIy observation is that the blessings-and to accept the relief and now we.have 500 hardships,, the advantages and disadvan- families on the rolh: • • tages, of living in one part of our com- . moh country, are equal to those of any Centralization of Administration '•;.'•• other part, but the circulating medium of exchange does not share that proportion. Another effect the program inust have on the states is to centralize the state ad "'. ^ Regional Differences . __ , ministration of these securities or benefits. Ill our section this centralization would ' I have no doubt that the laboring man also be undesif'^ble. Not only does every . in an industrial center of Senator Daven state have its individual problems but every port's state of Massachusetts would have county in gvery state has its individual about as many pleasures and benefits of problems, ^'e have in our county seven . living as in the rural section which I enjoy. elected magistrates. They know their .con However, the amount of money required to stituency well. We have a very personal • secure such pleasures and benefits is vastly administration of these public benefits. In ' different. The employee in an industrial rny country it is somewhat of a reflection . ^center in Massachusetts mlist have a .sub- to go to the poorhouse—not a reflection stantialor.day for rent, a substantial'out on the poor,^but on their family and their' lay for f.iel, for food, for each necessity connections, because however remotely re of life, and an additional sum for. a reason lated one may be, he. is not supposed to ' able amount of recreation. The amount permit his relatives to go to the poorhouse. of money required to obtain the same bene We therefore have a systern whereby a fits and pleasures in" the rural community worthy nian, having the respect of the com . in, which. I reside isr much less. In my munity, doesn't care to send even a dirânt section, the average rural ernployee has a relative to the poorhouse. This individual 0 home furnished for little or no rent. If will contribute an amount sufficient to keep ' he is a colored employee he probably hoes' his needy relative at home. This economic a few days in the ggrjclen for the house security program is bound to lead to state rent. Regardless of Avhat the products he centrahzation which, will impair the effi raises bring on the market, they have the ciency of the local agencies. same nutrition value as in Massachusetts. -Food costs littlej and for pleasure, there Dangers of Federalization is the fishing pole leaning, against the cabin We have a wondeirful country aihd a and the hound dog asleep in the sun. Only common roiintry, but parts of it a,re very t, SATURDAY EVENING SESSION 407 different from other parts, -If you will what could be brought.together from, all; pardon some personal and human refer corners of the world with reference to past ences, we people in the South keep poor e.xperience in the handHng ofs^the .problem .; taking care of the Negroes. At home-the of social security through central govern other night I was in a reflective mood. mental action. Dr. Witte, we want you There I sat, thought I, without much of first to ."talk to us a little bit about the this world's goods biit with three servants, •status of the progr^^S!^then I am, sure. ; three reliable,, faithful, lovable colored peo that we can best j^ceed with general di%;;^; ple. One of them is a l;ttle boy about cussion.. If you. will leave a few of your • eleven years old who was. soft of bestowed' ideas until later, they will probably be upon us, a.wonderful little colored fellow. brought out in the questions. Pn,'\Vittel . • •I hdver saw him when he wasn't smiling. His people live in the deep South, down ADDRESS BY EDWIN E. AWTTE in.Alabama. We had iio ilse for Joe, and my daughter .and I \vent to the store to I assume that my job here is to answer . buy him a new suit to send him horne, and questions a:nd assist you in your discussion we looked around and there were tears in' of this subject, but first I will very brieny: . his eyes, and my little girl said, "Daddy, outline what the economic security program vye can't send Joe home." Well, now; Joe is, as.presented in the. Administration bill. ' is "on me"'for the b|ilance of his days. I can't tell you what it will be after Con- . All right, let's apply, to Joe, the social giress finishes with it, but. I can tell you security program. I* simply state this to what it is now. - show how inapplicable any fixed prograni .One point is very essential. The Presi-. : miist be. As I understand it, it is contem dent, in his message, referred to the pro plated that he is to have, and those other gram in these terms: he said.it was a coop servants are to have, $30 a. month—some erative federal-state program. :This does not thing like that.- Well, if an old colored mean nationalizing the operation of the'V man in the South, leaning back against the economic security program. That is a mis ;cane,withevery necessity satisfied and with conception. În fact, some states, I am ; - 3:11 the pleasure his taste demands, is given sure, would rather have it much • more . S30 a month, :he Avill be rich beyond his ;nationalize.d, since the states and the federal / fondest dreams. I am simply trying to illus government will share the cost bf the pro- \ trate that it is a locâl and not a national gram, and this legislation contempjates '•': program. • ^ -; state and local administration. .We will, ; . I have alf-eady consumed my tjme. I not disturb, to any appreciable extent, the 'need not: go further. ISIy comments are, arrangements already existing in loca;l.corri- . tharavhile in this great and prosperous and munities! . lean assure you of that. Vglorious country of ours no man should be It is a national program in. the sense allowed to go hungry, at the- same time it Mr. Gilbert spoke of-—it equalizes burdens. is a very dahgerbus field for the federal The difference, that. Mr. Gilbert referred government to enter,.. It should proceed to,, in -the resources of different sections of: with great caution lest the incentive for the country, is very decided. This situa-,. self-protection be destroyed. Were I a tion necessitates .some assistance on a na delegate to. a polftical convention of the. tional scale,in dealing with the very, com- . opposite jpiolitical faith this would be,one . plicated and difficult and expensive problems of the subjects that I would "view with that we • group together under^ the title .' . alarm." , , " • economic security. ; . ;/;:'" •: . So great are these differences that in ToASTMASTER GuLicK i Now'we wiU turn J.929i.;there werfe five states in- the Union in •:• to the other side of the picture. " which the per capita income w-cLs less than /' Dr. Edwin E.Witte, as everyone knows, $300,. and five other states •in\ which the is the nian' who took hold of. the tremen per capita income was over $1300; We" dously difficult task of bringing together are a nation,and therefore the cooperative the factual material for the; President's attack on many problehis---not a n'ationali?,-- . :'•• Committee7on Economic.' Security. His ing of the problem but a sharing of - the staff, in a, great burst of energy, gathered burdens—is vitally necessary. 408 THE BOOK OF THE STATES Now, what does the economic security With regardNto security for children, our program, in outline/deal with? Four mat- first and foremast consideration is the ten ters: -old age security, unemployment com- per cent of all. families now on relief, more pensation, security for children, and ex than 350,000 of them, consisting of a mother tension of public health services. and . young depei^derit children-^familfes where 'there is no "Qreadwiriner other than Four^Point Program the mother, and where the mother is usually Under old age security are included two unable to provide support. Again, as with distinct measures: federal grants-inraid to, old age pensions, federal assistance to the the states for assistance to aged persons states, not dictation but\financial assistance, dependent oh" the public for support, and is proposed to help the\ states- carry part a system of compulsory annuities by which of the burden of caringy for these unem- people not yet old can build up their o^^^l pioyables who are once lAoreto be a state protection for old. age. I shair not deal arid local responsibility. \ Further,' there with the latter of these hei*e-becausît is are provided federal grants-in-aid for ma entirely a. national measure, the only strictly ternal and infant, welfares services and national jpaft of the entire" program. The federal grants-in-aid for the, hospitaliza- nuhiber of aged dependents