This could be borne out by reference to what is happening in the savings field, what is happening to bonds. Again the Joint Committee on the Economic Report, the congressional committee, told us in their report issued in June 1950 that 11,000,000 families disposed of all the Government bonds they owned in the three relatively prosperous years of 1946 to 1949. The top 20 percent alone accounted for 97 percent of net savings in 1948, and 131 percent in 1949.

You may ask how you get 131 percent. You get it because of the dis-saving, the spending of more than they earn in the low-income brackets.

The conclusion we draw from that us that the bare or below living wage income families have no rich store of savings to cushion their low incomes. They have no hidden excess purchasing power. Taxes on these levels can only compound poverty.

Now a third variation of this question is the question of who does the spending.

Well, we have fortunately considerable data to show who does the spending in this country. The lower 60 percent of families and households accounted for less than 40 percent of the expenditures for all goods and services in 1948 and 1949. Estimates presented to the Joint Committee on the Economic Report, in January 1951, indicated that families and households with incomes under $3,000-that is about 54 percent of all the families-spent 30 percent of the total consumer expenditures in 1950. This seems to us to further emphasize the point there is no excess purchasing power in the low- and middleincome groups.

We were amazed when we read the report of the Council of Economic Advisers to read this statement on page 82, making reference to the ease with which the economy could adjust to buying less, to consuming less. It said:

Economies have not been wrecked because the people decided to do with fewer new pleasure cars and elaborate mechanical amusements, or wear their topcoats for longer or get healthier by eating less * * * we must stop eating so much cake

And please remember, gentlemen, the contents of this budget that I talked about before when you consider this statement.

In the appendix of the Council report, page 223, they have something else to say which was not reflected in the body of their report. They say:

There are still large numbers of families in the United States with small or inadequate incomes * * * allowing for Federal income taxes, the proportion of spending units below $3,000 is raised to 59 percent.

Now the next section deals with: Who pays the taxes?

On this question we come to the heart of our discussion. We find out that the incomes are already inadequate to maintain a minimum adequate living standard whose estimated cost does not include Federal income tax, but now you are faced with the problem in the alternative proposed that you had more Federal income taxes, that you had more excise taxes on these low income people, and from some quarters you are urged to adopt a general sales tax that further hits these smaller income people.

Let us take a representative case: A manufacturing worker with a wife and two children, who is earning the average weekly wage of $64. His annual income, if he works 52 weeks, is $3,300. To achieve

the minimum living standard provided by the Bureau of Labor Statistics budget, he needs $3,550 plus his income tax. Actually he needs a total income of $3,670. His income is $370 short. This means that his family must now do without some food that they need, without some clothing or some medical care that they require, or he must rob Peter to pay Paul, or he must go into debt or he must cut down in some fashion which is difficult to find.

Now it is in this setting that we have the proposal of the Secretary of the Treasury to raise the Federal income tax of that family to $144. The proposals from the Chamber of Commerce and the National Association of Manufacturers are, in our opinion, to do much worse. They would reduce the family's exemption from $2,400 to $2,000. They would increase its tax rate and they would add a Federal sales tax to the cost of living.

Now it is possible to find out how much the total tax load is on such a person. Fortunately, careful tax studies have been made which show us the impact of State, local, and Federal taxes, direct and indirect, and please believe me we think it is extremely urgent for you in the general consideration of taxes at this level to consider the whole tax burden and the part to be played by the low-income people.

The proposal, of course, for such a person at that level is that at the present time he pays $719.50 in taxes. The proposal from the administration would call upon him to pay at least $788.50 out of his income of $3,300, for a family of four. The Chamber of Commerce and National Association of Manufacturers proposals would go much beyond that.

Now you know that the exemptions have been changed in our country over a considerable period of time, but they are being changed in two ways. They have been changed by the action of the Congress and they have been changed by rising prices, and every day as we sit here the exemptions for workers are being lowered by the process of inflation.

