CONGRESSIONAL RECORD -- SENATE
July 14, 1969
Page 19362
TAX LEGISLATION
Mr. LONG. Mr. President, discussions in the Democratic policy committee, like discussions in the Republican policy meetings, are generally regarded as confidential. They are not usually matters of public record. I see no point in making a matter of public record what was confidential at the time it was discussed.
The rule we have pursued for many years in the Finance Committee is that one should be privileged to state his own view, what he said, and how he voted, in executive session, but he would not have the right to say how other Senators had voted, unless those Senators decided that should be the case.
I think perhaps some of the confusion in the press about our procedure on the revenue bill and the extension of the surtax results from the fact that the press was not privy to conversations among Senators which were more or less of an executive nature or confidential at the time those conversations occurred.
Let me state what my point of view is as to the procedure on the tax bill. As far as I am concerned, so other Senators may be informed, I am making it a matter of record as to what the procedure is to be. As stated in the letter of the majority leader, it was the view of the policy committee that when the surtax bill was before the Senate, it would be appropriate to consider measures relating to tax reform. The majority leader's letter to me makes that clear. In the discussions with the policy committee, I personally made it clear to Senators that, in the judgment of the Senator from Louisiana, it would be impossible for us to bring before the Senate over a period of 30 or 90 days all of the tax reform proposals that the Finance Committee possibly could generate. If one is talking about a comprehensive, overall reform of the tax structure, to consider every businessman's situation and to try to bring his tax situation in line with everyone else would require a great deal of time. In former years, such reforms have taken as much as 1 year of study in the executive department and then 2 years of study in the legislative branch.
My thought was that it would be satisfactory to have meaningful tax reform in connection with the revenue bill before the Senate. That bill has some urgency about it. One might not buy President Nixon's argument that the bill is necessary to stabilize the economy, to prevent runaway prices in face of the rapid degree of inflation presently existing, to protect the value of the dollar as a monetary item throughout the world, to balance the budget, or for any such purpose at all. But if one buys even a part of President Nixon's argument for the extension of the surtax -- and he is contending the same thing President Johnson contended before he left office – then there is something urgent about the matter, because there is a termination date with respect to it. The Senate extended the withholding rates under the surtax for 31 days, on the recommendation of the House of Representatives.
It was the view of the policy committee that the Senate Committee on Finance should have 90 days, if it wanted that time, to consider the matter and to bring before the Senate a bill which we hoped would be enacted before that period of time expired.
I want to make it clear that the view of the Senator from Louisiana, every step of the way, has been that we would be willing to consider and vote on any amendment any Senator chose to propose, whether we liked his amendment or not. It is already within the power of every Senator to have his amendment considered and voted upon on the floor, if not in the committee.
Our view was that it would not be possible to consider all the suggestions that might be generated within the field of tax reform as a part of the surtax extension, even though, if a Senator wanted to offer his amendment, it would be considered.
So the Senator from Louisiana made a statement on July 8, 1969, which appears in the CONGRESSIONAL RECORD beginning on page 18562, indicating how he proposed to proceed in the committee. Basically, it was that we would hope public witnesses would, as expeditiously as possible, testify on the House-passed bill. Thereafter, we would invite Senators to testify before the committee with regard to their suggestions for amendments, hoping to get consideration of the bill to a conclusion and to have the bill acted on within the expiration date of July 31.
I then explained my position in a speech I made on the floor. If a Senator wanted his amendment considered by the committee, he should have it printed so we could look at it. I suggested the Senator should have it printed by the 18th of this month, by next Friday, so it could be part of the committee's consideration.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. LONG. Mr. President, I ask unanimous consent that I be permitted to continue for such time as I may require.
The PRESIDING OFFICER. Is there objection?
Mr. MANSFIELD. I object. Could the Senator make it a definite time? Ten minutes?
Mr. LONG. Mr. President, I ask unanimous consent that I may proceed for 10 Minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. LONG. So, Mr. President, the Senator from Louisiana felt that if we were to bring this matter to some sort of conclusion, we should not be conducting hearings on loose concepts and ideas; we should be talking about concrete legislative proposals. The suggestion of the junior Senator from Montana (Mr. METCALF) is exactly the kind of thing I was talking about. We would urge the Senator to submit his amendment. Then we will schedule a time to hear the Senator and we will be glad to hear him on his amendment.
Mr. METCALF. I have done that.
Mr. LONG. Yes. Please understand that the chairman of the committee cannot bind the committee, nor can he bind the Democratic Policy Committee, nor can he bind the Senate, with regard to the rights of Senators. If a Senator does not wish to submit his amendment, if he wants to just wait and offer it, as a complete surprise to us, on the floor of the Senate, that is his privilege. No rule can bar him from doing that. He can offer it and insist that it be voted on. I am sure that the Senator from Montana, as one who has served on both the House Committee on Ways and Means and the Senate Committee on Finance, knows that if he wants support for his amendment, he has a better chance to persuade the members of the committee if he gives them a chance to see what he proposes and question him about it.
Mr. METCALF. If the Senator will yield, that was my purpose in submitting the amendment. I have a bill, S. 500, before the committee today, but I have modified S. 500 so that it complies in all respects as an amendment to the surtax.
Mr. LONG. Yes. I thank the Senator. Mr. President, as far as I am concerned, the Senator need not have modified his amendment, if he had just come before us and said, "Here it is -- S. 500." Whether it is offered as a Senate bill or as an amendment to the House bill, it is all right with me.
But we would like to have a Senator testify for something that is in print, that we can look at. We would like to know whether he proposes to offer it, so we can incorporate it into our committee print, and also assure ourselves that it does what the Senator says it will do, and we can proceed on that basis.
Mr. President, we have been able to do some things that the House of Representatives was unable to do, because of the difference in our procedure. For one thing, the House was not able to offer to public witnesses the opportunity to testify on the investment tax credit. The House did study tax reform, and after a while they brought forward a bill, and it included the repeal of the investment tax credit. Our staff, and also witnesses before the committee, have uncovered a number of inequities that clearly exist in the House bill. Those should be corrected, and we want to do that, if we can, to the best of our ability.
In addition, we have heard from public witnesses testifying on the provisions of the House bill. Tomorrow we will conclude that phase of the hearings. We have turned no one down, and I shall submit for the RECORD a list of the witnesses. (See exhibit A.) I believe everyone will agree that each one of those witnesses had a right to be heard and should have been heard. Fortunately, we did not have a great avalanche of witnesses, because most people are familiar with the fact that when the Committee on Finance is burdened with more testimony than it can hear, it asks witnesses to consolidate their testimony. We request that everyone in the paper manufacturing business should consolidate behind a spokesman for their industry, or everyone in the steel industry should consolidate behind a spokesman; and that type of thing has been done. Witnesses are familiar with those procedures, and they do that even without our request, and identify themselves behind one spokesman, rather than insisting on our hearing a proliferation of witnesses to explain the same point.
As I have stated, tomorrow we shall conclude the list of public witnesses on the House bill, and, starting on next Monday, we propose to hear Senators testify on their suggestions. We will then proceed, having heard them, to hold executive sessions and vote to report a bill with such amendments as the committee thinks appropriate.
I think, in fairness, that Senators will find that they are going to have more than one opportunity to vote on tax reform proposals. We will have many revenue bills. It is true that we have had very few up to now, but the Committee on Finance has found it desirable to respect the constitutional provision that revenue bills must originate in the House of Representatives. On many occasions, we have been requested by the House committee not to proceed with hearings until they had reached decisions, on the theory that some of their people would think it presumptuous for us to assume that the House was going to pass a certain bill, and therefore might proceed to vote against it just because the Members of the House of Representatives felt their prerogatives were being ignored and cast aside.
So I ask unanimous consent that an excerpt from the RECORD of July 8 on this subject (exhibit B), my unrevised colloquy in the committee with the Senator from Illinois (Mr. DIRKSEN) (exhibit C) and the statement of July 12 which I made subsequent to that (exhibit D) be printed in the RECORD. All of these matters are consistent, and explain, as I see it, the point that we have been proceeding to consider anyone's tax suggestions, and are now ready to hear whatever suggestions Senators want to make. After having done that, we will try to report a bill. After the Senate acts on that bill, we expect to have other tax reform proposals, whether the House sends them or does not send them, and whether they amount to something someone might call reform in one case, or a desirable tax reduction in another.
There being no objection, the items were ordered to be printed in the RECORD, as follows:
EXHIBIT A
SENATE COMMITTEE ON FINANCE PUBLIC HEARINGS ON H.R. 12290, EXTENSION OF THE SURTAX, REPEAL OF THE INVESTMENT CREDIT, AND OTHER MATTERS
Tuesday, July 8, 1969 Witness
The Honorable David M. Kennedy, Secretary of the Treasury, accompanied by The Honorable Robert P. Mayo, Director of the Bureau of the Budget.
Wednesday, July 9, 1969 Witness List
1. William Graham Claytor, President, Southern Railroad.
2. Paul D. Seghers, President, Institute U.S. Taxation of Foreign Income, Inc.
3. Thomas J. Ryan, Chairman of Tax Committee, National Constructors Association accompanied by Gerald S. Ostrowski.
4. J. R. Gulan, Legislative Director, National Federation of Independent Business.
5. Brice O'Brien, General Counsel, National Coal Association.
6. Marvin L. McLain, Legislative Director, American Farm Bureau Federation.
7. Angus McDonald, Director of Research, National Farmers Union.
Friday, July 11, 1969 Witness List
The Honorable Charles A. Vanik, Representative from Ohio.