is very grea.t tionand care of crippled children. These everywhere in the country. Seven hundrecl''- "are all activities in which \many of the thnusand people oVer sixty-five years of 'states are now engaged, and Which, during age are now being cared for by the federal this period of depression, havelstrained their government, but in response to insistent / finances, . Here you have again a very public demand, they are tolj^^rned back strong case for national assistance, not na to the states for care underTRfe general tional dictation. policy of returning responsibility for the W.ith regard to public health services, care of the unemployables to the states. grants-in-aid to the states are proposed for The states cannot be expected to carry that •^the extension of state and local public, load alone. The plan i.s for the federal health; facilities. Such grantsMn-aid are government-to assist the states in dealing with the large group of unemployables, I'ery popular and very necessary, particu- . among whom are included the aged and /larly in the section south of the Mason and also another large element in the present bixon Line where that type of 1 service is relief population—the fatherless families. rather new, and undeveloped. ISo much The unemployment compensation part of for the general program. ..'•. the program \yill not provide for the peo Slight Federal Control\ ple now unemployed and on. relief. It is a means of building for the future. Under I want to emphasize, very defmiiely, this such a system the unemployed of future "central thought: The ,degree ofl federal years will "not have tb.be dependent on 'control involved in thii, program lis very : relief. They will receive, as. a matter of slight and possibly it will be evenlslighter right, and for a period commensurate with when Congress finishes with it. It is far their previous employment, an amount of- ^^ss than the degree, of. federal i control. compensation that will enable them to \ imposed in federal aid for highway con- subsist without having to turn to the public -struction. Old age pensions are an illus- for support. Such a system is, impossible tration. The bill, as it stands,.contemplates - without state action, but"no state can pro- ihafold age pensions shall be paidlunder ceed alone unless assured that employers state laws and administered through! state in neighboring states will have* to, make and local authorities. It does not cohtem- . the same payrhents knd operate' under plate financial participation by the Ipcali- . similar provisions. \Vhat we contentplate. ties, because in so rriany states we have the , then, is a:system of undiiiployment com-- same financial problem • that we Vface pensation built upon statfevlines but with nationally. There, are within the states federal assistance which wiir enable the relatively prosperous areas that/can \and states to give unemployment\orhperisation -should help carry part of the load of\the .with the assurance that neighBorifig'states less fortunate,areas. \ are bearing a similar burden. "\ ,' The federal bill" proposes that the sfete «»

••i&y SA TURD A Y EVENING SESSION 409 law must not require a residence within the states will run.riot on c^d age assistance. •state of more than five years, a restriction There is one safeguard tlmt prei?6nts tms; which, after all, is quite reasonable when namely, that it will not b^^ji purely na we contemplate a situation where all states tional expenditure, and the states and local will have old age pension laws. Outside of governments will have to pay half the' the southern states there are, I think, only ^ bill. ; two other states that do not have old age To repeat, this is a cooperative federal- assistance laws. The reason for the southern state, program-designed primarily to make states not passing such laws is a fact which QBsit possible to provide for the aged, the. we. all recognize; that the southern states, fatherless families, and other unemployables on the whole, comprise the area which, as who are being returned toJhe states. The Judge Gilbert said, has been poor because alternative is for the* states to carry that « it has had to support a large Element in. load alone. We do not feel that is the the population-which was not very iDroduc- fair thing to do. These are local prnblems but they are also national problems. The The federal bill does not enforce a $30 great difference in the economic resources- a riionth pension; The standard prescribed of the various sections of the coun in the statute is "a reasonable subsistence try makes them problems of . national- 'conjpatible with decency and health." That doncern. --^ varies, of course, with the-circumstances ,'- '^- •. • • •• • •• • under which the person lives. It varies in Status OjLegislatmi different parts of the country. It varies between country and city. It Varies, with ' :A few words about" the status of-the the particular situation of the individual. legislation and the way in which these • In the twenty-eight states which have old states fit into the picture. .As has been age .assistance laws, the average pension stated, the legislation is still penxling in • . grant is ?26.47 per month. The federal .Congress. There has been no unneces.sary delay in the consideration; of this legisla legislation does hot propose that those per tion by the Congressional committees. sons who are now being supported by their Both committees have completed their hear •children, by friends^ by relatives, shall not ings and the House Ways and Means Com- .^ be so supported in the future. It merely . mittee has re-drafted the bill and reported i contemplates that those old people who it favorably to the House, where it is now are dependent upon the public for support being debated. Membersof both the Senate "^shall be" given a grant, not a general relief and House Committae^ have worked most grant, but a definite fixed grant which can diligently to expedite consideration of the be varied from time to time iii proportion bill. The House Ways and.Means Com to their needs. mittee laid aside all-.other matters and held Even under relief, which has been _ sessions both forenoons ;and afternoons. much more nationalized than is contem- Practically every meniber 6ttended every • plated for the social security program, the session, ^""^ "" average grant per iamily in Mi^^ Gilbert's The economic security program is a state is, I believe, just sli'-'itly over $10 measure of gre^t importance involving a month. In the state of I"^ew York they entirely new policies. ,The .-Xdministration ; have been over S40 a month, and that does . did not expect the Congressional committees' ''not mean, as Mr. Gilbert has very well „ or the Congress merely to rubber-stamp stated, that people are being taken care of this bill, but has sought their cooperation any,less \yell in Kentucky than they are' iru.perfecting the legislation recommended.' . in New York. But, it does indicate dif In carefully considering every' section of ferences in costs and standards of living, this billj the Congress is "only performing «• and thesei differences will obviously influ-. its constitutional duty. This has taken ence the grants for old age assistance. We • time. It may take considerably more time- do not expect tliat p.ensions of $30 a month* There is no doubt'that in the end there will be grantefd to people in Kentucky or will be legislation on this subject, legislation any other place where sucn a grant would which will"include substantially all/of the . ,' be excessive. We do not expect that the matters that are now in the bill. There is 1r vrth the excefition of Indiana, which has the Economic Security^'Blll as introduced a 60 day session and is contemplating a and be reasonably safe in doing so. Alter recess. ....•".. nate model state unemployment insurance

