Receipts from Federal automotive excise taxes in fiscal years 1918 to 1927

Comparison of receipts from Federal automotive excise tax with all Federal internal revenue in fiscal years 1917 to 1927

1 Nine months' collections only, as excise tax became effective Oct. 4, 1917. * Includes receipts for first six months, i. e., up to Dec. 31, 1926, and applies only to passenger automobiles and motor cycles, other Federal motor-vehicle taxes having been repealed.

STATEMENT OF HON. FRED W. GREEN, GOVERNOR OF THE
STATE OF MICHIGAN

Mr. HAWLEY. His excellency, the Governor of Michigan, the Hon. Fred W. Green, is here on public business of his State, and with the consent of the committee we will hear him for a few minutes at this time on the subject of the automobile tax.

Governor GREEN. I am here to-day interested in an endeavor to call the attention of the committee to the fact that the States also have very large problems when it comes to the matter of taxation.

We are anxious that the new tax bill shall rest just as lightly as it is possible on us. We feel that the automobile, especially in Michigan, is being discriminated against. We feel that it is not entitled to be burdened with this Federal tax.

We have a gasoline tax in Michigan. We have a Federal contribution, of course, but the allowance to us from the Federal Government is small in comparison with the amount of money that the State of Michigan is raising for its highways, for the purpose of furnishing transportation.

The automobile has become a real factor in transportation in this country, just as much as the other and older means of transportation. and we feel that just because it is new is no particular reason why it should be continually burdened.

We see locks through which ships pass maintained and we see harbors dredged. We maintain that the automobile is not a luxury, neither is it a semiluxury, but a necessity.

The State is burdened with a great deal of expense, gentlemen, for this reason. The railroads with the permission of the Interstate Commerce Commission in our State, are allowed to discontinue branches that have been serving the people. Our own State railroad commission does the same thing. I am not making any complaint on that score. You can not compel railroads to operate when they are doing it at tremendous loss, as they are on some of the branches in Michigan.

That put the burden, however, on the State of Michigan to furnish ways by which the people may come and go to and from these towns which otherwise would be entirely isolated.

I believe that the United States Government has furnished us in the last eight years something in the neighborhood of $16,000,000 that has gone into our highway construction. The State during this time has put in about $100,000,000.

The property tax in the State of Michigan in the year 1926 for all purposes-I do not include special things like sewers and paving-was a lump sum of $220,000,000. But we furnished the United States Government $227,000,000, and so we feel that the burden that the United States Government puts upon us does not rest lightly. We come here, therefore, asking that these things that can be lightened should be lightened.

I noticed in the newspapers this morning that the distinguished Senator from Utah, Senator Smoot, said that the burden for economy rests chiefly upon the States. While we realize that we must be economical, that we must cut down in every way we can, at the same time that burden also rests upon the United States, we think as heavily as it does upon ourselves.

I came here to speak on the inheritance-tax matter and I understand that that is not up for discussion this morning. I have been told that I would have the privilege of filing a brief on that subject. which I shall be glad to do. That is one of the things that we feel should be left to the State of Michigan. We have an inheritance tax that brings us about $1,900,000. We have a national Federal tax that brings us about $1,600,000. That does not seem very large, but in 1922 the Federal Government took from the State of Michigan $17,000,000.

We do not like the idea of the 80 per cent principle. We feel that is a club. We think that if 16 per cent goes to the State and 4 per cent to the Federal Government it is not going to be a matter of revenue to the United States Government, but rather a club to make the States join with the Federal Government.

Pensonally I feel that the Federal Government wants to get into a new field of Government endeavor. It is perfectly proper for them to offer a certain amount for the States, if they are thoroughly convinced that that is the right thing to do to encourage them to get into it, but I do not believe it is the province of the National Gov

ernment to continually hold out these things. If they are what they should be, then it is up to the State after they have been introduced and thoroughly tried to support them.

Mr. RAINEY. May I ask you one question?

Governor GREEN. Surely.

Mr. RAINEY. Have you any information as to who is financing this lobby in Washington? I am going to find this out, if I can, while we have this inheritance-tax matter up?

Governor GREEN. I have not.

Mr. RAINEY. It is the most expensive lobby I have ever known, and it is advocating the removal of these taxes.

Governor GREEN. I want to say this to you, that I am here at my own expense, and I am not connected with anything in any way.

Mr. RAINEY. I am going to ask every witness who appears before this committee, including the governors, whether they are here at their own expense or not.

Governor GREEN. I am here at my own expense, I am glad to tell

you.

Mr. RAINEY. Well, I am glad to hear that. Many of them will not be here at their own expense.

Governor GREEN. I came from the train up here.

Mr. RAINEY. You have no information about this lobby here and how it is maintained, have you?

Governor GREEN. No; I know nothing about it. I know that we were asked to appoint delegates from our States, and we appointed senators and representatives to come here to speak.

Mr. RAINEY. Who is going to finance them?

Governor GREEN. I do not know.

Mr. RAINEY. Who asked them to appoint that committee? I am going to get to the bottom of this, if it is possible to do so.

Governor GREEN. It was some organization-I do not even know the name of it. I could get it for you.

Mr. RAINEY. I wish you would put it in your remarks.
Governor GREEN. I will.

Mr. RAINEY. Because there will probably be an investigation in the House or in the Senate of this matter.

Mr. GREEN. It is customary that in a national matter of that kind that a governor is asked to appoint a committee, and he naturally would do that.

Mr. RAINEY. Do you know who is financing the campaign in the public press in favor of removing this tax?