The Honorable Bob Eckhardt, Representa-tive from Texas.
Eugene A. Gulledge, President, National Association of Home Builders.
Thomas M. Goodfellow, President, Association of American Railroads, accompanied by AAR Tax Counsel Frank McDermott.
Frank Barnett, Chairman of the Board, Union Pacific Railroad.
Andrew J. Biemiller, Director, Department of Legislation, AFL-CIO.
Charles I. Derr, Senior Vice President, Machinery and Allied Products Institute.
Peter Nevitt, Senior Vice President of GATX-Armco-Boothe, and Boothe Computer Corporation.
Roscoe L. Egger, Jr., Member, Taxation Committee of the Chamber of Commerce of the United States, accompanied by Rother R. Statham, Taxation and Finance Manager, and Dr. Carl Madden, Chief Economist.
Monday, July 14, 1969 Witness List
The Honorable George McGovern, Senator from South Dakota.
The Honorable Henry S. Reuss, Representative from Wisconsin.
W. P. Gullander, President, National Association of Manufacturers.
Joseph V. Ferguson, Air Products and Chemicals, Inc., accompanied by Leon C. Holt, Jr., Vice President and General Counsel, and Neal Powell.
Edwin A. Locke, Jr., President, American Paper Institute.
Albert Lannon, Washington Representative, International Longshoremen's and Warehousemen's Union.
Tuesday, July 15, 1969
The Honorable John Sparkman, Senator from Alabama.
Don Magdanz, Executive Secretary, National Livestock Feeders Association, accompanied by G. L. Hadley, President.
The Reverend William T. Hogan, Professor of Economics, Fordham University.
Herbert B. Cohn, American Electric Power Service Corporation, and Edison Electric Institute.
Harry A. Poth, Jr., Minnesota Power and Light Company.
John M. Randolph, Chairman of the Board. Randolph Computer Corporation in behalf of Computer Lessors Association, Inc.
John W. Scott, Master, National Grange. John Huffaker, Chairman, Committee on Transition Rules Upon Repeal of Investment Credit of the Philadelphia Bar Association.
E. A. Trigg, President, Alcan Aluminum Corporation.
George W. James, Vice President of Economics and Finance, Air Transport Association.
J. W. Henderson, Jr., Chairman, Railway Progress Institute.
Richard Owen, Baker Industries.
EXHIBIT B
TAX LEGISLATION
Mr. LONG. Mr. President, with regard to the proposed extension of the surtax and the
on issue of tax reform, I ask unanimous consent that statement which I made at the opening session of the Committee on Finance be printed at this point in the RECORD.
There being no objection, the statement was ordered to be printed in the RECORD, as follows
"TAX REFORM AND THE SURTAX
"This is the first of a two-part hearing with respect to H.R. 12290, a bill passed by the House of Representatives to extend the income tax surcharge and to repeal the 7 percent investment tax credit. The bill also continues for another one-year period the present 10 percent excise tax on telephone service and the 7 percent tax on passenger automobiles. In addition, it provides a special low income allowance which relieves millions of poverty-level wage-earners from the tax rolls. Finally, it allows air and water pollution control devices to be amortized over a 5-year period.
"During this first portion, the Committee will receive testimony from the Secretary of the Treasury and the Director of the Bureau of the Budget with respect to the need for the legislation. We will also hear public witnesses with respect to the provisions in the House bill. If the Secretary concludes his testimony today, we will begin hearing public witnesses tomorrow.
"In the second phase of the hearing, the Committee will take testimony with respect to tax reform.
"There will be no tax hearing on Thursday, July 10, because of a prior commitment to the Subcommittee on Veterans' Affairs which will be inquiring into several matters relating to the Veterans' statutes.
"Before recognizing the Secretary of the Treasury, let me make an announcement with respect to the Committee's schedule for considering tax reform.
"TAX REFORM HEARINGS
"In our Committee on Finance it has been the practice to hold hearings on specific bills and amendments that Senators are interested in. This procedure differs from that followed by the Committee on Ways and Means where hearings often precede the introduction of a bill.
"In keeping with this practice of the Committee, I plan to announce to the Senate that our tax reform hearings are going to be just as broad and comprehensive as the Senators want them to be. All we ask is that the Senators draft and indicate to us all of the tax reform proposals they desire to offer to H.R. 12290 so that we can conduct hearings on them before we take the bill up in executive session.
"I know most Senators will agree with me that we should not take taxpayers by surprise and take up amendments which may affect them without giving them an opportunity to state their side of the question. That's what the hearings process is all about.
"Similarly, a Senator should be entitled to state to the Senate that his tax reform suggestions have been through the hearing process in the Committee on Finance and thus prevent that procedural argument from being used as a device to build up opposition to his amendment. He should be entitled to get a vote on the merits of his tax reform suggestions.
"IDENTIFICATION OF TAX REFORM PROPOSALS
"So to be fair to them and to the Senators who want to propose tax reform amendments to the surtax bill, I urge that Senators who have introduced bills in the Senate identify to the Committee on Finance those which they intend to call up as amendments during Senate consideration of H.R. 12290.
"If Senators have tax reform suggestions in mind that they intend to propose but which have not yet been introduced, I urge that they introduce them and identify them as matters they would like to have considered during discussion of H.R. 12290.
"If Senators will cooperate with the Committee on Finance in this way, we can publish all these tax reform suggestions in a Committee print and make them the basis for the tax reform phase of our hearings.
"No Senator will be deprived of the right to a hearing on his tax reform ideas. But in order to advance these hearings in an orderly manner, it is necessary that we know within a specified time exactly what the Senators want to propose in the way of tax reform.
"Therefore, I urge Senators to let us know by Friday of next week -- July 18, 1969 -- what they plan to offer in the way of tax reform. Then we can schedule our tax reform hearings to begin promptly the following week -- the week of the 21st.
"I believe this procedure recognizes the right of every Senator to offer whatever tax reform amendment his conscience dictates, and at the same time, enables the Committee on Finance to carry out its responsibility to the Senate.
"SENATE DEMOCRATIC POLICY COMMITTEE POSITION
"I might add that in my opinion this procedure also fully conforms to the announcement made on June 25 by the distinguished Majority Leader that the Democratic Policy Committee had voted unanimously:
"'That any proposals to extend the income tax surcharge be considered simultaneously with recommendations on meaningful tax reform.' and
"'That the present income tax withholding rates be continued after June 30, 1969 for a period of one quarter to permit full consideration and disposition of the reform and extension of the surtax.'
"The Majority Leader elaborated on the Policy Committee resolution in a letter to me dated July 1. In his letter he emphasized that the debate on the floor prior to passage of the 31-day extension of the surtax withholding rates 'clearly specifies that additional extensions will be forthcoming if necessary to afford the ordinary processing of intended tax reform through the Senate Finance Committee.'
"It is my purpose today to implement the Majority Leader's announcements by again urging that Senators identify their tax reform proposals to us by July 18 so that the Committee on Finance can proceed with the ordinary processing of intended tax reform."
Mr. LONG. Mr. President, I also ask unanimous consent that the letter of the majority leader addressed to the chairman of the committee, dated July I, 1969, be incorporated in the RECORD at this point.
There being no objection, the letter was ordered to be printed in the RECORD, as follows
U.S. SENATE,
"OFFICE OF THE MAJORITY LEADER,
"Washington, D.C., July 1, 1969.
"Hon. RUSSELL B. LONG,
"U.S. Senate,
"Washington, D.C.
"DEAR RUSSELL: At the meeting of the Democratic Policy Committee on Tuesday, June 24, 1969, the following resolution was unanimously adopted:
"'Whereas, the Senate Majority Policy Committee, having met and considered the matter of the extension of the income tax surcharge, hereby resolves:
"'That meaningful tax reforms should be adopted as a means of achieving an equitable national income tax policy, and further resolves,
"'That any proposal to extend the income tax surcharge be considered simultaneously with recommendations on meaningful tax reform and further resolves,
"'That the present income tax withholding rates be continued after June 30, 1969 for a period of one quarter to permit full consideration and disposition of the reform and extension of the surtax.'
“It was my intention of course to inform the full Democratic membership of the Policy Committee's recommendation before incorporating that action into any deliberations on the Senate floor. You will recall, however, that during the Senate's consideration of the temporary extension of the tax withholding rates last Wednesday, I publicly announced the Policy Committee's unanimous position that meaningful tax reform should be considered simultaneously with any fixed extension of the surcharge.
"The announcement was required at that time simply because Senate action was needed. The House had planned originally to consider the surcharge question on Wednesday. It was unable to do so, in fact the House leadership announced a postponement of two weeks. That event required the Senate's Finance Committee to proceed immediately with an interim 31-day withholding rate extension to preserve the status quo until House disposition of the surcharge. The short extension of the tax withholding rates was necessary to permit House action; it was undertaken at the request of the House leadership. So it was because of this impending action that I felt it was imperative to publicize the Policy Committee's position. In going on record at that time, I was hoping to assure against any misinterpretations of any subsequent extensions of the withholding tax rates to permit additional time for Senate action. The debate on the floor prior to passage of the 31-day extension of withholding rates clearly specifies that additional extensions will be forthcoming if necessary to afford the orderly processing of intended tax reform through the Senate Finance Committee.