• .'•••'.'"-• ' ' bills and suggestions for a state old age " Special Sessions '•,'. - -. pension bill conforming with the federal There/ is reason to believe.that a great legislation now pending in Congress have "many statelegislatures will still be in regu been sent, by the'Committee on Economic • lar session when the federal legislation is Security to the Governors of all states. It finally passed. Others that will not be in cari|ôt be guaranteed that those bills will, regular session can still take advantage-of meet all requirements of the federal act as the federal legislation and it is my belief it is to be finally'passed, but this seems that the states, after a study of the prob highly probable. SATURDAY EVENING SESSION 411 The advocates of the-so-called'"subsidy will^be to the interests of all states to enact plan" of unemployment insurance proposed unemployment compensation laws, so that many more, restrictions upon state action— employees may derive ôme benefit from called by thern "standards to which the state^ the payroll taxes the employers will have, laws must conform"—than are included in to pay in any event. All states are directly the Administration's bill. If I judge the interested in the Administration's economic • temper of"Congress correctly, it is not in security program and will want to cooperate clined to place mb.re restrictions •'Upon the in carrying out this program. Reports to states. Certain it % that.if the states do the contrary, it is still entirely possible to not want additional restrictions, the Con do so. ; . ' V gress \\'ill not enact them. A final word:. The Committee-ori Eco •Cooperative Venture/ nomic Security will be glad to give you the •The legislation proposed by the Com best assistance that it can. . ^ - ' mittee on Economic Security was. framed ToASTjtASTER GuLicK: One vcry Con I in the thought that the attack upon the vincing proof of this readiness^to assi'st was, problems-ef insecurity should be.a coopera''- given us tonight by the fact thatDr. Witte tive venture participated in by both the flew all the way from Wisconsin in order federal and state governments. There was to be here tonight.to talk especially with ' no thought that the federal government the. finance men from the various states ; should decide all questions of policy-and and the members of the Interstate As ' dictate what the states sKould do. Only very sembly. ." • . ' necessary minimum standards are included • I am sure that you must have many in the Economic-Security Bill, leaving wide questions. latitude to the states to deal with their HoxN. P. E. WARD-(Ohio): the state .peculiar situations. ment is made that there are old age pen Jn: taking this position, the Committee sion set-ups in Kentucky at $10 a month on Economic Security has assumed that the and New York.at $40 a month.. states are fully competent to decide basic DR. WITTE: That is relief, and it is per .questions .of, policy for themselves.. The family. unemploymeht insurance committees or. .JMR. WARD: I-was wondering if the aid commissions which have studied this prob set-up contemplated, in final effect, the lem in more than a dozen states have pre doubling of the grant in those states where pared bills which are fully as good, if not they have aid of that kind now. better, than the standards which the advo- DR. WITTE: Well, of course that will . ' cates of the "subsidy plan" would write into be lip to you. You will pay half the bill. the.federal law for states to live up to. But that isn't \yhat we visualize, for this It has seemed to the Committee that some one reason; In every state, practically, • of the energy spent in trying to ge.t Congress there are old people who are not being.i ^ to "prescribe what benefits the states must. taken care of but who ought to be taken , pay, what waiting periods they shall have,. care of. As a result of the recent financial .and similar matters, might much better be .slringency there are long waiting lists, the devoted to securing passage of the very .proposed law will mean, in some states per " good unemployment insurance bills how haps, an improvement in the allowances. pending in more than half of the states. In a state like Indiana—and I am not The Economic.Security Bill, as it stands, criticizing any state—the situation has been is free from all unnecessary restrictions "such that the states have done the best they upon state action. It is truly designed to can. The allowances have been about $6 help the states with problems they will a month, which of course is an inadequate otherwise have to face alone. Some parts grant in Indiana, and in such instance^ of the program will cost the states consider federal assistance will probably take th^' able money, but not'nearly as much as they. ~^~form, very largely,'of increasing the aU- "" would otherwise have to carry all. alone. ; Iowances. On the other hand, in the state Under the, Economic Security Bill, the of ]\Iaryland, where the law is really opera Federal government will assist the states tive only in Baltimore, the grants have in carrying,Jhese burdens. Similarly, it. averaged close to $30 a month. That is 412 THE BOOK OF THE STATES the. highest in. the Union; Now in that It is entirely different from an old couple state there are almost no people.on the living in the city of New York where lists. The allowances are adequate but- shelter has to be provided and where every t.here are very few people on the lists. In other item of expense is very.much higlijeii, that state the assistance probably would , Old . age assistance and mothers'* aid take the form of taking.care of additional everywhere have meant adjustment to the people, but in any event the local people particular needs of the individual. That . will pay half the bill -'and will determine is. what we contemplate. You take into what shall be done. \. ,cprisideration.ho\^ much that particular in-' HON. O. K. ARMSTRONG. (Missouri): I dividual needs for a decent subsistence a^n^ • woiild like to .ask Dr. WitteÎ understood you take into- consideration what other correctly the .proposition, in regard to the income'or equivalent of income that per granting of allowances for any of these son has, and you provide the balance, and .four major divisions of the program. Do the federal .government says, "We will you mean the'federal law will be so written match you half way. We won't go higher that it will be entirely flexible as to amounts, .than $15 a case." That doesn't mean some for example, for old .age pensions or grants- cases and some individuals won't-have to in-aid to dependent mothers and children? be given more than $15 from state and' Will it be so flexible that if Missouri, for local funds, but the federal government, example, should decide on a certain amount comes, up only to $15. ^J and our neighboring state should decide on HON. HENRY G. VAUGHAN (Maine): double'the amount or one-half the amount, Why $15?. . & . the funds will be allocated to our states DR. WITTE:- The $15 is of course a respectively in proportion? Did I under purely arbitrary figure. It comes from the stand that correctly? Or will there haye fact that the majority of the state laws now to be a minimum, a flat rate from the provide. that old age assistance shall be Federal Treasury? computed on the basis of $30 a month, less DR. WITTE: There is no flat rate from the.amount that the old persori himself has. the Treasury. That is the situation in a majority of the MR, ARMSTRONG: In other words, there .states, but not in all states, ' is no "minimum that must be paid' from the MR. V/tuGHAN:' It is'arbitrary, you just,, Treasury. If Missouri decides to pay six say $15?' or twelve or eighteen dollars, then on what DR. WITTE: It is a sum that we assume basis will the federal government decide on isn't going to be questioned except in in^ • the amount to be granted the state? .dustrial communities. DR. WITTE: The federal- government • HON, 0. K. ARMSTRONG: Dr, WHtte, one pays one-half of the anient, with the maxi other question if you please, The decision mum of. $15 per case. I^J of the cost is as to the >amount of payment and eligibility . what.the bill provides, witâ maximum of will rest entirely .with the. state. There will J^lS.in any case. Now tha^^S maximum be no coercion on the, part of the federal has importance in highly Nûstrialized government to set up standards which will communities. I can illustratOTihat by the force each state to say if a man or woman . state of New York, which no\% has a roll in a certain condition shall receive the pen of 60,000 people on old age assistance. In sion? , the state of New York last year the old age DR. WITTE: That isn't quite correct, no. grants averaged a little over $22 a month, There are a few standards in the bill as but they averaged over'$40 a month in the introduced. We do say that the state-shall city of New York, and'Tor the very obvious provide assistance for people who need it, reason that in the city of New York it who have no other means of support, and costs a lot more to maintain an old pesson. who are aged. The bill, as'originally intro Where an old couple own their own home . duced, said that assistance must be granted and live in a country district with a garden, to aged dependents who are residents of the the. extra allowance that they need, even United States, who have resided in the state if they have no other source of income, iV .for five years and who have no means of very small. • The grant.you need is small. \ securing a decent subsistence.

