The CHAIRMAN. Suppose it is making extraordinary, abnormal, or unusual profits. Then, merely because it is small business, do you think it ought to use all of its profits and not help the Government in this kind of emergency? I just want to get your position clear. I am not expressing an opinion one way or the other.

Mr. BURGER. In answering your question, with no disrespect to any other segment of our economy, I think small business will be found most patriotic in helping the Government in all of its endeavors. The CHAIRMAN. If all of the recommendations you make at the top of page 5 in your prepared statement were approved and carried out, would that not result in a loss of revenue in this emergency? If the committee approved those recommendations in its tax bill, would that not result in the loss of revenue? You see, our job is to find additional revenue. I believe both of the recommendations you make there would result in a loss of revenue.

Mr. BURGER. I do not think, Mr. Chairman, that the Government stands the chance of losing anything in the long run by giving consideration, if necessary, to small and independent business.

The CHAIRMAN. But the long run might be a period of 10 years. We are dealing now with the fiscal year 1952.

Mr. BURGER. I know that, but in the hearings before the Joint Committee of Foreign Relations and Armed Services, a witness the other day-and I do not know whether it was General Marshall or the Secretary of State-stated that this may be a 15- or 20-year pull, this condition that we are in now.

The CHAIRMAN. Well, I suppose that is possible, but we cannot legislate for 15 or 20 years.

Mr. BURGER. Suppose that in the meantime, to a large degree, small businesses ceased to exist in this economy. Do you think that is going to be helpful to the tax load? Someone has to pay it.

The CHAIRMAN. Well, I am not a witness. I am just asking questions that will help me. That is what you are here for: to help this committee bring out a proper tax bill, a fair tax bill, an equitable tax bill. I am sure you realize that it is our duty to bring out a tax bill that will increase revenues. I do not believe you have helped us any on that.

Mr. BURGER. To conclude, Mr. Chairman, I would like to have the privilege, with your consent and with the consent of the committee, to file a supplemental memorandum giving a tax proposal in dollars and cents.

The CHAIRMAN. We will, of course, accord you that privilege, providing you get the memorandum in in time, subject, of course, to the approval of the clerk.

Are there any further questions? If not, we thank you, Mr. Burger, for your appearance and for the information you have given the Com

mittee.

Mr. BURGER. Thank you very much.

The CHAIRMAN. Our next witness is Mr. Russ Nixon, Washington representative of the United Electrical, Radio, and Machine Workers. of America, Washington, D. C.

Mr. Nixon, will you state your name and address, together with the capacity in which you appear before the Committee, for the benefit of the record.

STATEMENT OF RUSS NIXON, WASHINGTON REPRESENTATIVE, UNITED ELECTRICAL, RADIO, AND MACHINE WORKERS OF AMERICA, WASHINGTON, D. C.

Mr. NIXON. I am Russ Nixon, Washington representative of the United Electrical, Radio, and Machine Workers of America, 1000 Eleventh Street NW., Washington, D. C.

Mr. Chairman, at the outset I would like to ask permission to have my statement put in the record, and I would like to summarize it extemporaneously, if that is satisfactory to your committee.

The CHAIRMAN. Without objection, that will be done.

Mr. REED. Pardon me, Mr. Nixon, but are these your charts?
Mr. NIXON. Yes, sir, they are.

Mr. Chairman, before I start, I would also like to thank the committee for the privilege of appearing before you again in these tax deliberations.

The CHAIRMAN. We are glad you have appeared. The information may be helpful to us.

Mr. NIXON. As you know, I am a representative of a trade-union. Very frequently, I think, we come from the trade-union movement and we raise a fuss about the rich. We talk about the wealthy and great profits.

Today I would like to put my principal emphasis, in discussing the tax question which you are considering, not on the rich but rather on the poor, because I think we have come to a situation where we need to give special attention in this area.

The basic point that I want to make to you is a simple one. It is this: No taxes should be levied on American families whose income is not large enough to maintain living standards at minimum adequacy levels of health and efficiency.

Put in a different way: No taxes should be placed on family incomes already below a living wage.

Mr. MASON. What would you establish as that standard?