"I should mention that during its deliberations on this question, the Policy Committee was well apprised of the inequities of the tax structure and the growing public awareness of this fact. To vote simply to extend the surtax would have compounded these inequities. Coupling the reform of the tax structure with any extension of the surtax thus appeared eminently fair. Indeed, for the taxpayer, it should come as a welcomed message.
"So it was for these reasons that the Committee felt that no permanent extension of the surcharge should be voted, unless and until tax reform is passed. And it should be added that Senator Russell Long, Chairman of the Finance Committee, participated fully in these deliberations and in the unanimous vote of the Policy Committee.
"I hope you will be understanding of these events that prohibited a more orderly communication of this action. I hope also you will consider favorably the position adopted on this proposal.
"Sincerely,
"MIKE MANSFIeLD."
Mr. LONG. Mr. President, it is the intention of the Committee on Finance to move as rapidly as we can, in good legislative procedure, with the surtax extension and the other amendments voted by the House.
It is also our intention to consider amendments proposed by Senators in the nature of tax reform, be they those to reduce someone's tax or those which raise someone's tax. Many Senators have ideas on this subject which they would like to have considered.
It is our hope that Senators who have amendments to be considered will have them drafted by July 18 and that they and other witnesses will be prepared to testify starting on July 21 with regard to them.
The Secretary of the Treasury testified on the bill this morning. He will be back before the committee this afternoon. It is expected that he and the Director of the Budget will conclude their testimony today. It is our hope to consider the testimony of public witnesses starting tomorrow.
I hope Senators will realize that it is important that amendments to this important legislation be considered by the committee, so it can vote those suggestions up or down, improve them if we can, before they are offered on the floor. I think most Senators will agree that it is appropriate that the committee have an opportunity to study their suggestions before they are offered on the floor to a big revenue bill.
Therefore, we hope to commence hearing those matters the week beginning Monday, July 21, and perhaps concluding on Friday; proceed immediately into executive session; and report the bill the first week of August. If that can be done, perhaps the bill will be voted on before the Senate takes its recess in August. If we cannot do it, we will have to ask for another extension of the surtax withholding rate.
When we asked that the bill be voted extending for 31 days the withholding tax rates, we did so at the request of the House. That was not a proposal initiated in the Senate. It was because of a problem confronting the House Members that we asked for the 31-day extension of the withholding tax rates. We will perhaps find it necessary to ask for an extension in our own right, and we think the House will be considerate of us, just as we were considerate of the House when they asked us for a 31-day extension. We hope we will not have to do it, but it may be necessary.
If the Senator from Illinois (Mr. DIRKSEN) wishes me to clarify the record further, I will be glad to try to do so.
Mr. DIRKSEN. Mr. President, I explored this matter with the Secretary of the Treasury and the distinguished chairman of the Senate Finance Committee in open committee session this morning. I tried to point out, that if we waited until the 18th of July to get in all the tax reform proposals, we would then have to set hearings, hear Senators first, and then Government witnesses, and then outside witnesses. Then, after a time, we get around to the marking up of the bill. After the markup the staff has to prepare the report. Then the bill goes to the Senate Calendar. Always, right ahead of us, is the 13th of August date, because that is when the late recess begins. That is immutable and cannot be changed. So if no bill is passed, then nothing more can be done until after Labor Day. Meanwhile, we have to go to conference. We cannot go to conference unless a bill has been passed in some form or other. So it goes to the third house. The custom is for the third house to wrestle with it for a long, long time.
So one can well apprehend that, unless these delays are not met, we are not going to get a tax bill until late in the year. Obviously, the inflationary fever is going to be eating away at the economy.
I would not like to undertake that kind of responsibility if there is a way to somehow accelerate this matter and get quicker action on it.
Obviously, if possible, we could bring in a bill relating to low-income people, the so-called top credit, and the surtax bill -- those three items -- put them in a package and let the other reform items come in a later package. I know there is an indisposition to go along with that idea. On the other hand, haste is essential, because it is vital that we find a cure and a solution for inflation.
Mr. LONG. Mr. President, I think I should state that it was the view of the Democratic Policy Committee that tax reform should accompany this tax bill. I certainly agreed with that procedure.
I did not feel that I was according anyone any right that was not his anyway, because we have no closed rule in the Senate. Any Senator can offer any amendment he wants to on a revenue bill. He can offer any amendment he wants to on a revenue bill, except a constitutional amendment, and remain entirely within the rules. Senators who have their favorite amendments will offer them in any event. We cannot deny them that right. That being the case, it seemed to me we might as well go ahead and agree that we would be willing to hold a hearing on amendments Senators might offer.
Perhaps we can work out some way to expedite this matter. As far as I am concerned, I am willing to help. At the moment, I would like to continue doing what we are doing. But I must say the House somehow resents the Senate's undertaking to initiate big revenue measures.
The VICE PRESIDENT. Under the previous agreement, all time having expired, the question is on the motion to concur in the House amendment.
Mr. LONG. Mr. President, I ask unanimous consent that I may proceed for 1 minute.
The VICE PRESIDENT. Is there objection? Without objection, it is so ordered.
Mr. LONG. Mr. President, as I said, at the moment I am satisfied we are doing what we should be doing. We are moving as rapidly as we can. We have heard the Secretary of the Treasury. We hope to conclude his testimony and that of the Director of the Budget. Tomorrow we expect to hear public witnesses. Starting on July 21, we expect to hear Senators and other witnesses testify on their pet proposals or such amendments as they may want to propose, which they feel will make for equitable tax reform, whether on the up side or on the down side, as may suit Members of this body.
Perhaps we might be able to prevail on the Senate to follow the approach suggested by the Senator from Illinois, but that is not before us at this time. In the meantime, we will go ahead as we are.
EXHIBIT C
EXCERPT FROM THE HEARING ON H.R. 12290 BEFORE THE COMMITTEE ON FINANCE, U.S. SENATE, TUESDAY, JULY 8, 1969
Senator DIRKSEN. Mr. Chairman, I would like to have you listen very carefully, because the timetable begins to not only intrigue me but it begins to concern me some. The old preacher in Ecclesiastics said there was a time for every purpose and a season for everything.
Now I note, Mr. Chairman, in your statement this morning that you expressed the hope that those who had tax reform proposals should submit them by the 18th of July, so they could become part of the committee print, and then it would be your purpose to hold the hearings on the committee print, so that all Senators and I presume all others who might be interested would have a free and open chance to testify. Is that substantially what you have in mind?
The CHAIRMAN. Yes.
Senator DIRKSEN. Now of course it is difficult to say how many witnesses there will be and how long it will take, but when the witnesses have completed their testimony, it then becomes necessary to sort of finalize everything and put it in form for the committee, and then prepare for a markup of the bill. That is the usual custom. Now that may take a little time, because comment has a way of getting chewed up here in legislative laws.
What I am thinking about, Mr. Chairman, is that the official late summer recess, which the leadership agreed on in January, will begin at the end of business on August 13. There will be that period from August 13 to September 3 which the Senate will not be in session, so that regardless of what committees may do, they can sit if they like and they can take testimony, but there will be no Senate action of any kind until the day after Labor Day. That will be the third of September.
Mr. Secretary, that is taking us pretty deep into the year 1969, and I am thinking in terms of urgency here. I fully appreciate the problem which confronts the Chairman of the committee, and I know also that he has to be properly responsive to the hopes and the desires of the Policy Committee on his side of the aisle, So I just wanted to get a reading here as to when we are likely to get a tax bill, and how deep this is going to go into this fiscal year. We are in a new fiscal year now.
The CHAIRMAN. I think the question was directed as much to the Chairman as it was to the witness.
Senator DIRKSEN. It was.
The CHAIRMAN. So I will try to answer it. It seems to me that we should keep in mind, and I personally favor it, that this is a reform bill as well as a revenue bill to begin with. There are two kinds of reform. One is giving some tax relief to someone whom we think is paying too much taxes. Now the Administration sent its own tax reform package in on the relief side recommending relief to low-income taxpayers. It also had a form that some of us thought was justified in the current circumstances to repeal the investment tax credit. Now that is a reform in terms of making someone pay more taxes. So those would be probably the two big items.
Whether we embellish them or modify them dollarwise I think they are likely to be two of the biggest items in the reform package anyway.
Now this committee and this Senate does not operate under a closed rule as does the House. Any Senator can offer his proposals. The Senator from Indiana, for example, has informed us that he is going to offer his version of what the Social Security laws ought to be as an amendment to this bill and we had better be ready to vote on it because he is going to insist on a vote and we have no power to prevent a Senator from offering his amendments, so we agreed that we would vote on tax reform in connection with this bill and he was simply conceding the right that every Senator has to offer his proposal.
Senator Harris over there has a proposal for a minimum income tax on favored taxpayers. He thinks they ought to pay something. It has been drafted. He has a proposal he proposes to offer. We may change it around a bit between now and then but I suspect we will vote on it.