Governor GREEN. I do not. I have had no connection with it in any way. The views I am giving to you are my own, but I would say, since you have brought up the question, that they are quite generally held out in the State of Michigan. I would be glad, if you had the time to listen, to read a very short editorial on this subject. Mr. RAINEY. I am very familiar with the propaganda that has been going on, and I think that I know the sources of it.

Governor GREEN. This is not propoganda. It is from the largest newspaper in western Michigan, one of our best and one of our ab'est. If you will permit me, I will read you a couple of paragraphs:

As is well known, the new Federal estate tax law grants a credit of 80 per cent of Federal taxes for State taxes paid. That provision was deliberately and outspokenly inserted in the law to bludgeon the State into passing uniform

death taxes with maximum rates, say, around 16 per cent, which is just 80 per cent of the Federal top rate. Uncle Sam said, "Why not take the bribe? If you don't collect the money so that I can give estates this credit, then I'll take it."

Nevertheless, very few States have sought to meet the Federal level. They have recognized the new law for what it is a dangerous attempt to substitute Federal dictation in tax matters for State independence. Death taxes, except in war time, have been a traditional State revenue, and Congress now attempts permanently to usurp this State field of legitimate local policy and decision by setting up a money incentive to do as Washington says.

Mr. GARNER. Do you personally believe in the principle of death taxes, Governor?

Governor GREEN. I do. I feel this way about it

Mr. GARNER. Believing in the principle of death taxes, do you not believe that it is to the interest of that principle to have the rate equal and uniform throughout the United States in the various States?

Governor GREEN. I do not. I think that it is a matter entirely for the States.

Mr. GARNER. I understand that; but I did not ask you that. I said, believing in the principle of death taxes, do you not think it is to the advantage of that principle to have it equal and uniform within the States so far as possible?

Governor GREEN. It might be; yes.

Mr. GARNER. And not have one State bidding for wealthy men through the exemption of that tax?

Governor GREEN. That does not appeal to me as a strong point. Mr. GARNER. Governor, I did not say it was a strong point. I hardly ever make a strong point.

Governor GREEN. Yes; you do.

Mr. GARNER. I am trying to get your viewpoint. You do believe personally in the principle of a death tax?

Governor GREEN. Yes, sir.

Mr. GARNER. Does your experience as a public official lead you to believe that death taxes should be levied in the States?

Governor GREEN. Yes, sir.

Mr. GARNER. I ask you, then, in the interest of the uniformity of that tax, is it not advisable that all the States should, as far as possible, have a uniform rate of taxation? You have already said that you believe it would be of advantage to have that.

Governor GREEN. Yes. I believe that should be brought about by the action of the States and not by action of the Congress.

Mr. GARNER. You said a while ago that your State contributed $227,000,000 to the Federal Government.

Governor GREEN. Yes, sir.

Mr. GARNER. North Carolina contributes a very large sum, one hundred million dollars and odd-I believe it is $160,000,000—to the Federal Government, and New York contributes over $600,000,000 to the Federal Government. But I believe Governor, with your experience in economics, you will admit that the North Carolina tax is paid in part by Texas, whose inhabitants smoke some tobacco and some cigarettes, and probably Texas pays a little of Michigan's taxes when they buy automobiles. I just wanted the record to show that we are helping to pay that tax in Michigan, that it is not entirely a burden on Michigan.

Governor GREEN. Yes, sir.

Mr. RAINEY. Have any of your men of great wealth gone to Florida recently?

Governor GREEN. I do not believe that our rich men are pikers. I do not believe that they are going to Florida to escape a legitimate

tax.

Mr. RAINEY. A great many of them must have gone, because there are 1,200 millionaires, and that is as many as there are in all the Southern States.

Governor GREEN. I rather question these statistics, to tell you the truth.

Mr. RAINEY. Well, there is no question about the statistics.

Governor GREEN. I am acquainted with a great many rich men in Michigan, and I will say that there is not one that would be guilty of that sort of thing.

Mr. OLDFIELD. Your richest man has a home in Florida.

Governor GREEN. Yes; some do; but they are not going to give up their citizenship in Michigan, I want you to understand, to get away from an unreasonable inheritance tax.

Mr. TREADWAY. Mr. Chairman, may I return for a moment to the matter of the automobile tax?

Governor, you thought that we should remove this Federal tax? Governor GREEN. I think so.

Mr. TREADWAY. I am referring to the tax on automobiles. You said that it was a burden to the automobile user.

Governor GREEN. To the automobile industry, which represents a large part of the prosperity of Michigan.

Mr. TREADWAY. Does the State of Michigan have a gasoline tax? Governor GREEN. Yes, sir.

Mr. TREADWAY. What is it, please?

Governor GREEN. It is in the courts.

Mr. TREADWAY. All of it?

Governor GREEN. We do not know; we rather think it is. We have had a tax of 2 cents, and the last legislature made the tax 3 cents, and that is now being contested in the courts.

Mr. TREADWAY. What are your receipts from the State gasoline tax?

Governor GREEN. From the 2-cent tax it was about $7,000,000between six and seven million.

Mr. TREADWAY. Do you favor the State continuing to levy that tax?

Governor GREEN. That is the only way I know of, without going to property, and in connection with that I want to make this statement to you: With reference to the property tax in the State of Michigan, in 1926, we had returned to the State 727,000 acres of land. We have had 8,051,000 lots-city and village lots returned to the State for taxes.

This is not merely the age-old cry that taxes are high. There is the absolute and positive proof that something must be done in the State of Michigan to relieve property. I can not see any other way to get roads that we must have for this new method of transportation except the gasoline tax.

Mr. CHINDBLOM. When you say "returned" you mean what in some States is called forfeited?

Governor GREEN. Yes, sir.