Mr. NIXON. Mr. Mason, that is a major part of what I want to talk to you about.

Mr. MASON. Good.

Mr. NIXON. In other words, I am addressing myself to the question of taxes on income levels which have the effect of cutting down the amount of food that children eat, the clothing that the humble people wear, their ability to have medical care, and to meet the other basic necessities of life.

Secondly, I want to address myself in a secondary way to the question of alternatives. But I emphasize that, in talking about alternatives, I want you to keep in mind that as you consider alternative sources of revenue, the first alternative which is before this committee and which you must consider is the imposition of more povertycreating taxes on the low-income levels of our people.

Now, I realize that in taking this position we take issue with a major propaganda and pressure campaign which I believe emanates from major industrial and financial sources to the effect that lowincome groups must absorb a great additional part of the tax burden. We interpret this as being the choice of that alternative rather than the alternative of taxation on areas which can much better accept an additional load.

We feel that these proposals for additional sales taxes, lowering of exemptions, raising of the rates on low incomes would aggravate existing poverty which now exists for the 45 percent of the low- and middle-income families that now receive less than a living wage. They would drive millions of middle-income families, now on the borderline, into substandard existence.

Now, I would like to come directly to the question that Mr. Mason asked me what is a living wage? I think that is something that we must very seriously consider.

Fortunately, it is not necessary for us, as a union without special approach to this question, to give the answer. The answer has already been prepared very carefully and very scientifically by the Federal Government. It has been prepared in the report of the Bureau of Labor Statistics which prepared this city workers' family budget, a very careful analysis of what is necessary for a minimum living wage. Also significantly the Treasury Department has issued on December 22, 1947, a major report which they entitled "Individual Income Tax Exemptions" in which they address themselves precisely to this question, the relationship of exemptions to the minimum living standard required by the people. This was based on the report to the Bureau of Labor Statistics on the minimum budget and it also dealt with the very significant study of the Heller committee for research in social economics of the University of California, of a cost budget along the same lines which I have here.

Now in this Government-prepared document, this Governmentprepared study, it is possible to indicate the income levels that are necessary for what they call these minimum standards of living. Adjusted to present-day prices, this is what the Government report shows:

For single persons, $1,630 is required as of December 1950 prices. For a married couple, $2,330 is required.

For a family, married couple and two children, $3,550 is required. Now this does not include any allowance for Federal income tax. That has to be added to these figures set forth by the Federal Government.

Now this minimum adequacy budget is not a luxury budget. I urge you to consider this very carefully, because you can undermine my case if you can say that what I am suggesting here is a dream world of high budget. You are going to undermine my case on that basis. It seems to me you cannot undermine my case unless you take issue that this is the minimum budget.

So let us take a look at it. Certainly it is far below what we call an American standard of living. The Federal budget that I make up and show is $450 less than the Heller budget-the University of California budget-which they call a healthful and reasonable comfortable living budget. So it is not a luxury budget.

This becomes clearer, if you wish, if you refer to the table on page 3 of my statement, which shows how much food they include in this budget. Let us take a look at some of the items.

On meat, poultry, and fish in this Federal Government minimum budget they include 116 pounds per year. That compares with 184 pounds per capita consumption in the United States in 1949.

On eggs this budget I am talking about includes 256 eggs per person a year compared with 376 per capita consumption in the United States

in 1949.

On milk, referred to in pounds, the BLS budget provides 320 pounds of milk per capita per year and the per capita consumption in the United States last year, that is, in 1949, was 385 pounds. Clearly this is not a get-fat budget.

On clothing there is nothing luxurious in this budget. Just to give you an indication of it, and you can make detailed reference to this if you should care to, it provides that the man of the house could buy one overcoat every 6%1⁄2 years. He can buy five shirts a year and two pairs of shoes. His wife could buy one cotton street dress a year. Her wool dress would have to last for 5 years. They could buy one low-priced automobile every 15 or 16 years.

As far as durable consumer goods are concerned, there is a provision in the budget for them but it is limited in this fashion. It includes only a cook stove, refrigerator, washing machine, iron, sewing machine, vacuum cleaner, and so forth, if it could find a way to finance them in 17 years for the stove, refrigerator, and vacuum cleaner and up to 100 years for the iron and sewing machine.