Notwithstanding that, it will be my hope that we could report this bill before the first of August from this committee. Maybe we cannot, and if we cannot, then we will just report it as soon as we can, by the first week in October, and hope to pass it with a week of debate, but if it is possible I would hope we can report this bill by the first of August or some time within the first week in August.
Senator DIRKSEN. Mr. Chairman, I would utter the hope that it might be reported before that time, and considered by the Senate before that time. But when you have a committee bill obviously the sky is the limit as to the number of amendments and proposals that will be offered, and so we will be confronted with the old story that we are coming forth with a Christmas tree, all the good things are on it, and of course, that is going to take time. You cannot dispose of those just overnight or in a summary fashion either in the committee or on the Senate floor, but August 13 is our deadline that has been fixed, and it is rather immutable and we either get in under the wire or we go over until after the third of September.
Now then, you still have another problem. There are not only two Houses around here, there are three. The Conference Committee is the third House. Obviously there are differences, and then it must go to conference, and I know from past experience that it has required time to work a bill out of the Conference Committee and get it back to the House and Senate floors for final approval.
So, Mr. Secretary, we will be later and later here. Meanwhile the inflationary fever continues to strike its fitful flames into the economy.
Secretary KENNEDY. I think it is urgent, Senator, and we must move. As the Chairman indicated, he would move aggressively on this as we must move.
Senator DIRKSeN. I felt that the timetable ought to be explored a little, and if anybody else wants to put in on this discussion he may do so. But we owe it to the country, we owe it to business and industry and we owe it to the committee to at least charter our course a little and see about where we expect this, and all of this is of no avail unless it gets on the books, and book law and forceful law.
Secretary KENNEDY. There is great uncertainty in the public mind.
Senator DIRKSEN. I would gather so.
The CHAIRMAN. I will be happy to discuss the procedure with the Minority Leader of the Senate, the Senator from Illinois. He certainly has a heavy responsibility and I realize the problem.
Now as far as this Chairman is concerned, he will seek to cooperate in trying to move as rapidly as we can.
Senator DIRKSEN. May I say the Chairman always has cooperated.
The CHAIRMAN. I am satisfied that we are doing what we ought to be doing today, and maybe we might want to change our proposed schedule, and I will be glad to consider any suggestions that someone might offer. It was my hope, however in the statement that I made, that it would help us to expedite procedure because we were hopeful to avoid coming and testifying to something that they just take off the tops of their heads. We would like to see something in writing that they would like to see done in terms of an actual amendment drafted, not someone just testifying vaguely on his general theory of taxation and things of that sort. The whole purpose here was to try to expedite these proceedings, so I would hope that we can report this bill this month, and if we cannot do it, then I would hope that we would move as rapidly as we can.
Now at the same time that is something that the committee will have to decide. The Chairman cannot do it for the committee. It is a matter for every Senator to think about and see what we can do.
If we cannot report prior to the end of August, prior to the end of July, then certainly we will have to ask for another thirty days at a minimum, but I would imagine the House would cooperate in passing another extender if need be to continue the withholding rates until such time as we can act on this bill.
Recognizing how the House insists on its prerogatives to initiate revenue bills, and recognizing also that some people object to a Christmas tree bill -- not that I do particularly -- I always thought a Christmas tree bill is a bill that would pick up amendments, this would not be that definition, this would be a big bill picking up amendments, so it would be something that it is a big enough horse to carry almost any rider I would think, and if the Senators wanted to they could offer anything except a Constitutional amendment on this bill.
EXHIBIT D
SENATE CONSIDERATION OF THE SURTAX
The Honorable Russell B. Long, Chairman of the Senate Committee on Finance, today made the following statement with respect to the Senate consideration of H.R. 12290, the bill to extend the ten percent surtax and to repeal the seven percent investment tax credit:
"There has been enough misunderstanding of the position of the Senate Committee on Finance and its members with regard to the extension of the surtax that I believe an explanatory statement is in order. Here is my position:
"First, the Senate Finance Committee should correct such inequities as witnesses before the Committee and members of the Committee staff have uncovered to assure tax uniformity and fairness in the repeal of the tax credit.
"Second, the bill should be passed as promptly as possible consistent with sound and constructive legislative procedure. This means that the bill should be passed before the end of July if possible and no later than the August recess in any event. The hearing schedule of the Committee has been set with this goal in mind.
"Third, the efforts to achieve tax reform should not be so sweeping or comprehensive as to obscure the need to balance the budget and stabilize the economy. In other words, the bill should not be so mired down in endless controversy that it fails to pass before the August recess. As of today I can report that no Senator has come forward with any tax reform proposal which he insists be considered as part of this surtax bill.
"This is not to say that the bill should not have a considerable amount of tax reform in it. The bill in fact already contains several meaningful tax reforms. This does suggest that the idea of a full and comprehensive overhaul of the Internal Revenue Code should await the many months of study that such a task requires if it is to be done in a thorough and thoughtful fashion.
"In years when the Executive Branch is controlled by one party and the Legislative Branch is controlled by another, it is more important than ever that members on both sides of the aisle should be responsible in providing the President with the revenue he needs to sustain the government and the support he needs to defend the nation.
"The struggle to control inflation and rising interest costs is not something that the President can do by himself."
Several Senators addressed the Chair.
Mr. LONG. I yield to the Senator from Wisconsin.
Mr. PROXMIRE. Mr. President, I thank the Senator from Louisiana for this very helpful explanation of what, to me, was a very confusing situation. He will recall that a few days ago, on the floor of the Senate, I informed the distinguished chairman of the Committee on Finance that I would offer an amendment, taking him up on his offer, to reduce the oil depletion allowance.
In the meantime, my staff and I have been in touch with the staff of the Committee on Finance; they told us when we could testify, and when they wanted the amendment introduced.
Therefore, I was shocked to see it reported in a newspaper that no Senator had stated that he favored any specific amendment to the surtax bill along the lines of tax reform, because I thought I had made my position sufficiently clear.
I have offered my amendment today on the floor, and it will be printed, and therefore I hope it will be considered by the committee in due course.
Mr. LONG. The Senator will be heard. If the Senator will read the two statements which I hand him together, he will see what the proposed procedure was.
I was well aware of the fact that Senators were going to offer these amendments, but I was hoping to restrict the hearings so that we would not be asking people to come before the committee and testify merely on their general views on taxation. That could go on forever. It was my hope that Senators would have their amendments drafted and offered.
The depletion amendment the Senator proposes could be drafted very simply. He could provide to strike out where it says "27½ percent" in the Internal Revenue Code and insert "0" or "15 percent" or '1 percent" -- anything that appealed to him. But we would like to have a specific legislative proposal, as the Senator would do if he were calling the amendment up on the Senate floor.
If we all knew what Senators want to offer, it occurs to me we would be able to move expeditiously and efficiently than if we simply invited everyone to express his general views on taxation.
Last year, I went before the platform committee at the Democratic National Convention, and said, "Some people pay too much and some too little; we ought to have a minimum tax on the fellow who makes a lot of money, but pays virtually no tax. In such cases, we ought to tax on a different basis."
My proposal has not been drafted, but it is being worked on, and in due course it will be drafted.
Senator HARRIS read that proposal in the Democratic platform, and he said, "Something ought to be done about this; here is a platform commitment. We ought to do something about it."
He is working on a draft also, but neither of us can yet qualify as a Senator who has put his amendment in as a proposed amendment to the surtax extension bill. We have not done it.
Mr. MILLER. Mr. President, will the Senator yield?
Mr. LONG. I yield.
Mr. MILLER. Mr. President, first of all, I am comforted by the realization that the leadership intends to bring out the surcharge bill in a relatively short time.
Mr. MANSFIELD. Oh, no; the Senator is mistaken. I said it would be considered separately.
Mr. MILLER. Well, separately. Although I am not sure now what the word "separately" means, if it could be that there will be amendments tacked on to it in the Senate Finance Committee. In any event, if it is brought out separately, that should be in a relatively short period of time.
I do not subscribe to the thought expressed by some Senators that all we need to do is continue the withholding, and that will tone down inflation even if there is delay in passing the bill; because, in addition to the need to keep money out of the economy through the withholding, we have inflation psychology, and there are some people in this country who are betting that the surcharge will not be continued.
The only way to lay that speculation to rest is to take action on it.
I must say to the Senator from Louisiana that I am a little bit concerned about the extent to which amendments are going to be considered in connection with the surcharge measure. The junior Senator from Montana has now filed an amendment relating to tax loss writeoffs from farming operations.
I have a bill which I have introduced.
That bill is in the same general area as the one of the Senator from Montana (Mr. METCALF).
However, I am not so sure that either one of these will be the approach. There is another approach presented, and that is the limited tax preference approach which some think to be the best one. However, that is not even before our committee. That measure is before the Ways and Means Committee.
I am not sure that the Finance Committee, much less the Senate, could reach a sound conclusion about either the Metcalf bill or the Miller bill until we had the limited tax preferences proposal before us so that we could study all three and determine which is the way to go.
Similarly, with respect to the amendment the Senator from Wisconsin indicates he will submit, I have an amendment which I would like to have considered in the general area of oil and gas.