\ 5^TURDAY EVENI/WG SESSION 413 Now the Ways and Means Committee p/oportion to. what it contributes. Now , has turned around'those standards, and the Ave don't worry about our-own situation law now.simply says that if you impose a.''^ but-speaking about Kentucky, do the funds , residence requirement in your law you may. which we contribute toward this, worthy not have a residence requirement of rnore program go into the state treasury of Ken- than five years,-.^ It sets as an ideal standard tucky to Jag distributed by the state or is that you shall give assistance in an amount it controlled by the federal government? adequate to provide reasonable subsistence, We have no desire to control Kentucky's but leaves the determination, of what is administration of the money which we want reasonable subsistence primarily to the local to contribute; of course we are very glad people. The standards are very few. . to do it if we have the funds, but we would ; . MR. ARMSTRONG: Will the.administra like to know who distributes that money tion be left in ,the states or will the.case and .who determines hiow it shall be-dis- work be done by feder-al supervisors? • \ : tributed, whether Kentucky or the federal DR.WITTE: There is no federar super government. . • vision in'the picture at all. . DR. WITTE: Kentucky will do it in the , MR. ARMSTRONG: the federal case main, with relatively few standards in'the workers "will be dropped? federal law—relatively few standaids. In DR.. WITXE: Oa_thie relief set-up. various parts of the program it differs. In • MR. ARMSTRONG: * This contemplates the public health work there, is very con taking-over the relief work too? ^ siderable control frohi the federal govern .( . DR. WITTE; This.does not contemplate ment because the public health peopfe want completely taking over relief..' The entire that. On this,matter of. old age assistance, ..program contemplates that the unemploy- ithe control is very slight because condi tions do differ,so vastly and the largest * • ables shall be returned to the state control J 'and that the states shall foot the bill, and protection to your people in Connecticut' .that the federal government shall help <^the wh(/are paying the bill is. that after all states in carrying .that load,. the^eople in Kentucky will have to pay SENATOR GEORGE WOODWARD (Penn half the cost. At the present timis, on sylvania) : In connection with unemploy relief, the people in Kentucky.haven't been ment insurance, I wbuld like to know when "paying anywhere nearly half the cost. the model bill comes along to Pennsylvania Are there any other questions with re whether in addition to the tax on the pay gard -to this program? joW of the employer, what.the participation MR. VAUGHAjFviOne more question. I of the employee will be. come from the State o'f ]Maine. As I under DR. WITTE: That is up to-your state. stand it, the^ federal government, reprer We say nothing about it. / . sented by Dr. Witte, who has to bear it HON. RALPH L-.KAliiSEYCGeorgia):' I whether he likes it or not, is trying to help would like to ask Dr. Witte, in the pro the states. Is that so? ,, •\, gram which contemplates the four major DR. WITTE:. We are not trying to help, phases that you have mentioned, then must • the states—we are trying to meet the prob the legislation by the states also incorporate lem, of these pieople who are dependent, those four major phases or may it incor which is a common problem for us all. porate less than that? .MR. VAUGHAN: I ask why, when you DR. Wi7:tE: Certainly, any part of it. have a state like" New York, which I am HON. ERNESTL.AvERiLL (Connecticut): not at all interested in, which wants ?40 Do I miderstand the. federal government for its poor—why you don't have a flexible is going tof.contribute something to this system tJ help them out instead of giving program? ;\ . ' them only $15 when Kentucky or Tennessee .; DR. WITTE:^ . The" total appropriations or Alabama gets'$15. too? Why-hot help amount to $98,500,000 in the first year and oujt the northern states as well, as the $236,000,000 the second year. • - southern, proportionately? Why not be, MR.feAvERiLL: Then I understand that flexible to suit the conditions instead of^ "probably Connecticut will be orie of those being arbitrary at $1-5? • • • states which will be high' on the list, in r DR. WITTE: .We don't have $15 flat. If 414 THE BOOK OF TJIE STATES Alabama doesn't pay an old age^/bension have accepted with the system of federal of^p, if it grants only "an average ©X $10 government. It has only been very recently as^^well might, \ve would pay onl^^'five that we have discovered the difficulties of dollars to Alabama. But we -do haVe an the effort to maintain . ourselves on state upper limit and it is arguable, I will grant lines which do not coincide with economic you that. It is a question of public policy. lines. There are limits to how far you If Congress sees fit to make that change, can go under a federal system and we don't that is up to Congress. That isn't a vital know what those limits are. We don't rj^tter. It is very frankly an attempt to know how far it is desirable to go and at liniit the amount of money, to make the what point we will begin to get into diffi amount of money we have go as far as pos culties. There are undoubtedly limitations sible. . in the nature of our" federal system and NjEw York City and Boston are the two in the nature of the populations of which .places right now where old age assistance we are made up. averages above $30 a month..; There is an announcement to be made • I\IR. P'GARA: I would like to say that at this time by the Reception Coinmittee time is the element we are interested in. of which Senator Davenport of Massa NebraskEL is about half through with her chusetts is the Chairman. legislation. We have hot taken up those^ SENATOR WILLIAM A. DAVENPORT: I matters with which this bill you speak of desire to offer some resolutions, as follows: would deal; Just how long will it be before "RESOLVED, That the Assembly convey We. rnight expect the federal government to Honorable Frank Ruth, Chairman of tp pass this bill?: We don't care to adjourn the Ways and Means Committee o.f the and then have, a special session. I am one Pennsylvania House of Representatives and

