Mr. GORE. It certainly would have.

Mr. CROWTHER. That was passed in the committee and presented to the House; it passed the House, but was lost somewhere, either in the Senate or in conference. I know it was in the bill, and I think the committee had an idea such as you suggest of appointing men of ability at decent salaries, authorized and empowered to settle cases. Mr. GORE. That is what is needed.

The CHAIRMAN. I will say to the gentleman from New York that the provision was not lost in conference; it is in the law, but the bureau found it impracticable to carry it out. When the bill got into the Senate the Senate made provision that those gentlemen should be appointed, with the advice and approval of the Senate, which meant that instead of them being appointed on grounds of efficiency and capacity and ability to serve the people, they were very likely, to put it mildly, to be appointed on some other grounds. As I understand the situation, only one of those gentlemen has ever been appointed, because there could not be any agreement between the executive branch of the Government and those who determine it otherwise as to who should be appointed. I think these parties of whom you speak should be under civil service; it should be competitive; and I think that is the opinion of the Treasury.

Mr. GARNER. Mr. Gore, I think I can speak probably with a little bit more frankness of the party in power than the chairman did. What he intends to say is that we provided in the law for it, but they found such a conflict between the Republican Senators and the Treasury Department as to the method of getting efficient men that they could not carry the provision out.

The CHAIRMAN. I would not put it that way.

Mr. GORE. Being just a plain, ordinary citizen, who works for a living, I would say that I do not feel competent to make a reply.

In the case of transferred assets there is a tax liability which goes along. We think that that liability ought to be limited so that the purchaser of an asset from a taxpayer who has not paid all of his taxes is not going to see that particular piece of property taken from him, at least in its entirety. If there be a lien, it should be proportioned to the whole assets of the taxpayer.

We think the burden of proof in a case of that kind ought to be on the bureau. In the case of sales by executors, we think the gain or loss should be computed on the market value of the assets sold, at the date of the death of the decedent.

The CHAIRMAN. I think that would work out best administratively. I agree with you on that and on the previous proposition. Mr. GORE. I thank you.

In the case of installment sales of merchandise the commissioner had a ruling in effect that was justifiable, I think, from every standpoint, but the Board of Tax Appeals found that it was not in accordance with the law. We think that such legislation should be had as would validate those regulations and save harmless the people who have in good faith complied with them, and particularly because the method is just and fair and decent all the way around. There is no reason to complain of it, except that technically it is not legal. We want it to be made legal.

Mr. HAWLEY. Can you cite the regulations by number to which you refer?

Mr. GORE. NO; I can not; because I have not the numbers here. I can send that information in.

Mr. GARNER. But you can get the decision of the board in that case, and the regulations are found cited in that.

Mr. GORE. Yes; I can get that.

Mr. GARNER. As I understand it, the policy you speak of is this: That where the Treasury Department has made rules and regulations with reference to the taxpayer's renditions, and his case goes to the Board of Tax Appeals and the renditions are decided as being too favorable to the taxpayer-and that is what they did in this instance-you would then have Congress validate those renditions, and not go back and collect the taxes that were collected under the regulations of the department?

Mr. GORE. No. You assume there that these regulations have resulted in unjustified favors being shown to the taxpayer.

Mr. GARNER. Yes; that is what they did in this case you speak of. Mr. GORE. Let me indicate what my understanding is of the operation of these regulations. If a piano dealer sold pianos he was required to report as income the proportion of profit on the installments paid in the same ratio as the installments paid or to all the installments to be paid. That is to say, he paid his income on his profits as he got them. I think that an eminently fair way to do it. I do not believe he should be required to pay a tax upon profits that will only be realized after the lapse of a year or two years and compel him to guarantee the financial security of the obligation undertaken by every one of his customers who bought on the installment plan, knowing very well that the proportion of repossessions is very large in all of those businesses.

I think that it can be so framed as to make it compulsory that every dollar of profit shall have a tax paid on it within the year in which it is realized, and the Government will be treated fairly and the taxpayer treated fairly.

Mr. GARNER. I thought you were speaking about a case the board had decided with reference to executors having paid their taxes upon the basis of the market value at the time of the death of the decedent and not at the time of the acquiring of the property. I did not know you were speaking about installment sales.