However, here again we are running into the limited tax preference approach, which is not before the committee. I can understand that it will be before the committee when we have a major tax reform package come from the Committee on Ways and Means. However, as of now we do not have it.
I am concerned about how far we can go in really intelligently pursuing each of the amendments, important as they may be in connection with the surtax measure, if we are going to act appropriately, since the Senator from Louisiana properly says we should have a complete picture on anything we will operate on in the Finance Committee.
It seems to me that, unless we wait for the amendments of the Senator from Montana (Mr. METCALF), the Senator from Wisconsin (Mr. PROXMIRE) and my own amendment to be considered in connection with a House-passed tax reform package, I do not think we can give the consideration to these that is due them.
Finally, a lot of concern is expressed on that side of the aisle about the need for tax reform and the need for assurances that there will be a tax reform package in addition to the surcharge measure.
I suggest that the policy committee on that side of the aisle is in control of the situation. We want to join with many on the other side of the aisle on much of this, but we do not have control of the Senate. The other side has control of the Senate.
If the other side wants to assure people that there will be a tax reform package, they can give that assurance. I think most of them have already done that.
I cannot understand the fuss over whether we will have a tax reform package. That has been made eminently clear. It has been made clear on the Democratic side of the House too, and by the administration too.
I know the chairman of the committee, the Senator from Louisiana, has given that assurance. I think we are beating a dead horse when we talk about tax reform in addition to the surtax measure.
Mr. LONG. Mr. President, the Senator has testified himself. Any other Senator may do so. I have announced how I expect to conduct the hearings. That is what I have done. If someone wants to vote for an amendment, he will not be able to vote for it if we do not get a bill before the Senate. And if one wants to vote for a measure, we should first set some ground rules by which we will conduct the hearings. If we do not conclude the hearings, we will not have a bill.
Mr. MUSKIE. Mr. President, partially in response to the observation of the Senator and partially for my information, I want to read a proposal in pursuance of the responsibility with which the Senator is cognizant and ask the Senator from Louisiana for his comment. The language reads:
Whereas, the Senate Majority Policy Committee, having met and considered the matter of the extension of the income tax surcharge, hereby resolves:
That meaningful tax reforms should be adopted as a means of achieving an equitable national income tax policy, and further resolves,
That any proposal to extend the income tax surcharge be considered simultaneously with recommendations on meaningful tax reform and further resolves,
That the present income tax withholding rates be continued after June 30, 1969 for a period of one quarter to permit full consideration and disposition of the reform and extension of the surtax.
I ask the Senator from Louisiana whether the plans he has presented to the Senate are consistent with the program in the resolution, "That any proposal to extend the income tax surcharge be considered simultaneously with recommendation on meaningful tax reform and further resolves."
The Senator from Montana, the distinguished majority leader, has indicated this morning that in his judgment that language would be implemented if we took into consideration the tax surcharge extension and the reform as separate pieces of legislation, provided they are on the calendar at the same time, subject to action by the Senate within a reasonably close time.
I ask the Senator from Louisiana whether his objective, as he has described it, is consistent with that language of the resolution adopted by the Democratic policy committee.
Mr. LONG. Mr. President, does the Senator mean am I being consistent or is the majority leader being inconsistent? I am trying to get this thing straight in my mind.
Mr. MUSKIE. As I understand it, the majority leader this morning stated the objective in different terms than I had previously understood. However, as I reviewed the language of the policy committee resolution, it did not eliminate the possibility of separate pieces of legislation to deal with the two objectives. So, I assume that the majority leader had in mind pursuing the objectives stated in the resolution, but doing it through the medium of two pieces of legislation simultaneously before the Senate. That is, as I understand it, the majority leader's position.
I ask the Senator from Louisiana whether what he intends to do in both of these fields could be considered the simultaneous consideration of meaningful tax reform and the surcharge.
Mr. LONG. Mr. President, as the chairman of the committee, I have been proceeding on the assumption that we were going to bring a bill to the Senate and that the committee was going to make its suggestions as to the amendments it felt should be added to the bill. Thereafter, any Senator who was not satisfied with the committee bill could proceed to offer any amendment he wanted to offer to the bill.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. LONG. Mr. President, I ask unanimous consent that I may be permitted to continue for an additional 3 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. LONG. Mr. President, I was aware of the fact that the House was going to subsequently send us some recommendations which would not have been suggested by anyone in the Senate.
That is why I do not want to agree to a suggestion that we have a complete overhaul of the Internal Revenue Code as a so-called reform amendment. I thought that the Senate should vote on suggestions that Senators might want to make, and then vote on other suggestions that might be made thereafter.
It has been my feeling that tax reform is a continuing process. Most people think they pay too much in taxes while somebody else is getting away with something and is paying too little.
Generally speaking, the average person thinks that tax reform means that he is going to get a tax cut and that somebody else, who he thinks is not paying enough, will pay more. Most Americans today think that they ought to have a tax reduction.
Mr. MUSKIE. I understand that Senators individually can initiate amendments to the tax law. I understand also that the House Committee on Ways and Means is considering tax reform and presumably will report a bill dealing with that subject, in the accepted meaning of the phrase, before this session is over.
Mr. LONG. Yes.
Mr. MUSKIE. I understand also that the tax committees of Congress can really address themselves to what anyone looking at the agenda would describe as meaningful tax reform.
What is troubling people in this country is that our income tax policy is no longer an equitable national income tax policy. If it is not, then the correction of that policy ought to involve something more than the consideration of hit-or-miss amendments offered by individual Senators or individual Members of the House. The consideration of the equity of our national income tax policy ought to originate in the committees, and out of that consideration ought to come, not necessarily every reform that could be conceived of by the mind of man, but a substantial modification of our national income tax policy, which will move it from what it now is to something that is more equitable in the minds of the income tax payers.
Now this, I am sure, is the concept that the policy committee had in mind when it adopted this resolution. So I think, as a member of the policy committee, that I had in mind that, at the right time, at some point within the first quarter of this fiscal year, we would have before us in the Senate simultaneously an extension of the surcharge and a meaningful reform proposal, which is the product of this kind of consideration.
All I am asking, because I am confused by what has been said and written over the weekend, is whether or not the distinguished chairman of the Committee on Finance has in mind moving in that direction, has in mind putting before the Senate in two pieces of legislation, possibly -- but at one time -- the extension of the surcharge and a meaningful tax reform proposal.
Mr. LONG, I do not have in mind putting anything before the Senate except what the committee reports.
Mr. MUSKIE. I understand that chairmen of committees have objectives in mind. I do not think the chairman of any committee I have been associated with has allowed the committee just to ramble down the road, hit or miss.
Mr. LONG. Meet one. Meet this one. So far as I am concerned, I am convinced that I cannot speak for those Democrats, unless they authorize me to, just as I cannot speak for the Republicans.
Mr. MUSKIE. But the Senator intends to influence them and try to influence them.
Mr. LONG. I have learned what little influence I have, too.
May I say to the Senator that if he will read my colloquy in the committee with the distinguished minority leader, who was not representing the policy committee, and the colloquy on the floor with the minority leader on the same subject, both of which I made part of the RECORD, he will see what my reaction was. It was that we must move this bill and must move it as expeditiously as we can.
I am aware of what the Democratic policy committee wants to do; and I say let us conduct hearings and hear those who want to testify for their amendments, so that we will have the amendments before us. If the Senator has an amendment to offer, I would suggest that he have it printed in time and offer it before the committee. Of course, he can also offer it on the floor.
Mr. MUSKIE. I do not have within my staff resources, my office resources, or my personal resources what it takes to write a meaningful tax reform bill which will achieve a more equitable national income tax policy. Yes, I have ideas in mind. I will submit them. The Senator is in a position to disagree with the policy committee. I am not challenging his right to do so. I am simply trying to understand, out of the confusion generated by this weekend's news stories and out of the colloquies on the Senate floor this morning, whether or not the Senator supports the resolution of the policy committee with respect to presenting to the Senate simultaneously proposals for meaningful tax reform as well as extension of the surcharge. I simply want to know where we are headed.
Mr. LONG. I think I supported that resolution when I tried to schedule these hearings and to get Senators to bring in their suggestions. If the Senator is aware of what I said at the policy committee meeting -- and I was invited to be its guest, and I am glad that I was invited to be its guest. If the committee is going to tell us what to do, it should invite someone from the Finance Committee to be there. When they asked me my thoughts about the matter, the Senator will recall that my reaction was that this bill should be voted on.
As I stated for the record, one of the biggest reforms of all is the repeal of the investment tax credit. Under existing circumstances, I do not think it can be justified, and I advocated that it be repealed as a part of this bill. That is a $3-billion item, and it is added to a big tax bill. It is not my amendment, but I was one of those who spoke out and said that before the Democratic study group in the House, even before Chairman MILLS was known to be in favor of it. I thought that should be done.
So here it is. We will consider refinements and improvements and things that should be done in connection with that, and then we will consider, so far as I am concerned, anybody else's amendment. The Senator from Montana (Mr. METCALF) introduced his amendment, and it will be considered. We will vote on it. And if he is not satisfied, he can offer it on the floor.
