we were very frank in telling the Commissioners that we would rather pay an increased tax ourselves than have a tax on our patrons.

That is not as altruistic as it sounds, because we know that an increase in the amusement tax would naturally cause a great drop in attendance, and cities that have ventured and experimented with the amusement tax have found out in some cases that they would have been far better off paying themselves; attendance has dropped alarmingly in certain cities. I know of cities that show a record of 35 to 40 percent in the drop of admissions by reason of additional taxes.

At the time we had that hearing, therefore, in answer to Commissioner Mason's inquiry did we have any suggestions to raise revenues, I told them at the time that I thought the motion-picture theaters of the District of Columbia were paying a low license tax, and quoted to him figures showing that what we were paying in other cities, and offered to raise our license fee ten times.

Senator CAIN. Would you go into that a little for us as to what you were paying.

Mr. BRYLAWSKI. Yes. According to a law that was passed-I do not remember the date, but I know who proposed the law-the license fees of the amusement places in the District of Columbia were supposed to be set up on the basis of cost of inspection.

Now, let me say to you gentlemen, if I may, without taking too much time, that we are inspected frequently; we are inspected very thoroughly once a year, for which we pay an inspection fee; that is in addition to a license fee, but it is a very moderate one; and then our exits and the conditions of aisles are inspected frequently, all with our entire cooperation because we feel that anything we can do-that the city exercises the authority on for the safety of our patrons-is wholeheartedly our problem, too. For that service we pay $30 a year for a motion-picture house and $50 a year for a house using movable

scenery.

The disparity there is very great; that is, that a motion picture theater using no movable scenery of any kind, there the conditions remain the same all the time, I mean from week to week; whereas a theater such as the National or the Capitol or the Earle, when we had shows there, bring in new performers and new scenery every week, and they require an inspection every week because every bit of that scenery must be tested and found to be fire-resistant or fireproofed before it can be used, and theaters having movable scenery are also compelled to have other fireproof safeguards, sprinklers, water curtains, asbestos curtains, and standpipes which also require frequent inspection. Therefore, there is really a disparity between the $30 that the motion picture house, per se, pays, and the larger theaters; they should pay a great deal more, but still the price was set by the Congress at $50.

We offered to raise our rates 10 times in the hope of raising some revenue. Of course, it will not meet the deficit of the District of Columbia.

Senator CAIN. How many movie houses are there?

Mr. BRYLAWSKI. Sixty-six. They have been collecting $2,000, and we proposed that they collect $20,000, but that also brought up at the time, and I think now it is being considered by the Commissionerswe also brought up the fact that if the licenses were raised 10 times that they should be on a more equitable basis. There was no reason

for a little theater on Ninth Street paying possibly the same prices as the Palace with 2,200 seats and the Earle.

Senator CAIN. Now every theater pays exactly the same?

Mr. BRYLAWSKI. Yes. So, we suggested that possibly a seat tax would be a more equitable way to distribute the burden. It is much easier for the big theater to pay five or six times what the small one can because it can earn it by taking in more money through admissions since the admission prices are higher. So, it was revived, and we are being told it is being revived, and we are not going to oppose it unless the price of that seat tax gets out of proportion to what we think it should be.

Senator CAIN. And that matter would have to go through the Congress?

Mr. BRYLAWSKI. Yes, it would have to go through the Congress. Now, on the question of licensing, I have also brought to the attention of the Commissioners, not once but several times, the fact that while they are collecting license fees in the District of Columbia it is by no means the fulfillment of that possibility. While a theater pays $30, and I believe you were told at one hearing that the ball park pays five, we are also faced with the fact that a little grocery store pays a license fee of $15, and the big Hecht Co. and Woodward & Lothrop, which do a hundred million dollars worth of business, pay nothing. Therefore, I think if the whole question of licensing were explored it would be found to contain a great deal more revenue. Senator CAIN. And more equitable probably.

Mr. BRYLAWSKI. It would also-the fact that any business has to take out an annual license more or less brings them under governmental supervision because, for instance, the theaters, they make their inspection, and if they find that one exit door is not working properly or one red light is out, we are required to repair that before the license is issued for the following year.

Now, we are faced with a revision of the building code. In fact, I have been rather active on it, and we are going to try to bring all the buildings of Washington to where there is a public assemblage of more than 50-and that figure of 50 is used in the code-to at least some standard of safety comparable with modern requirements.