Mr. GORE. I was speaking about installment sales.

Mr. CHINDBLOM. Your idea is that the tax should be paid in proportion to the profit realized on the payment, rather than the gross payment made.

Mr. GORE. Oh, yes; the profit is the determining factor. That is what you intend to tax.

Mr. CHINDBLOM. As it is now, they are compelled to pay upon the gross payment.

Mr. GORE. The treatment would be this, that the sale of a piano that sold for a thousand dollars, payable in 50 installments of $20 each, would be treated as a thousand-dollar sale, and there is a gross profit in it of $400, and the dealer would pay a tax on $400, less certain deductions and allowances for expenses.

The CHAIRMAN. Are you sure that is quite the ruling of the board?

Mr. GORE. No; I do not say that that particular case was before the board, but a case before the board which perhaps had conditions that thoroughly justified the board so holding produced from them a decision that those regulations were not in accordance with the law, and caused the department to abandon the use of those regulations.

We believe that there should be further decentralization. We believe that the administration of this law should be carried on out in the district just as much as it is possible to do so, and that decisions could be made out there and settlements could be made out there, and that there should be recourse to a central bureau simply for the determination of new questions of high moment that may arise in the course of administration.

Mr. HAWLEY. Would you allow a limitation on the amount involved?

Mr. GORE. That might be a good thing to do.

Mr. GARNER. It seemed to be the judgment of the committee that instead of putting it into the law and making it compulsory, we should let the Treasury try it out. The Treasury tried it out and the Treasury changed its rules and has every case come back to Washington, regardless of the amount of taxes involved. The Treasury has not yet given the committee any real reason why that change in procedure was made. But the Treasury did for one year ass gn to the collectors, as I recall, cases involving less than $500, to be settled in the field, and that settlement by the collector was to be final. They tried that out, as I have said, for one year, but the next year they changed the ruling and every case now comes back to Washington for final settlement.

Mr. GORE. I have never known a final settlement to be made in the field.

Mr. GARNER. Well, they were made for one year.

Mr. GORE. It did not happen in my practice.

Mr. GARNER. You paid more than $500, so, of course, it did not come under your observation.

Mr. GORE. I am not talking about my personal payments. That would be less. But of the cases I represented I have never been able to get one settled in Chicago yet.

Mr. GARNER. I am speaking of the tax of Brother Green here and the farmers in Iowa.

Mr. CHINDBLOM. Did you not find that there was a set of rules set up in each district, different rules in the different districts?

Mr. GORE. If they had, I should say the department should have sent the rules out ahead of the change. The department makes the rules and ought to have the local officers live up to the rules.

Mr. CHINDBLOM. But the rules have to be applied to the facts in each case, and the application would be different in one district than in another, by one representative of the department at one place than it was by a representative of the department in another.

Mr. GARNER. I think you will probably find-I have not heard the Treasury's explanation of it--but I think you gave it awhile ago, or Mr. Green gave it awhile ago when he said that they failed to appoint these assistants in the Treasury Department for very good reasons. It may be that the collectors have been selected throughout the country on a basis that would not justify trusting them even to settle $500 cases.

Mr. GORE. I do not know all of them.

We are favorable to a civil service classification for all employees. We think they ought to be under the civil service and be protected by its provisions. In making this change the interests of employees now in the service ought to be given due consideration and protection. We also think that it is possible to make these positions such that they will furnish a career, that it may be a decent profession for a young man to go into, and it may attract men of high ability, the salaries in prospect being sufficient to guarantee a decent living.

We think that the induction into the service ought to be from just as high grade applicants as can possibly be arranged for.

To be quite frank, it is the position of the chamber that the business of assessing and collecting internal revenue taxes, should be put on the basis of a decent-going, well-managed corporation.

The CHAIRMAN. Thank you, Mr. Gore.

I can say as far as I am concerned that I am with you in the main and I am inclined to think the committee is also. Mr. GORE. I thank you.