So you can see this is not a budget of a household filled with fancy new refrigerators, great big television sets, and fancy new stoves.

To repeat, according to careful studies prepared by the Bureau of Labor Statistics and detailed by the Treasury Department in its report of December 22, 1947, to maintain a limited standard of living, including no money for Federal taxation, the following annual incomes at December 1950 prices are needed: Single person, $1,630; married couple, $2,330; married couple and two children, $3,550.

Our basic point is that no taxes should be levied to reduce the standard of living of American families below such a minimum living standard.

Now I would like to go from this to a consideration of some of the facts in income distribution. I would like to address myself particularly to some of the arguments that are very popular in the present discussion about inflation, that there is a vast pool of excess purchasing power among the laboring people which has to be drained off. I am fully aware of what you can do with figures. You can use them on both sides of every argument and you can play around with them, but I think the facts and figures I want to present to you, which come from Government sources, are beyond real debate insofar as the major point that they make.

We feel that it is a monstrous misrepresentation to contend that workers and other low-income people have excess purchasing power which must be drained off to prevent inflation. The Joint Committee on the Economic Report, a congressional committee, which in our opinion has done an excellent job in studying the low-income field, reported that in 1948, 53 percent of the American families got less than $3,000 a year-53 percent of the American families got less than $3,000 a year.

Now it is possible by use of the income data and this budget to figure out how many families there are in America whose incomes are less than enough to meet this minimum budget. Remember what I said about its food consumption, clothing consumption, and so on. In 1948 21,300,000 families got less than enough to meet this minimum budget. Of all families 46 percent suffered substandard living in one degree or another in the most prosperous year in American history.

We feel that it is difficult for anyone to justify, after looking at this over-all picture, talking about its purchasing power in the low-income brackets.

Now the next section is: Who does get the income? Perhaps it should have been entitled "Who does not get the income?"

You want to look at it in terms of fifths. Dividing your family into fifths, this is the picture:

In 1948 and 1949, the latest years for which the Federal Reserve Board data are available, three-fifths, 60 percent, of the families, and households in the middle and lower income groups received only 32 percent of the total personal income.

Now I think the words "Federal groups," "middle income," have been thrown around in a very loose fashion in much current discussion. Let us take a look at it. The middle income in 1948 was $2,840. The middle income in 1949 was $2,700. It is misrepresenting the picture and distorting the picture to talk about the middle group and to be talking about $7,000, $8,000, $9,000, and $10,000 of income.

I noticed that when the President in his tax message referred to upper income groups he said above $10,000. That means that 97 percent of all American families are below what he calls the upper income group, and when Mr. Snyder was here he chose another dividing line which he called above the lower and middle area, $5,000. It is a rather curious mathematical definition of "middle," because in his lower and middle are included 83 percent of all American families. I think it is important to avoid an illusion about the actual distribution of income within our country. To put it in different terms, to put it in dollar terms rather than in fifths or 20 percent, families or households with income under $3,000, more than 50 percent of all families and households, got about 25 percent of the total personal income in 1948. If you stretch the definition of "middle" up to $4,000, 73 percent of all families and households in 1948 received 45 percent of the total share of income.

Now the further question is asked sometimes in discussing the question of taxation and also of purchasing power, what economists call the pull of demand on prices. It is the question of who has the liquid assets, who has the cash.

The President made the reference to large savings and other liquid assets, "which," he said, "they are free to spend as they choose.'

Now it is important for us to look in to see who has the liquid assets. In 1950 the Federal Reserve survey of consumer finances reports that "nearly one-third of all consumer spending units had no liquid assets in early 1950." In other words, one-third of the families were broke at the beginning of 1950.

Sixty percent of the families and households in early 1950 either had no liquid assets or had total assets of less than $500.

We suggest that this is not possession of vast sums of excess savings and liquid assets "which they are free to spend as they choose," to bring pressure on supply and to bring inflation.

The lower three-fifths of families by income had only one-third of the total liquid assets in early 1950.

If you want to say it another way, the top 40 percent had 67 percent of all the total liquid assets in the United States at the beginning of 1950.