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. I 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. 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. 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 seriousthey 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. 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. 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. 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 seriousthey 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. 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. 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 81/2 percent as its share. Senator CAIN. We are trying very hard to find that formula. Mr. BATES. We have asked that question, Mr. Hayes; that is constantly before us, and I have asked the Commissioners to set forth in |