STATEMENT OF CARLOS B. CLARK, DETROIT, MICH., REPRESENTING THE NATIONAL RETAIL DRY GOODS ASSOCIATION

Mr. CLARK. I am controller of the J. L. Hudson Co., of Detroit, a department store, and I am chairman of the taxation committee of the National Retail Dry Goods Association, with a membership of about 3,300 stores, and doing a business of about $3,000,000,000 annually.

I would like to say also that 60 per cent of these stores are small stores and that we have members in each State of the Union.

I hold a commission given to me by the February convention of our association to appear before your committee for the presentation of a plan for tax revision.

We believe that there should be an elimination of three titles in the present act-title 5, admissions and dues; title 6, that part which applies to automobiles; and title 8, the stamp taxes.

If I am correct, for the year ended June 30, 1927, there was an aggregate collection from these three titles of $132,000,000.

We believe that they are taxes primarily on business, that they are discriminatory, and that all reason for their existence, for their imposition, ceases when the amount derived from them is not necessary to balance the Budget.

When we consider the estate tax. I am frank to admit that we are not in favor of immediate elimination, certainly not in the coming session of Congress.

I believe that we are not in favor of its elimination until the war debt has been paid, although we believe in the principle that inherently it is a State tax and not a Federal tax.

As to corporation rates, it is pretty hard for a business man like myself to know just exactly what to expect as to the amount which can be utilized for tax reduction in that field.

We are confronted by the fact that the report of the commissioner shows that to the end of June of this year there was a return from corporation taxes of an amount of $1,308,000,000. I tried to get from a division of that amount by the rate of 132 per cent the base of

corporation taxable income on which it was imposed, and by so doing, I arrived at a taxable corporation income in the amount of $9,700,000,000.

I think all of us try to figure to 10 per cent as the ultimate of tax reduction on corporate rates. Ten per cent of this base of $9,700,000,000 is $970,000,000, a difference between that and the receipts of last year of $338,000,000.

Of course, yesterday, in listening to Mr. Mills, I realized that my computation was incorrect, that included in that $1,308,000,000 there were back taxes from corporations, and from the report of the commissioner their total is $278,000,000.

Mr. GARNER. When you say commissioner, you_mean the Secretary or is it the Commissioner of Internal Revenue you are referring to?

Mr. CLARK. It was the Commissioner of Internal Revenue, in his report for the year ending June 30, 1927. Two hundred and seventyeight million dollars deducted from $1,308,000,000 gives a remainder of $1,030,000,000, which we can assume as being the yield at 1312 per cent from corporations last year. Dividing that by 1312 per cent gives a tax base of approximately $7,600,000,000 taxable income from corporations. These figures I am forced to consider in thinking of any reduction of corporation tax.

Mr. Mills says, if I recall, that there will be a surplus of $455,000,000 June 30, 1928, but that only $225,000,000 of that will be available for tax reduction.

The President, before the business organizations in Memorial Continental Hall, in June made an estimate of $338,000,000.

I would like to point out the coincidence that that estimate of $338,000,000 agrees with my first calculation of $338,000,000, the difference between 131/2 per cent and 10 per cent.

Mr. GARNER. Mr. Clark, may I say for the benefit of the record that the President on December 6, 1926, estimated the surplus at 8200,000,000. In June, if I understand you, he estimated it in a speech at $338,000,000.

Mr. CLARK. Yes, sir.

Mr. GARNER. And now the spokesman for the administration-I mean the representative of the Treasury Department-says it will be $445,000,000. When June 30 comes around, if the deficiencies are not greater than usual, it will be nearly $600,000,000.

Mr. CLARK. That is June 30, 1928.

Mr. COLLIER. You say you represent the National Retail Dry Goods Association, doing a $3,000,000,000 business?

Mr. CLARK. That is right.

Mr. COLLIER. How many different concerns are there in the

association ?

Mr. CLARK. Three thousand three hundred.

Mr. COLLIER. What I should like to know is, how many of those are corporations and how many partnerships.

Mr. CLARK. I wish I could tell you, but I can not; I do not know. Mr. COLLIER. Of those that are corporations, the majority are of small stockholders, are they not?

Mr. CLARK. Yes, sir.

Mr. COLLIER. I wanted to get some information along that line in connection with another question which I had in mind.