If each building, therefore, each business, were required to take out a license that job would be simplified and made easier—at least, the supervision of it would be, and you would have a continuing supervision.

I am a long way from amusement taxes, gentlemen, and I thank you for your indulgence.

Senator CAIN. Well, it is a very interesting observation. I think your observations are typical of examples throughout American communities generally. Taxes on business establishments simply seem to grow, and some day you wake up and you find that you are getting too much from some establishments, nothing from others, and not nearly enough from others, and then you are faced with a practical problem that takes a long time to solve.

Mr. BRYLAWSKI. Not only that, Senator, but these taxes, these license fees, can by no means be passed on to the public. This increase in tax that we are suggesting, we are perfectly willing to absorb. If it were an admission tax it would, of necessity, be passed on.

Senator CAIN. That is right.

Mr. BRYLAWSKI. Thank you a lot.

Senator CAIN. I wonder if Mr. J. P. Hayes, general manager of the National Symphony Orchestra, is present?

STATEMENT OF J. P. HAYES, GENERAL MANAGER, NATIONAL SYMPHONY ORCHESTRA ASSOCIATION, WASHINGTON, D. C.

Mr. HAYES. Good morning, Senator. My name is J. P. Hayes, and I am general manager of the National Symphony Orchestra As

sociation.

I would like also to speak in two other capacities, manager of the Hayes Concert Bureau, my own, and as a citizen, and veteran of World War II.

I will speak exclusively on the admissions tax. I am strongly opposed to it.

Before the war I was manager of the symphony orchestra, back in the old days we all speak of, when this type of concert presentation was nonprofit on the other end, such organizations like the Metropolitan Opera, the Chicago Opera, and the San Francisco Opera, 25 symphony societies, were all tax-exempt. There was not even the old 10 percent then.

In the old days there was the 10 percent tax on movies. With the coming of the war in 1942, there was a need for broadening the tax base, and the amusement tax was then changed to what, on the statute books, was an amusement tax, and as such, excluded church societies; it was changed to just that, which means that instead of an amusement tax, one pays now first 10, and then later 20 percent, when it was further broadened in 1943; you now pay for the privilege of passing a door when the church societies give amusement to raise money for paying off a mortgage on the church, that was passed, and that is how broad it became. That is overlooked by some people.

Now, it is proposed that an additional 10 percent, for a total of 30, be levied on this type of thing, broadly called amusement but more correctly called admissions. I think it is time to look the other way and review the old basis as to whether now, having gone through this war phase, and having become, in their own words, "the pet of the Treasury Department," the easiest tax to collect, no great troubleit is paid up, we make up our box office statements, and so much goes to the Government, one check there; there is no collection problem, and it is the old story of it gets to be convenient. I admire your phrase that you add and you add. When will the straw break the camel's back?

Not very far from here is the city of Philadelphia, and they tried that, and here is what happens. It does not mean that the people stop going to concerts and movies, and so forth, any more than when you put on a sales tax the people stop buying. What they do is this: They go less; they buy fewer times. So, instead of this gravy money they look for there is a contraction of it entirely, and you have less volume, and the fact is that in the city of Philadelphia, even with continued high income levels, and I know the story there very well, there is less volume of dollars coming in when the tax was lower. These are strong facts, and they are facts.

Senator CAIN. Both of us are very conscious of that; it is the law of diminishing returns. Where does it really start to hurt?

Mr. HAYES. The Board of Trade of Washington recently held a forum, and had a tax expert down from Cornell University.

I posed a question to him from the floor while Mr. West had this general plan of eight items, called the West proposal, and so forth, and Mr. West stated that originally it was contemplated that the 20 percent Federal tax would go down to 10, and the D. C. tax would go in on that.

Senator CAIN. And still be 20.

Mr. HAYES. But the question was-and I think it was Mr. Brylawski who asked the first question, although this is no collaboration, and he said, "Now that the 20 percent is holding, would you also put on the 10?" And he said it will.

I asked the next question, and our tax expert friend said he thought it was unwise. There is a certain point beyond which you cannot go on any form of taxes, and 20 percent is of that type of thing.