•/ of those, meticulous people who like to do . official delegate to the Second Interstate a job right. Assembly, its wishes for his speedy, recovery • TcASTMASTER GULICK: I don't think, from the attack of pneumonia which pre that could be answered by our speaker or vented his attendance." - ^ by anybody elseat this stage, though it is, . ToASTMASTER GULICK: Youhave heard a very pertinent question, and; the dis the motion."" Is there a'second? cussion of it doesn't do a great deal of good. .':. The inotion\was regularly seconded. .'•:- However, yo'u have .sprQg__^members in Con ToASTMASTER GULICK: 'All those: in gress. ...•••' favor will say /'aye"; opposed, ''no." The I I think that the time has come when we. motion is carded!. ' will have to. turn from this discussion, howv MR. DAVENPORT: "RESOLVED, that the ever interesting and profitable it is. In Sqcond Interstate. Assembly send its con these problems we are beginning to move' dolences and its sincere sympathy to the forward into entirely new fields^nd that Honorable William H. Labrot, member of is why we all come to it with such a feel the i\Iaryla.nd House of Delegates and offi ing of bewilderment. In this rfecent de cial delegate to this Assembly, who was pression,, we have discovered that the state prevented from attending the Assembly by as a unit isn't a unit, that is—in the eco the death of his distinguished father." nomic fields,, because of the free movement ToASTMASTER GULICK:- YOU havc heard §f commerce and the free movement of this r^solutioh. Is it seconded? All.those population. These are two things which in favor will say/'aye"; opposed, "no." the states cannot control under our federal This motion, is .likewise carried.." . system. As a result of those things the MR.-DAVENPORT: Will you read this individual American stale has no economic last one?. skin. The fact that the state has no pos : TOASTMASTER GULICK: "RESQLVED, sibility of closing the dOors on commerce, That the Second Interstate Assembly ex or on the movement of population or.of press its deep appreciation and gratitude wealth means that this country has to deal to President Roosevelt for his leadership with economic pfoblems on a larger.founda in endorsing the call for; this Assembly, tion than the state. which leadership contributed so signally to That is a necessary .condition tl/at we ifs success. •..'". SATURDAY EVENING SESSION 415 : "That the Assembly extend a vote of mony of: the American Legislators' Asso sincere thanks to all others who have, con ciation and the Council of State Govern- • tributed to the success of this meeting, and ments. . ; especially to the president of the American "That the Assembly express its appre Legislators' Association, Hon. William B. ciation to the management of the ]M ay flower , Belknap and .to the president of -the Hotel and to the Greater National Capital Council of State Governments, Governor Committee for their courteous service and . John G. Winant, to the chairman of the assistance." . : \ • Interstate Commission on Conflicting Taxa You have all heard the reading of this' tion, vSenator Seabury ,G. Mastick, to the resolution. The motion is seconded. All chairman of the Resolutions Committee those in favor, say "aye"; opposed, "no." "- and to each of the other committee chair The motion is carried. men and to each committee member to Mr. President, I how turn the meeting whom this. Assembly is especially indebted. over to you. "That the Assembly also express its ap SPEAKER BELKNAP: I will now call on a. preciation for the unselfish support which man who I think has grown in all of our • it has received from the members of all the affections from the time we started know state, legislatures and the governors, whose ing him. I don't dare say too much for far-sighted assistance in furthering this fear I will be accused of fulsomeness. I project has materially promoted friendly . want to call on Henry Toll. cooperation among the states. • : • • "That the Assembly extend its .sincere ADDRESS BY HENRY W". TOLL thanks to the men who,, as invited speakers, contributed so substantially .to the interest I am an' ambitious pessimist—^which I . arid value of the sessions: Honorable Henry would define as a man who always.expects . . ^ F. Long, Professor Robert Murray Haig, the wors' but is never discouraged by that Honorable C. H. Morrissett, Honorable fact. Consequently, although actively in- - > i\Iark Graves, Honorable LovellH. Parker, terested for ten years in the project which Honorable Ernest L. Averill, Honorable is now operating under the joint auspices of Enoch Fuller and Honorable Ralph Gil the American. Legislators' Association and bert. . • . • • of the Council of State Governments, I have • . "That the Assembly especially acknowl never before expressed the conviction to ^, edge the gracious chairmanship of former anyone that this was a permanently estab Governor John Garland Pollard of Virginia lished project. at the opening dinner and the interesting Tonight, for the first time, it is my be and thought-provoking message on inter lief that if we could isolate, the ten indi state cooperation of Governor Leslie A. viduals who are doing the most to furnish Miller of Wyoming. ..._..,.• the initiative and the propelling powei^-for "That the Assembly also express its ap- • this project, and subject them to the same preciation to the- Honorable Robert ,L. trifling operation to which derFiihrer sub Doughtori, Chairman of the Hotise Ways jected (the two beautiful society ladies, a and \Means Committee, and to the Honor fortnight ago, and then if the Spelman Fund, : able Fred M. Vinson,. Chairman of the after the fashion of. a toy balloon, should \«^ Subcommittee on Double Taxation, for suddenly explode, this project would go for-. their interesting and informative addresses ward. • • to the Assembly on the question of conflict Under these circumstances,.upon the ad ing taxation as it affects federal fiscal prob journment of this afternoon's session, senti lems, and especially for. their cordial spirit ment got the better of me, and with the of cooperation between federal and state help of a patient stenographer, I dictated governments. . ---. the following expressions of appreciation to "That the Assembly acknowledge with some of the many individuals who have gratitude the enthusiastic and fair-minded, given aid and comfort to a struggling and attitude of the press toward the efforts of ill-perfected organization. this Assembly and its.generous and en About ten years ago a college profes-: . couraging comments regarding the various. sor, whom I- had never met, wrote to me . phases of the project for governmental har from a southern state, saying that as a legis- 416 THE BOOK OF THE STATES lator he had delivered an address endorsing Since there is not.sufficient time to dis- . : the project of the American Legislators' cuss the. participation of other individuals- Association—a project which Tat that time in this detailed way, I am going to do little had only.begun to chjp:.the egg. That is more than to list a. few of the many who probably the first public address ever made have helped to launch the Association. , endorsing this undertaking. If my work in Fifteen years ago I used to travel daily in this field had brought r^f no reward but the the Harlem Valley Club Car plying between friendship of that erstwhile college profes New York City and Westchester County. sor,-I. would be, in large measure, compen One of my pleasantest recollections of that sated. He is the President of the American experience is my association-with an ami Legislators' Association, and the Speaker of able gentletnan who—like myself—had \ the Interstate Assembly—^William B.. Bjelk- never thought of going to the legislature. ,;'nap, •-••/-• '/ • • . r'"~^"'^';'z - • Since that time he has become a legislative : When the Association held its first meet leader of the Empire State, and has devel ing in the Senate Chamber of the Colorado oped an outstanding reputation as a prac-_ State Capitol during the summer of 1926, a tical expert in the fields of