Now we have two charts here which are relevant to this. The first chart shows you what has happened to the purchasing power of personal exemptions. I guess that is brown over there [indicating]. That shows the 1939 exemption in dollars. The blue bar shows you the present dollar exemption. The black bar shows the exemption that would be required in real terms at today's prices to maintain exemptions at 1939 real levels. The difference between the blue and the black reflects what has happened to the actual exemptions for low-income people. In other words, the exemption now is only onethird of what it was in 1939 for a single person. For a married couple the exemption now being $1,200, it would have to be $4,500 to be the same as it was in 1939.

Mr. MASON. Would the gentleman yield there?

Mr. NIXON. Of course.

Mr. MASON. You are comparing the exemptions in the number of dollars in these different years. Now you cannot do that because it does not give a fair comparison. You have to compare the $600 and the $1,800 that you have there in the black with the income that that same man had, and if his income is three times as much now as it was back when it was $600, then on that basis he is paying that same proportionate income in comparison to his total.

Mr. NIXON. As your income rises, your income tax rises and that certainly takes care of the changing income. Obviously there are many other economic developments since 1939. I only now hope to make one point, and that is what has happened where you start the tax in terms of real income, subject to the limitations you mentioned and to other developments in the economy. This chart shows the great difference between today's exemptions in real terms and the exemptions of 1939. It compounds the changes made by Congress and the changes made by changing the value of the dollar. We think it shows a startling change as far as the actual impact is concerned. Mr. MASON. This chart, as I read it, simply shows the varying purchasing power of the dollar, and evidently if the man had three times as many dollars now as he had in 1939, he would buy, we will say, the same amount of goods because it would take $3 where it used to take $1 to buy.

Mr. NIXON. Subject, of course, to the changes in the tax burden. I have given a report already on what today's income is.

Now I have here a second chart that I would like to have you address your attention to. This chart shows you the comparison between the gross exemption and the budget requirements for a minimum adequacy budget as set forth by the Federal Government, the budget that I discussed before.

For a single person you can see the discrepancy between the present exemption of $675 in gross exemption and the $1,630 that the Government says this man requires for health and efficiency, the difference between $1,325 for a married couple and the $2,330 that our Government says is required for a minimum adequacy budget, and the difference for a family of four between the Government's budget requirement of $3,530 and the gross exemption of $2,675.

I would like to make just one other point before we come to the question of our recommendations. The question is: How much taxes does a worker pay?

I made reference to a sample case. I would like to make another point with you gentlemen and that is contained in the material on page 14.

Mr. HARRISON. Were these records prepared at your union headquarters?

Mr. NIXON. Yes, sir.

Mr. HARRISON. They were prepared for presentation here?

Mr. NIXON. Yes, sir; exclusively.

Mr. HARRISON. I think you and I are fellow Virginians. You live

in Virginia?

Mr. NIXON. Arlington.

Mr. HARRISON. You appear here at the direction of your union; is that correct?

Mr. NIXON. Yes, sir.

Mr. HARRISON. By direction of the executive board?

Mr. NIXON. No; by direction of the general officers.

Mr. HARRISON. And you appear here as a voluntary witness?

Mr. NIXON. Yes, sir; I requested to appear.

Mr. HARRISON. Your purpose in appearing is to ask this committee to frame legislation in the interest of better government in this country; is that correct?

Mr. NIXON. Yes, sir.

Mr. HARRISON. You are entirely actuated by the welfare of this country and not by any other country; is that correct?

Mr. NIXON. I do not know just what the implication of that is, Mr. Harrison, but the answer is unqualifiedly "yes."

Mr. HARRISON. You do not know the implication of the question?
Mr. NIXON. No.

Mr. HARRISON. Are you a member of the Communist Party?
Mr. NIXON. No, sir.

Mr. HARRISON. Have you ever been a member of the Communist Party?

Mr. NIXON. I am not going to go into a whole train of questions of that sort.

Mr. HARRISON. Have you ever been a member of the Communist Party?

Mr. NIXON. I have answered the question that I am not.

Mr. HARRISON. Do you refuse to answer whether or not you have been a member of the Communist Party?

Mr. NIXON. I think my answer is adequate, Mr. Harrison.