The Senator from Wisconsin (Mr. PROXMIRE) wants to do something about the oil depletion allowance. I do not agree with him, and I have made speeches to that effect. He has a right to have it voted on, and we will vote on it in the committee.
May I say to the Senator that his resources are limited, and so are ours. We have only six professionals on the committee staff, thanks to people like the Senator who voted for us to have six. We had only one before that time. Insofar as we can, we will give the Senator some help, and the legislative counsel are available to the Senator, just as they are available to me. The Senator from Maine has equal access to the legislative counsel. They can help him draft whatever suggestions he wants to make.
So far as finding suggestions for tax reform are concerned, I would think that if the Senator went back to the old Treasury recommendations he would find hundreds of them -- where the Treasury suggested somebody should pay more taxes and somebody else should pay less. In most cases on the down side, it is easy to buy, but on the up side it is difficult to buy. If too many tax reform amendments are included which would increase somebody's taxes, you usually cannot pass the bill, even though there is something popular in the bill seeking to give somebody a tax reduction.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. MUSKIE. I ask unanimous consent that I may be allowed to continue for 30 seconds.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. May I say to the distinguished chairman that I think what he has said this morning is still subject to the difference of view that is represented by the Senator from Iowa and myself with respect to the Senator's objectives.
I hope that what the Senator has said is consistent with the policy committee resolution, not because I think it should bind him. I think the Senator is aware that the policy committee takes the position that it has no right and has no intention of usurping the jurisdiction of legislative committees. I express the hope that what we have ahead of us is consistent with the Democratic policy committee resolution.
Mr. LONG. I think I am being consistent with it, in everything I have said.
I suspect that one statement I made in opening the hearings could be misconstrued -- perhaps in two instances. On one occasion, I made the statement that "these hearings would be just as broad as Senators wanted them to be." That was construed by some persons in the press to mean that I was going to delay this bill indefinitely in the committee. That was not correct. At the time I made the statement, I had just read a printed statement, which I put in the RECORD, saying that I was inviting Senators to have their amendments printed, and be prepared to testify -- that they should have them printed by the 18th and be prepared to testify starting on July 21, which is next Monday. My invitation to Senators was to limit our hearing to the amendments they want to offer, and thus keep the hearing from getting mired down in ceaseless discussion of general tax policy.
But we would like to have a printed amendment. In that way we will have a more limited hearing.
Mr. ELLENDER. Mr. President, will the Senator yield?
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. LONG. Mr. President, I ask unanimous consent that we may proceed for 2 additional minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. LONG. I yield to my senior colleague from Louisiana.
Mr. ELLENDER. Did I understand my colleague to state that aside from the public witnesses, the only other witnesses to be heard would be Senators?
Mr. LONG. That is how I would hope to proceed. I would hope we could bring the hearings to a conclusion.
Mr. ELLENDER. I hope so also, because if every Senator introduced one of these meaningful tax reforms we would be here until Christmas. I hope the Senator takes up the bill before him. Let us get rid of it and later on take time to look at the matter thoroughly. Then there could be outside witnesses to help accomplish that.
Mr. LONG. That is what I had in mind. We have had public witnesses on the House bill. If 10 people desired to testify over here in opposition to every amendment proposed by a Senator, and we took the time to hear all of those public witnesses, we would never get the bill to the floor of the Senate. We would prefer to have amendments submitted in writing.
Then I would prefer that we limit ourselves to hearing Senators testify in favor of their own amendments. That way we can finish the hearings before August. I think we are on sound ground in asking Senators to have amendments printed before they come in to testify.
It may mean that somebody does not get a chance to testify against a particular amendment but that is the way it was done in the other body on the investment credit repeal.
Mr. MANSFIELD. Mr. President, I yield to the Senator from Delaware.
Mr. WILLIAMS of Delaware. Mr. President, I wish to join the chairman of the committee in expressing the hope that we can expedite consideration of the surtax bill. I can state, and the record will prove, that I have been just as determined as any other Senator to have consideration by this Congress and our committee of meaningful tax reforms.
I think that to do otherwise Senators on both sides of the aisle would be negligent in their responsibility and would fail in their duty to the American taxpayer. We must give consideration to meaningful tax recommendations to correct certain inequities in our law.
I am as determined as anyone else to correct some of these inequities. I think it would be a mistake, however, to withhold our action on the surtax bill until after we have been able to complete hearings and report a meaningful tax reform proposal. There is already too much uncertainty in the financial community as to whether Congress will or will not extend the surcharge, and there is uncertainty as to whether or not Congress will repeal the investment credit. I think the continued uncertainty will create more confusion and more problems in our economic system. For that reason it is important that we dispose of this matter as soon as possible. In urging prompt action on the surtax bill, I join with the distinguished majority leader and others who suggest that the Senate needs to be assured that we will have an opportunity to vote on meaningful tax reforms.
I wish to point out one of the problems with which we are confronted in handling tax reform problems without adequate hearings, and I do not mean filibustered hearings -- I mean proper hearings. When one speaks of minimum taxes on everyone he is, in effect, proposing to repeal a part of the present tax-exempt status of State and municipal bonds. When that is seriously proposed -- and it is possible our committee will be confronted with that suggestion -- we are going to have requests from nearly every Governor of every State and nearly every mayor of every city. They will want to present their views because their borrowing rates on State and municipal bonds will be affected. They have a right to be heard. The Finance Committee could not turn down a request for a hearing from the Governor of a State.
I cite this one example to illustrate that we could not possibly complete the hearings and have the tax reform bill reported in time to get action before Congress recesses in August. I think it would be most unfortunate to defer action on the question of extending the surtax or repealing the investment credit until after Labor Day.
I think there is a way we can proceed. The chairmen and the ranking members of the Committee on Ways and Means and the Senate Finance Committee can give assurance that committee hearings will be held promptly. We would then, be ready to report the tax reform bill promptly after the House passes the bill, which is expected around the first of August. In this way we can get a tax reform bill. We can proceed now to vote on the surcharge extension knowing for certain we will have a chance to vote on the various reform proposals.
I say this as one who has rather fixed ideas as to some of these needed reforms. I see the Senator from Wisconsin (Mr. PROXMIRE) is in the Chamber. We both feel we should revise the law with reference to oil depletions. That matter will be debated, and we will do our best to get a vote on it at the most strategic time.
If we were to take certain of the so-called lesser controversial reform measures and put them on the surtax bill I would be afraid that we would never get any real tax reform measure. For that reason I would rather separate them in their entirety than to put some of them in each proposal. I do not think we could possibly include them in one bill and complete action by September. It would be a tragic mistake to make a decision to delay all action until fall.
Why delay this decision on the question of extending the surtax or repealing the investment credit. Let us vote now.
I think there is a way these two proposals can be separated and both sides still achieve the objective they seek. But whatever we do let us tell the taxpayer back home the rules under which he is to be taxed.
Mr. PERCY. Mr. President, I would like to say at this time that the distinguished Senator who is the chairman of the Committee on Finance, Senator LONG of Louisiana, acted in what I consider to be the finest tradition of the Senate.
We worked very hard to reduce expenses last year. No lawmaker likes to increase taxes or sustain them, but we are facing a serious economic threat in our Nation today. It is a threat that not only bankers and businessmen are aware of but a threat which every American family is aware of. It is the threat that inflation will grow worse in the months ahead if the surtax is not extended. I do not know of any better way to protect American families from inflation and to preserve the integrity of our whole fiscal policy, than for us to match our revenue with our expenses and continue and extend the surtax by law -- now. I would like to commend the distinguished Senator from Louisiana, the chairman of the Finance Committee, for his statesmanlike attitude on this question. Those of us who worked hard to carry out a responsible fiscal policy under a Democratic administration, deeply appreciate those Senators on the other side of the aisle who now share this same attitude under a Republican administration.
We all want tax reform. We all want a more equitable tax system. However, it cannot be done overnight.
We know that if we hesitate now on the extension of this necessary tax, we will lose the momentum we are beginning to gain to hold down inflation. It could be that if we wait 30, 60, or 90 days, it will set us off once again into an inflationary spiral. Once we start the momentum downward on otherwise spiraling costs, we must keep the pressure on, to fight the worst economic enemy we have in America today -- inflation.
We must do first things first. Work on tax reform, which certainly the Senator from Delaware (Mr. WILLIAMS) knows better than I, must go forward. The administration is dedicated to finding a way to making a more equitable tax system for this country. I am certain we will all have the opportunity to vote on a reform tax bill in the very near future.
Knowing the majority leader as I do, I feel confident that he will do everything within his power to help the administration develop a fiscally sound economic policy.
I thank the distinguished majority leader for yielding.
Mr. MANSFIELD. Mr. President, I ask unanimous consent that I may be allowed to proceed for 15 minutes.
The PRESIDING OFFICER. Is there objection to the request of the Senator from Montana?
Mr. HART. Mr. President, will the Senator from Montana yield to me briefly?
Mr. MANSFIELD. I yield.
Mr. HART. To use the phrase the Senator from Illinois just used, it has been "a very long night."
It has been a very long night. Some of us have been here for many years, anticipating the delivery of a basic tax reform bill out of the appropriate committee from the day we arrived.