goyernmental few individual legislators drifted in—from efficiency and of interstate cooperation. a very few states. Most of them dropped He is now Chairman of the Interstate Com in sornewhat casually because they, hap-^ mission: on Conflicting Taxation, Senator pened to be in town in connection with a Seabury' C. Mastick. ' meeting of the American Bar Association. . When a meeting of the American Legis There was only one fact in which an inv lators' Association convened in Buffalo in partial observer could have found any .1927 there were five persons presient: my . grounds for optimism as to the future of. self and. four newspaper reporters; t the organization. That single good, onien laughed as heartily as they did, and they was the arrival of a delegation of eight men then inquired what it was all about. When - from two \ thousand miles away, four • I told them, the tenor, of their remarks was Pennsylvania Senators and four Pennsyl "It's a damn good idea at that." They vania Representatives, sent by official posed me, photographed me, and ran front action of the kjislature and by virtue of a page stories reportirig the inspiring meeting state- appropriation. The attendance of of lawmakers and its national significance. that delegation was largely due to the inter As the day progressed, the meeting irii- est of a brisk, knickerbockered senator, proved, and the luncheon was a genuine suc ' whose unique personality will be.one of the cess. I had invitêd as guests of the longest remembered features of the early Association, the members, of the National days of the'American Legislators' Associ Conference of Commissioners on Uniform . ation. From that time to this, his interest State Laws and also the members of the has never flagged. He is the only indi- Buffalo Bar Association. About thirty ' vidual in the United States, with one from each group put in an appearanoe... . . excî^lion, who has assumed a substantial What made the meeting successful was. that burden in the finaneing.of this work. The the Buffalo lawyers thought that the Com ^ . Association has never solicited financial as missioners were legislators-—and the. Com- ; sistance from individuals, but at the Den missioners thought the Buffalo -lawyers ver meeting, without provocation, the gentle- were legislators. After listening tb an able . man in knickerbockers handed me a check address by Franklin Edmonds, the speaker : for^500 for this work, and when I-en of the day, they left in an apparently satis deavored to express appreciation, he. an fied frame of mind; Franklin Edrnonds swered, "Oh! that's quite all right. I'll do was himself one of the original Pennsyl at least that every year." That was a vania delegation to which I have referred, decade ago, and "since then he has not only although by the. time of the Buffalo meet carried out his original intention, but dur ing, he had retired from legislative office, ing almost every year he has—according to to becom^ Chdjôian of the Pennsylvania his custom—-done much more than he Tax Commissiom promised. He is the first vice-president of However, that afternoon one state legisr . the American Legislators' Association, Dr. lator arrived who had ; come to Buffalo George Wopdward. ' primarily to satisfy himself concerning the SATURDAY EVENING SESSION % 417 ::._: character of the prganization.' He W3S a and sponsorship should not be forgotten, is man who has given inspiration to many the majority leader of the United States individuals to do more than their part in 'House of Representatives, my personal legislative work, just as his participation friend, Edward %. Taylor, who in 1926 ' has given encouragement to many in their.- made an inspirational address at the first ^ work for. this organization. I refer to meeting of the American Legislators' Asso-, • . Henry Shaittuck of Massachusetts, elation, and who has taken an active^ in \A year after the Buffalo episode^ the terest in jtiie development of this organiza Association's annual meeting convened in tion, p.. • • • Seattle. There may have been as many as My sentiments, of sincere appreciation seven or eight legislators present." " concerning Congressrrian . Doughton of '"^Feeling that; my two terms as.president North Carblipa, the grand old man of the of such a magnificent Association had been • AVsiys and Means Committee, and concern considerably more than my just desert, I ing Fred Vinson, dynamo of the Congres pleaded with the ^nly. legislator present'^ sional .sub-committee on Conflicting Taxa who could conceivably have served in that tion, are already in today's record. capacity, to succeed me. Reluctantly, and It is not easy to give adequate expression as a personal favor to mej he accepted. His tP the appreciation which is due to Lovell —înterest__and enthusiasm increased as time Parker,. Avho, as the technical adviser of went on^—as has been the case with'almost Congress in matters of taxation, greeted us, everyone who has taken part in this project. with the right hand of fellowship... In his For two years he worked diligently as Yankee manner—honestly come by in the president of the Association. ^ Jle has iriade town of Barnstable—he has never promised many trips across the continent on'its anything and~-has-always done everything work. On his own initiative, a;id without that he could, w^hichmeaii^ a great deal.-,-_i expense to the organization, he has visited several legislatures in' its behalf. He is For many years, until recently, the.legis- Robert Patterson of California. V- lative counsel of the United States Senate It is difficult to characterize spm'e of the has been F-ted Lee, a-man in w^hom one other colorful personalities who. will be re discovers from year to year new depths of membered in. connection with.the first dec character; and the legislative coiinsel of ade of this undertaking: John Chambtiss the United States House of Representatives of, Tennessee,\vhimsical,'.well-read, an in since t'hatoffice.was established, has been corrigible enthusiast;, Beverley Herbert of that indefatigable worker, Middleton Bea- South Carolina, quietly resourceful, mod- man, who has rendered Congress a tre -estly influential, incurably loyal; Henry mendous service. At no time have either .Parkman of Massachusetts, studious, ear of thesebver-workedmen been too busy to nest, untiring; \Villis Smith of North Caro- do anything that has beep asked of them in V linaj of attr-active personality. Tar HeeL this behalf. This characteristic is '6ne accent, vigorous mind; Philip Sterling-of which they must have acquired in part from • Pennsylvania, full of determination, good that lovable friend to all honest workers in . hurnor, and fiscal knowledge. ; the civic vineyard, that patron saint of good . 'Federal lawmakers, too, have given, aid government, Joseph Chamberlain of Colum and comfort, and' th3 Association owes a bia University, whose proteges they both ^ permanent debt of gratitude to former- Con .wererraiid to whose" encouragement and gressman Ralph Gilbert of Kentucky, who counsel this, project owes much. 