Now, realize what we are thinking of. Two percent is the amount of the sales tax. I work on a salary-it is a good salary but I earn it. If you buy paper clips and pay 2 percent, that is all right; and if you buy paper and pay 2 percent, why that is all right. But a sudden 10 percent on a ticket is like this: You have 2 of 10 percent on top of 20 already. Why, this exceeds by double the jewelry and perfume tax, for example. I am amazed that the thing is even up for a hearing, frankly.

By experience elsewhere, and I think it is careless thinking, and I accuse Mr. West of being a very, very hasty operator, I will go along with the sales tax, the broadening of the base of the income tax. I have studied the whole proposal and it makes sense, although there is a more penetrating question on which I will close in a moment, but to add 10 percent on top of a current 20 percent tax, gentlemen, does not make sense, believe me, and I will stand on this comment.

Lastly, may I leave you with this thought, and I take my citizenship seriously. I could not vote in the District of Columbia, but I live in Virginia, and so I do vote again, but during the war we all became conscious of this type of thing, the fundamental question, and I say this without too deep a study-I should have more time to study. I hear from the old-timers about it, and I have been here 6 years, that there was a time when Congress recognized its responsibilities to the Federal city-they called it the 50-50 plan.

At night I read stories to my 412-year-old boy, and one story there was an animal scene, and the mother duck was talking to her children telling them to look on the blackboard, and the caption was, "So busy giving the answers that nobody thought to ask what the question

was.'

Gentlemen, this question is not the 8-point tax program; the question is who should pay and why. Fundamentally the District of Columbia citizens should not be punished by these additional taxes. It is up to the Congress to go way and above the money formula of payment of 812 percent as its share.

Senator CAIN. We are trying very hard to find that formula.
Mr. HAYES. To whom else does the city belong?

Mr. BATES. We have asked that question, Mr. Hayes; that is constantly before us, and I have asked the Commissioners to set forth in

detail every type of service that the District government offers to the Federal Government and what the Federal Government gives to the District government, and also the amount of land that we have taken out of the tax rolls; that is a fundamental question; we are just a little step ahead of you in that regard.

Mr. HAYES. Very good. I am pleased to hear it.

Mr. BATES. We have been here 3 weeks trying to get that answer, and we have not got it yet.

Mr. HAYES. I will go back, then, to the admissions tax, in general, and in particular to those organizations that are nonprofit. I am still laboring my hair gets grayer daily trying to raise $175,000 in this city, the citizens of which all feel allegiance to Indiana and California, where there are great organizations like this to keep a cultural, musical organization alive. We have $130,000, and we need that much more. The Government phase of the campaign is now on. You all know that story, and suddenly these things come along, and they are serious— they are blows-they retard the march of progress culturally and musically in our country, and I cannot say too much in opposition to this proposal of an additional 10 percent on admissions.

Senator CAIN. Thank you very much.

Let us try to save some time, if we can. If we are to be besieged by a series of gentlemen representing the cigarette retailers, why do we not have them all up at once?

Please be seated, introduce yourselves to the reporter, and proceed with your testimony.

STATEMENT OF JEROME KAUFMAN, REPRESENTING NATIONAL ASSOCIATION OF TOBACCO DISTRIBUTORS, WASHINGTON, D. C.

Mr. KAUFMAN. Mr. Chairman and members of the joint fiscal committee, my name is Jerome Kaufman. I am associated with the National Association of Tobacco Distributors as director of industry and public affairs. My association represents the wholesalers of tobacco products in the Nation who collectively service approximately a million retail outlets.

In this particular instance, I represent and speak in behalf of the wholesale tobacco trade in the District of Columbia, who are vitally concerned with the effect of the proposed cigarette-tax law on their businesses and the businesses of their customers, retailers of cigarettes in the District.

The tax is, if I remember correctly, a 1-cent tax per package.
Senator CAIN. That is correct. Go right ahead, sir.

Mr. KAUFMAN. We are familiar with the method of obtaining revenue for the administration of the government of the District of Columbia and are cognizant of the present need for the large sum that must be raised through taxes to supplement the contribution of the Federal Government. Nor are we unaware of the urgency of obtaining the necessary funds to properly administer the affairs of the District.

However, we are certain that it is neither the desire nor intention of any congressional committee or the Congress to impose a tax that will prove inequitable and prejudicial to the welfare and interests of hundreds of merchants in the District of Columbia.