I am not sure what the majority leader, the Senator from Louisiana and the Senator from Maine resolved. I got in late, and it was not clarified in my own mind. Perhaps that would not be true if I had been here throughout the discussion. But one point must be made which may not have been made; namely, that those who feel the importance of the extension of the surtax at this time because of the economics involved, must understand that there will be many of us who will be persuaded there are principles involved which are noneconomic but equally critical, and they are labeled "fairness." If there is not presented to us a proposal to extend the surtax on a fair tax base, then many of us will not be with you.
I am not sure that if we omit this opportunity to attach real tax reform to the extension of the surtax, we may be another 11 years listening to explanations that it is "complicated," and, "be patient," and, "it will be along some day."
The PRESIDING OFFICER. Is there objection to the request of the Senator from Montana that he be allowed to proceed for 15 minutes? The Chair hears none, and it is so ordered.
Mr. MANSFIELD. Mr. President, first, let me say to my good friend, the distinguished Senator from Illinois, that I am not at all certain he was commending the right Senator when he referred to me.
Second, I invite the attention of the distinguished chairman of the Committee on Finance to a statement he made, incorrectly referring to the fact that the policy committee was "telling the Finance Committee" what to do in recommending to the Senate tax reform.
The policy committee had no intention whatsoever of so doing. The policy committee did not do that. As a matter of courtesy, it invited the distinguished Senator to the policy meeting, not once but twice, so that the members could have the benefit of his advice. I believe that is good policy. It will be pursued in the future. Nothing will be done under the table. No committee chairman – and, for that matter, no Senator -- will be told what to do by the policy committee. The policy committee, however, maintains its prerogatives, as the leadership's advisory group on the timing and scheduling of legislation reported to the Senate Calendar. That is its responsibility. So far as other committees are concerned, it is subordinate to them in making initial recommendations on the merits of legislation assigned to the standing committees under the rules of the Senate.
When the policy committee invites the chairman, or requests the chairman, to attend, it does so not only as a courtesy but also to seek the advice of those who have a greater experience about a particular subject under discussion.
Now, Mr. President, the distinguished Senator from Maine read the resolution unanimously adopted by the Democratic policy committee on Tuesday, June 24, 1969.
For the purpose of keeping my remarks in sequence, I should like to repeat it at this time, so that its intention will be made clear, and its meaning will be understood without doubt.
That is contained in a letter which went to every Democratic Senator, and which it is my intention to read in full at this time:
Whereas, the Senate Majority Policy Committee, having met and considered the matter of the extension of the income tax surcharge, hereby resolves:
That meaningful tax reforms should be adopted as a means of achieving an equitable national income tax policy, and further resolves,
That any proposal to extend the income tax surcharge be considered simultaneously–
I repeat that word "simultaneously"--
with recommendations on meaningful tax reform and further resolves,
That the present income tax withholding rates be continued after June 30, 1969 for a period of one quarter to permit full consideration and disposition of the reform and extension of the surtax.
Over the weekend, I was called by the press to give my reaction to the statement issued by the distinguished Senator from Louisiana (Mr. LONG), chairman of the Committee on Finance. In general, I approved of what he had said, but I did indicate that it would be no more than a hope that the measure would be reported by the beginning of the recess and that the Senate would act on it by that time.
I also declined to support the statement of the Senator from Louisiana that a comprehensive tax overhaul would require "many months of study," because I had in mind the dictum laid down
unanimously by the policy committee and the agreement, that we would consider first, a surtax extension bill, and second, a tax reform bill. In other words, they would both be on the calendar at the same time.
In response to further questions by the reporter, I made the following statement:
First, that Senate hearings on the surtax itself, which includes repeal of the 7-percent investment credit and a few other reforms, would continue during the coming week.
Second, beginning on July 21, using the surtax bill as a vehicle so as not to challenge the House authority to initiate tax legislation, the Senate committee would begin its reform hearings.
That was predicated on the statement referred to by the Senator from Louisiana, which he made on Tuesday last, that all Senators would be invited, around July 18, to present their reform proposals to the Finance Committee.
Third, at the same time the House Ways and Means Committee would be holding hearings and working on a tax reform measure promised by Representative WILBUR D. MILLS, the committee chairman. This pledge by Mr. MILLS to Members of the other body had been instrumental in obtaining House approval of the surtax extension by a 210 to 205 vote on June 30.
Fourth, I stated that I thought Senator LONG'S committee would be expected, in a week or two, to send a surtax extension bill to the floor. In that event, the policy committee had unanimously recommended, with my full approval, that it should be held until a tax reform bill followed it.
And I stated that I would not call up the surtax measure for action by the Senate as a whole until a tax reform bill was placed on the Senate Calendar. This will require not only passage by the House of a tax reform bill, but follow-up approval by the Senate Finance Committee.
I stated also that I had good reasons -- at least, I thought I had good reasons -- for insisting that both a surtax extension and a tax reform bill be placed on the Senate Calendar. Without the prospect of early action on a reform measure, I explained that there would be intense pressure to turn the relatively simple surtax bill into a Christmas tree bill, and that it was my intention that each of these measures be considered in sequence, but separately.
So much for that.
To make my position a little clearer, I had a memorandum drawn up this morning, which will be repetitive in part of what I have already said, but which I think should be made a part of the RECORD at this time.
Mr. President, if I am running out of time, I ask unanimous consent to have 5 additional minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MANSFIELD. Mr. President, on June 24, 1969, the majority policy committee unanimously adopted a resolution calling for the simultaneous consideration of an extension of the surtax and meaningful tax reform. Senator RUSSELL LONG participated in the policy committee deliberations and joined in the unanimous vote.
The policy committee also resolved unanimously that the 1968-69 withholding tax rates should be continued at least until September 30, 1969, to permit the consideration of the surtax extension and tax reform and at the same time continue the economic slowdown the surtax is designed to effect.
This determination was based on the following considerations:
First, a deep awareness that the present tax structure is inequitable -- the very rich pay relatively little -- the middle and lower income groups pay disproportionately high taxes. Tax reform to remove these inequities was considered of the utmost urgency. Extending the surtax without removing the inequities would in effect compound these inequities.
Second, the only impact the extension of the surtax has on spiraling inflation is the slowdown effected by removing an added 10 percent of revenue from the private sector. In this regard it was felt that an extension of the 1968-69 withholding rates with the proviso that the surtax extension will be retroactive to July 1, 1969, has the same effect on the economy as immediate passage.
Continuation of the withholding rates until ultimate passage is fully intended by the leadership.
Third, the growing mood in the Senate against a simple extension of the surtax. The House action earlier this month signified that rejection of a simple extension of the surtax is not improbable.
The surtax bill will undoubtedly be used in the Senate as a vehicle for adding numerous tax amendments -- not all of which will remove present inequities. If the surtax is called up prior to reform legislation reaching the Senate Calendar, then the Senate will not gain the wisdom of the recommendations of the Senate Finance Committee.
Fourth, the fact that there is no chance to consider and dispose of a tax bill containing an extension of the surtax with the attendant amendments prior to July 31 or for that matter prior to August 13 -- the last day before the summer recess. The present military authorization will use up most if not all of that period.
Fifth, the House Ways and Means Committee is presently considering a tax reform package. It has been promised for House action prior to August 13. In view of the inability to schedule any tax bill with the debate it will entail, extensive hearings on reform in the Senate Finance Committee at this time would give the Senate the benefit of its recommendations when the surtax is called up.
Sixth, having both the 10-percent surtax extension and tax reform on the Senate Calendar when the surtax is called up, will provide for a more orderly debate on the bill. Waiting for the House reform bill to reach the Senate Calendar prior to calling up the surtax merely gives the Senate Finance Committee a chance to consider the reform bill prior to its being offered on the Senate floor as an amendment to the surtax.
We would prefer to have a recommendation of its Finance Committee on Senate reforms prior to voting on them on the Senate floor. Thus, in view of previous scheduling commitments, that will take the rest of this month at least, it will not be possible to bring the surtax extension up prior to July 31. In the interim, I believe that the continuation of the surtax withholding rates will provide every anti-inflationary economic effect intended. Importantly, the Senate will be able to proceed on both tax measures in an orderly and efficient legislative fashion.
Mr. President, the text of the letter amplifying the resolution was modified, and the corrected text is as follows:
U.S. SENATE,
DEMOCRATIC POLICY COMMITTEE,
June 30, 1969
At the meeting of the Democratic Policy Committee on Tuesday, June 24, 1969, the following resolution was unanimously adopted:
"Whereas, the Senate Majority Policy Committee, having met and considered the matter of the extension of the income tax surcharge, hereby resolves:
"That meaningful tax reforms should be adopted as a means of achieving an equitable national income tax policy, and further resolves,
"That any proposal to extend the income tax surcharge be considered simultaneously with recommendations on meaningful tax reform and further resolves,
"That the present income tax withholding rates be continued after June 30, 1969 for a period of one quarter to permit full consideration and disposition of the reform and extension of the surtax."
It was my intention of course to inform the full Democratic membership of the Policy Committee's recommendation before incorporating that action into any deliberations on the Senate floor. You will recall, however, that during the Senate's consideration of the temporary extension of the tax withholding rates last Wednesday, I publicly announced the Policy Committee's unanimous position that meaningful tax reform should be considered simultaneously with any fixed extension of the surcharge.