'is \vith us today, a courtly southern gentle Mrs. Harold Ickesyof Illinois is one of man; to Robert Luce of Massachusetts, a several women in the state legislatures who true New England scholar; to. Kent Keller have,loyally participated in the organiza . of Illinois, enepgetic, tireless, purposeful; tion's work for years—the outstanding one. very recently to Robert- Secrest, Ohio I wish -that I might enumerate various schoolmaster. For several years we have.: legislators wnom I have hot already men ' also been greatly indebted to Senator Fred tioned, who have helped to> make the InteV erick W.Steiwer of Oregon for aid and state Commission on Conflicting TaxatioA counsel. ; - \yhat it is—-legislators of the type of Earl ' Another Congressman, whose assistance Lewis of Ohio, Ben Oneal of Texas, and 418 THE BOOK OF. THE ST A TJES Alvih Reis of Wisconsin. Senator-Oneal, I suspect that we arc indebted to some ^ always . helpful,. has made • repeated trips forgotten member of a previous generation, frdm T^xas to'-Washington in this.behalf. .foF having infused an interestJh govern -As typical oT\the group of fiscal officials ment into an entire family. At any rate, Tor who have also been faithful in connection many years, Charles E. Merria.m, eminent with this Gommission,. I might point to politician-scholar of the-University of GM- Edward Leahy of Rhode Island, Henry . cago has been a stalwart senior-eounse^thr Long of Boston, C. H^ uMorrissiett of Vir ~t of this undertaking.. His brother,^ Johp ^. ginia, and Leon Metzger.of Pennsylvania- Merriam of Washington has been an urifail- all genial, and all firm-purposed. ing friend. And their cousin, Frank..£. And a power without which neither the '^Merriam, has been an active/participant, ConfliGtiiig Tax Commission nor the Ameri first as.state representative, then as senator, can Legislators' Association, nor the Coun then as Lieutenant Governor', and recently , cil of State Governments could have pro as Governor of California. •; ^ gressed so rapidly to its present stage of L do' not forget Raymond Fosdick,- influence, has been Mark Graves, always Arthur W-oods and Beardsley Ruml, ,1 steady, always,.. hoeing ""the row with should like to give public expression of my determination, always ready/to help—and appreciation for years of patient and kindly always accomplishing results in an unas , Jistening on the part pf Frederick Keppel, suming manner. He has set an example of Robert Lester, Alfred keed, and Henry Suz- : loyalty to this cause. zalo—and of Henry Pritchett who exerted Our paths have crossed those of sevei-al himself to secure for this work the support governors, and the Council of State Govern- of an older statesinan whose acquaintance 1 merits owes its successful launching in large have prized, EHhu Root. I look back to •measure to John Garland Pollard, humorous helpfulconversjitions w8th many interested .and high-purposed exponent of southern • persons who circ no longer on the scene-^ culture and of southern friendliness; to Les including John T. Pratt and Dwight INIor- • lie Miller, the clean cut governor of a pio row. .And .1.. shall never forget- the early neer state; and especially to John Winant,. , championship .of this cause by a departed somewhat nervous when he addresses an advocate,/'i'yson S..Dines of Denver.. audience, bilt fearless amid the bullets when • i have, not expressed my personal in his plane was brought dbwi on more, than debtedness to one individual who knows as onie occasion in the French escadrille. I will much a^ any other person concerning the .never forget the pleasure of last Decoration American.Legislators' Association, and who Day morning,' seated under the trees at his has expended as much effort on its found home, with the White Mountains-as our ing as any other one person /luring the sentinels, planning for the-beginning of the {TaStSteni years: Miss Alargaret Casmpn, work of the Council of State Governments. whom I have yet to see irritated and whom . Not all of those who have .taken us in Lhave yet to. hear complain. • . when we were cold and hungry have been Sqme o( my sentiments concerning Hugh . public officials. Some of them have beert" - Gallagher,' George Benson, and - James two-layer men—with an under^stratum of Martin, I have already expressed in STATE . -pedagogy and an upper-stratum of govern GovERNME^JT.. The loyal WOrk of Rodney mental experience. Consider, for instance, iNIott and of Lucius Hallett has been the encouragement which we have received : woven into the fabric of this enterprise, from my friend of many years' standing, and everymember of oiir staff has gener- • 5 Luther Gulick, who is probably on the verge ously given the sort of^ assistance which • ^bf using his gavel to make me bring these ^ mere money cannot buy. remarks to an end; Arnold Bennett Hall J' I should speak of many legislative'refer inventive man of good will; Leonard ence directors, individually, of whom Fred White, who/would dotibtlesC sacrifice his ; Wood, John Fertig and Allen .Moore are life on the .altar of gogd government if the only a few. But I will content myself with occasion called for iti';land the courtly, John .saying that the aid of Edwin E. Witte, the Wigmore, who has been the inspiration of principal speaker of this evening, has con many men who a^jgjiokv engaged in public > stituted one. of the buttresses upon which affairs. -- this strûcture has depended for support.

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5^ TURD A Y EVENING SESSION 419 Eyerybne who knoAVS our organization personal indebtedness-—and fnay I say the well, also well knows its debt to many, of indebtedness of this organization—to a cer the staff members of, the organizations of tain Smith College graduate, who, without governmental .officials which" have their complaint, has njade far greater personal secretariats in the same Chicago building sacrifices in this ckuse than I have ever , as ours. Since I cannot thank them all by thought of making. name, I desire to express heart-felt appreci There is one person, above all others, upon ation to the generalissimo, as a representa whom I have drawn for personal encourage tive' of them all-^to that. unique genius ment and for political philosophy. He is , who apparently never forgets a fact, a, a private citizen, w^hb strives for obscurity; friend, or a good yarn, Loiiis Brownlow, . in fict, he will reproach me for so much The government work upon which we are ds r lentioriing him this evening. There iS engaged could not have been begun without no doubt in my mind that upon the Ameri the. temporary assistance of som.° private can continent he is entitled tO:^recognitibn capital. That such capital has been avail as a.leading authority—if not the leading able without so much as a suggei-tibn of authority—<:oncerning the- techniques "*%f influence at any time, 'and as a minor part coordinating units of government, pf. in of the liberalities of one of several funds'' tegrating levels of government, and of established by a single family," is. a fact pvolving improved machinery of public ad which—like the radio—never ceases to be ministration.. I refer to that man of high •\a source.of«surprise for ine. purpose, of utter integrity, and. of self- And since I am. bearing, witness, I can sacrificing devotion to the cause of good' hardly omit a sincere .expression of my government, my friend, Giiy jMoffett. :