Mr. HARRISON. Are you or have you ever been a member of the Communist Party?

Mr. NIXON. I have told you I am not.

Mr. HARRISON. Have you ever been?

Mr. NIXON. I am not going to go into a train of discsusion with you on that, Mr. Harrison.

Mr. HARRISON. Do you refuse to answer whether or not you have ever been a member of the Communist Party?

Mr. NIXON. I told you I am not, and I am not going to go into a whole train of discussion.

Mr. HARRISON. I have asked you the single question. I am not now discussing anything.

Mr. EBERHARTER. Mr. Chairman, I would like to interject this thought. Since I have been a member of this committee for 7 years we have never brought in extraneous matter like this. I do not think it is proper for us to start to do it now. In other words. I do not think it is relevant to the issue before us. It confuses the issue. It is entirely immaterial. The gentleman has appeared here representing the views of a large segment of the American working public and his political views or connections are of no concern to this committee with respect to the issue we are having a hearing on now. do not think I could approve of the Committee on Ways and Means starting on this line of questioning now. Representatives of business have appeared here and we certainly have not gone into their personal political beliefs, whether they are Republicans, Democrats, or anything else.

I

The CHAIRMAN. The chairman has never attempted to decide what questions members of the committee should ask. They may ask whatever questions they desire.

Mr. HARRISON. Mr. Chairman, my purpose in asking that question is that the witness appears here for the purpose of influencing legislation. He appears here voluntarily and says that he represents a large segment of American labor. Now if that is true, that is one thing. If he is here representing the Communist Party, that is another thing. I think it is a very relevant thing.

I am perfectly willing to submit the issue to the committee as to whether or not this line of questioning should be continued. perfectly agreeable to do that.

Mr. NIXON. Mr. Harrison, I am not here representing anyone. except 300,000 workers in 1,000 plants in the radio and electrical machine industry who democratically run their union, who democratically elect their officers. I have been coming before this committee for 10 years. I am no stranger here. You may disagree with what I am saying here a great deal. I think you must agree I am trying to make a serious factual presentation of the views of my 300,000 members on this important question. I just cannot permit you to turn me from the discussion that I have here, from the evidence that I have here, and the case that I was sent here to make by my people. My membership are a loyal group, as loyal as anybody else, and so am I.

Mr. HARRISON. Is it not a fact that your union has been excluded from the CIO because of the fact that it is Communist dominated? Mr. NIXON. I would not put our relationship with the CIO in those terms, Mr. Harrison.

Mr. HARRISON. Were you excluded from the CIO?

Mr. NIXON. Well, that is a difficult question. We got out of the CIO.

Mr. HARRISON. Was there difficulty over whether or not your union was a Communist-dominated union?

Mr. NIXON. Yes, we have had that difficulty since we started in 1945.

Mr. HARRISON. Who is president of your union?

Mr. NIXON. Albert J. Fitzgerald.

Mr. HARRISON. Is he a member of the Communist Party?

Mr. NIXON. I do not know.

Mr. HARRISON. You do not know?

Mr. NIXON. Mr. Harrison, I am not going

Mr. HARRISON. Do you know whether he is a member of the Communist party?

Mr. NIXON. I am finished on this line of questioning.

Mr. HARRISON. Has he been cited by Congress for contempt?

Mr. NIXON. The answer to that is no, but I am not going to answer any more questions along this line.

Mr. HARRISON. Who is the secretary and treasurer?

Mr. NIXON. Mr. Chairman, I must request you to ask that we continue the discussion on the tax question before this committee. Permit me to finish my statement and to have questions and discussions on that subject.

The CHAIRMAN. The chairman is a little bit confused by your willingness to answer to one of the questions and your refusal to answer to the other. You did answer the question as to whether or not you are a member of the Communist Party. Then you refused to answer the question whether you ever had been a member of the Communist Party. The chairman is surprised that you answered one question and not the other.

Mr. JENKINS. I want to make this suggestion, Mr. Chairman. If I had enough power on this committee I would ask this man to step aside and invite his organization to send somebody here to testify who can answer the questions that Mr. Harrison has asked