The announcement was required at that time simply because Senate action was needed. The House had planned originally to consider the surtax question on Wednesday. It was unable to do so; in fact the House leadership announced a postponement of two weeks. That event required the Senate's Finance Committee to proceed immediately with an interim 31-day withholding rate extension to preserve the status quo until House disposition of the surcharge. The short extension of the tax withholding rates was necessary to permit House action; it was undertaken at the request of the House leadership. So it was because of this impending action that I felt it was imperative to publicize the Policy Committee's position. In going on record at that time, I was hoping to assure against any misinterpretations of any subsequent extensions of the withholding tax rates to permit additional time for Senate action. The debate on the floor prior to passage of the 31-day extension of withholding rates clearly specifies that additional extensions will be forthcoming if necessary to afford the orderly processing of intended tax reform through the Senate Finance Committee.
I should mention that during its deliberations on this question, the Policy Committee was well apprised of the inequities of the tax structure and the growing public awareness of this fact. To vote simply to extend the surtax would have compounded these inequities. Coupling the reform of the tax structure with any extension of the surtax thus appeared eminently fair. Indeed, for the
taxpayer, it should come as a welcomed message.
So it was for these reasons that the Committee felt that no permanent extension of the surcharge should be voted, unless and until tax reform is passed out of Committee. And it should be added that Senator Russell Long, Chairman of the Finance Committee, participated fully in these deliberations and in the unanimous vote of the Policy Committee.
I hope you will be understanding of these events that prohibited a more orderly communication of this action. I hope also you will consider favorably the position adopted on this proposal.
Sincerely,
MIKE MANSFIELD.
Mr. President, I hope this now explains the questions that have arisen not only over the past weekend but over the past several weeks. The Democratic policy committee has made its recommendation unanimously. Insofar as it is possible, the majority leader will adhere to that recommendation, because he feels the only way to bring about good legislation, in an orderly manner, is on the basis of the recommendations laid down by the policy committee.
As I said, it is the intention of the majority leader to call up the surtax bill first, and that will be followed -- right after or very, very shortly, thereafter, I would hope -- by a tax reform bill.
In that way, I feel that we strengthen consideration of the surtax, because if it were to come out here on its own, it is my very strong belief that it would be weighted down, as I have already stated, with Christmas tree ornaments -- and not all of them would be considered as true reform items -- and that the end result could be no surtax bill and no reform bill at all.
So, with that explanation, I rest the case. I hope my colleagues understand what the position of the Democratic policy committee and the majority leader is. I yield to the distinguished senior Senator from Delaware, the ranking minority member on the Finance Committee.
Mr. WILLIAMS of Delaware. Mr. President, I have listened with interest to the views of the majority leader, and I realize he is speaking for the policy committee of the Democratic Party.
However, I think it only proper to point out that we are dealing with a revenue-producing proposal, which is not necessarily a Democratic decision alone; it is a decision to be made by the U.S. Senate as a whole, including the Republican Members of Congress, the minority.
I say that as one who last year, as the majority leader knows, cosponsored this tax bill as a bipartisan measure with the then Senator from Florida, and I was hoping, and hope still, that we can reach bipartisan agreement again this year, whereby the views of both parties will be considered, the minority as well as those of the majority. There are those of us who feel very strongly that before any decision should be made as to procedure, we should at least have the opportunity of expressing our own views.
I certainly agree with the majority leader that major tax reform proposals are in order, and I can assure him that I am just as determined as he is that they be put before us. I should like to see a tax reform bill reported, if at all possible, before the August recess. I would join the chairman if he wished in a promise that our committee would promptly act on the reform bill which is coming over from the House in early August.
But, as I pointed out earlier, when we speak of reforms, we must remember that we are going to have a lot of Governors and mayors wanting to testify, including the Governor of my State and I am sure the Governor of Montana also, on any proposal to change the present tax-exempt status of State and municipal bonds. Our committee will have to extend them that courtesy. But we cannot afford to wait until September or October before acting on the surcharge.
But I wish to emphasize again that it is very important to the economy of this country, that we make the decision at the earliest possible date as to whether or not we are going to extend the surcharge and if so at what rate, and also whether we are going to repeal the investment tax credit and if so the effective date and on what terms.
I was hoping, and I still hope, that the Senate can arrive at a decision to vote on this at an early date and then proceed in an orderly manner where both the majority and the minority views can be brought into accord, where we can report a bill out and then consider it. If we do not have an opportunity to consider the second bill embracing major reforms until after we come back after Labor Day it will not make too much difference.
But I think it would be a strategic mistake if the decision on the surcharge were postponed until after this is realized.
I say again, I hope that before the Democratic policy committee reaches an irrevocable decision they will consider the views of some of us on this side of the aisle who have the same interests at heart as do they on that side.
Mr. MANSFIELD. Mr. President, I appreciate the remarks just made by the distinguished Senator from Delaware. I know of his great work in the Committee on Finance in the field of taxation, and of the many contributions which he has made to bettering the economic situation of this Nation, and its financial condition.
If I conveyed the impression that I was speaking for the Senate as a whole. or for Republicans, I should like to correct that right now, because I was speaking only for the Democratic policy committee and, I believe, a majority of the Members on this side of the aisle. Even that, for me, is covering a great deal of territory, because I have enough trouble speaking just for myself, most of the time.
Mr. WILLIAMS of Delaware. I was not criticizing the majority leader; I am sure he understands that.
Mr. MANSFIELD. I understand.
Mr. WILLIAMS of Delaware. What I wanted to ask was that before they make an irrevocable decision I hoped the members of the Democratic policy committee, or representatives of it, would please sit down with some of us on this side of the aisle who have an equal interest in these problems and see if we cannot work out, by mutual agreement, a time table which will satisfy all of us.
That is all I am asking, that we get a chance at least to express our views as to why we think prompt action is so important, before the final decision is made. I realize that as a Republican I am not going to attain membership on the Democratic policy committee. I do not expect that. But I do think there should be a liaison between the two parties comparable to what we had, as the majority leader knows, last year at the time this surtax was passed under a Democratic administration. I took the position then that prompt action was needed. I am taking the same position now.
All I am saying is that maybe we can achieve the objectives of an early vote on the tax bill and still let Members be assured without any question but that they will have a chance to vote on tax reform at an early date.
That is important. I am just as desirous of enacting some reforms in our tax laws as is the majority leader or anyone on his side of the aisle, and I think we are closer today to getting meaningful tax reforms than ever before; I do not want to miss this opportunity by taking hasty or harum-skarum action.
Mr. MANSFIELD. I assure the distinguished Senator that his views will be made known to the Democratic policy committee.
Mr. LONG. Mr. President, as a point of clarification of the legislative discussion about the tax reform problem, I should like to make it clear that some of the confusion arises from the fact that there is no meeting of the minds among Senators as to just exactly what tax reform is. Some Senators think tax reform means one thing, and other Senators think it means something else.
It has been my experience on revenue bills that if a Senator has his way, if he offers his amendments and the Senate agrees with what he proposes, when the bill passes, he thinks it is a good bill; and if he wants to call it a reform bill, he thinks it is a very good reform bill.
If, on the other hand, he is not successful in persuading the Senate to see the matter his way, and his amendments are voted down, he usually concludes that it is a very bad bill, and that the Senate was unwise and failed to legislate in the public interest.
That is just par for the course. When one talks of reform, the first thing that occurs to me, if the committee is supposed to initiate the reform, is to go back and look at all the old amendments I have proposed, to go back and get all those Long amendments I have offered down through the years, and bring them back before the committee and see if the committee will not reconsider the votes by which it rejected some of my particular amendments which I thought were very good ones.
I would hate to burden the committee with voting on all of my suggestions. I know what the result would be in some instances even before bringing the matter up. I hope that there will be consideration of some measures that have some chance of being agreed upon. Even so, there is a great variety of opinion with regard to what some Senators look on as tax reform.
The only way we would know whether a measure is sound and would be in the public interest or tax reform would be to have a Senator present the matter in draft form.
That being the case, my thought was in the beginning, and is now, that we should vote on such tax reform suggestions as Senators insist on having considered when the surtax bill comes before us. Next, we would proceed to consider the House suggestions when the House sends us their tax reform bill.
Meanwhile, of course, the Nixon administration, like the Johnson administration and the Kennedy administration before it, should be studying revenue proposals and initiating its own tax reform proposals.
When Mr. Cohen, who replaced Stanley Surrey as Assistant Secretary of the Treasury, first called at my office, I asked him what he thought about Mr. Surrey's tax reform proposals. Mr. Cohen's reaction was that he would like to study them.
I wanted to know if he was prepared to endorse them. His reaction was that he would want to study Surrey's suggestions and other suggestions and then recommend what the Nixon administration thought would be a good tax reform package on behalf of the Nixon administration.
The point I have in mind is that I would not arrogate to myself the right to know what the Senate was going to regard as a proper tax reform package at this point or what the Senate Committee on Finance would regard as an appropriate reform package.
As far as I am concerned, I find that the best way to proceed in this situation is to be flexible about the matter, consider everyone's suggestion, do as we have been doing in the past and vote for those things that people think are right and vote against those things with which people disagree.