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Agencies: 011 Interstate Gooperatioiv .. , \ IVE months have passed since the missions and the Committees on Interstate 'Washington' meeting of the Second Cooperation is that the Committees consist Interstate Assembly arid during that of legislators alone, while,'as outlined above, time each legislature in session has been ad the.Commissions include legislative and ex^ vised qf the Assembly's; recommendation ecutive representatives. " "that, appropriate agencies on interstate Members of the various Standing Com coopleratioh be formed; in each state;" At mittees on Interstate Cooperation in' the the present writing (August, 1935) seven Senate and House of Representatives.be states—New . Jersey, Colorado, Nebraska, come, ex officio, members of the Senate and North Carolina, Florida, Pennsylvania, and House Councils of the American Legislators' New Hampshire—have organized Commis Association. In those states where Com sions on Interstate Cpoperation while six missions have not yet been created the teen other states have established Standing Cornmittees are thus organically connected Cornmittees or Interstate Cooperation in with the Council of State- Governments one or both branches of the legislature.^ through the joint sect-etariat of the American Legislators' Association and the New Jersey Model •Council. It is anticipated that most of The Commissions on Interstate Co-, these legislative committees will be ex operation have been established, by joint panded into Commissions on Interstate Co resolutions modeled after that worked out operation, similar to those which have in New-Jersey by Senator Joseph G. Wol- already been created in seven states.- ber. This resolution (which Is reprinted on ¥\eld of Usefidness ^pages 78-79 of the April, 1935, issue of SxATE GOVERNMENT) is prefaced by a A wide field of usefulness is open to the : statement of the confusion and conflicts new Gomrnissions. One of the most imppr- : existing between: the states in both laws tant possibilities lies in the negotiation of • and administrative practices. This intro interstate compacts for the control of crime ductory section stresses the desirability of and the supervision of paroled criminlals. ' interstate cooperation for the purpose of Another important use to which the com .'developing "a mfere perfect union." To pact method might be put is in the' field of facilitate such cooperation and to perfect taxation. • Motor vehicle regulation is the participation of the state in the Council yearly becoming more and rriore a matter of of State Governmeints, a .Commission on 'interstate concern. Division oifiwater re Interstate Copperatiqm is created. It con sources, without expensive litigation, is sists of: . ^ • k ' important to a large number of states. The "The five members of tne Committee on recent Supreme Court decisions point to . Interstate Cooperation in the Senate; ev.en wider state activity in the regulation ; "The five members of the Committee on of business and labor which means iiiore Interstate Cooperationj^h the House of need of cooperation than, in almost any RejpresentativesT and "^ ' ' . other governmental activity. . "Five officials of the st^te named by the In addition to the compact method, Governor, one of whom Shall be designated Commissions on Interstate Cooperation will by him as the Chairman of the Go.mmis- be able to encourage and utilize other means, sion. ' .• • of strengthening the tie that binds the fortyc The chief difference between these Com- eight states. Administrative agreements, uniform laws, reciprocal statutes; all are in V Names of the legislative members of Commis the embryonic stage and ready for the sions ahdyCqmmittces on Interstate Cooperation may, be found on the back cover of any recent fostering care of some "agency_..oa4nter--- issue of STATE GOVERNMENT. . state cooperation."-—"""""" J- .„^-:4-20^' Index y.'

SUMMARY ..OF TIIK-rROCEElH.NGS OF THIV.SKCOND lNfKUST.\TK AsSKMin.Y , • , (EDITOR'S NOTE; A table of contents-of these procecdini^s will be found on.pai;e \ix: The- list of delegates to the Assembly is on piiges 295-297 at the beginning of this Summary, ahd' a list of Resolutions passed is on page 29S. Limitations of spacechave made it iinpossible to in clude: jmnes in this index.) • - .•

American I.e);i?^lati)r.s' Association, i)p. 367-36S. 3S5- Interstate .Assembly- conthui.ed ." 3S6..4I5-418; •• ' • .; ••'•"" •. sessions of th('.."0-306 - .' / COIMKH of State Government.-;, ..Old age ^pensions', 1)0.4.08-4.14 compacts for establishment of, p. 377 / orsanization of, pp.. 368. 378. 415-41^ ' Preface, p. 299 ' ; '^ preamble, articles, of ()r>:ani,;ation ofy/fip. 302-303 • I're'session legislative conferences, jip. 365.. 367; Crediting device, pp. 305-306, 390-59^/^. „ - , I're.sjdent of the rnile.(l States, •i)eleKatcs. list of, pp. 295-297' ' ' '"•; ' letter from. p. 314 ^ • ...•-- resolution of appreciation, p. 414 Electrical energy taxes, pp. 31s, 383 Federal collection of taxes, pp. 306, 308, 326, ,347, Public health legislation, PP- 408, 413 . ' 352-353. 365. 397-400 Public .lands, pp. 335-336 -Federal credits for state taxes,, pp.. 30S;-306, 390-396 Reallocation of .governmental (unctions, pp. 306, 358 Federal finances, pp. 304;-30S, 362-3.64 Regional secretariats, p. 369 Federal grants to the .states, pp. 3 73-3 7.5, 406-414 Resolutions and reports; list of, pp.. 298-299' Federal highway act, pp.'373-375 . .Sales taxes. pp."307. 309,' 319, 328, 329; 330. 341,. Federal statistics of state and local governmehts, pp. ^3.51,'-352, 355, 397-400 :,...'• ; • ,-

•••<;-,; .321, 349-351, 381 . Secretaries of State. National .Association of, pp. 371. <&..., ' Gasoline taxes, pp. 318. 3.26, '33d,-352-353, 372-375 -386. •• .;.- • • ' .. , •• . '.-. : Se|)aration of sources of revenue, pp.^305-.Vd6, 308- General, property tax. pp. 309, 357-358. 402-403 309. .34ir 346-347 ••. .. •^.:;;. ••'.••;• " • Great Britain, taxation in, p. 362 Social, seeui-ity legi.^ation;. pp. 406-414 • Income taxes/ pp. 306-307, 346-347,^90-396 v Stale administered locallv" shared faxes, pp. 355. Inheritance and estate taxes, pp. 347, 392-393 , : 356, 358-359 . . • . . .. ••• .;. Interstate As.sembly, r Studies of state tax systenvs, pp. 321. 349-351. 381 .financing of, pp. 389-390:- ^ • • . .Suf5ipli?mnntary tax rates, p. 306 • .• organization of. pp/301-0.02 plans for the next, pp. 380, 400-401 Tax exemi)tion, pp. 306-307, 330-331-..3>'6-!.397. 401 purpose and plan of. p. 301 Tax ; Revision Council,.pp. .312-3i3, 320, 321-323, *;•. sessions of the'Sfecond, ' • • ^.381;-382 • :; Thursday mbrning, pp. 301-315 ; Tobacco taxes, pp. 318, 375-377.> > ' Thursday afternoon, pp. 316-331 Treasury. Department,. ' " ' • Thursday.evening; pp. 333-339 •. •'Friday .morning, pp. 340-355 . . message delivered by. ruder-Secretary, pp. 303-304 F/iday afternoon, pp. 356-364 Unemployment insurance, pp. 408. 410-411. 4i3 Saturday morning, pp.. 365-379 . Water law, pp. 334-335 , .: .'- •'.,•• 421 ;<*??-

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