(The tabulation referred to is as follows:)

Average tax rate on total net taxable income of single individuals

Net taxable income (before deducting allowances for dependents)

0 to $1,000.
$1,000 to $2,000.
$2,000 to $3,000.

$3,000 to $4,000-
$4,000 to $5,000.

$5,000 to $6,000.
$6,000 to $7,000.
$7,000 to $8,000.
$8,000 to $9,000.
$9,000 to $10,000..

$10,000 to $12,000.
$12,000 to $14,000.
$14,000 to $16,000.
$16,000 to $18,000.
$18,000 to $20,000-
$20,000 to $22,000.
$22,000 to $24,000.
$24,000 to $26,000.
$26,000 to $28,000.
$28,000 to $30,000.
$30,000 to $32,000.
$32,000 to $36,000.
$36,000 to $38,000.

$38,000 to $40,000.
$40,000 to $42,000.
$42,000 to $44,000.
$44,000 to $46,000.
$46,000 to $48,000.
$48,000 to $50,000.
$50,000 to $52,000.
$52,000 to $54,000.
$54,000 to $56,000.
$56,000 to $58,000.
$58,000 to $60,000.
$60,000 to $62,000.
$62,000 to $64,000.
$64,000 to $66,000.
$66,000 to $68,000.
$68,000 to
$70,000 to $72,000.
$72,000 to $74,000.
$74,000 to $76,000.

$70,000.

$76,000 to $78,000.

$78,000 to $80,000.
$80,000 to
$82,000 to

$82,000.

$84,000.

$84,000 to $86,000.
$86,000 to $88,000.
$88,000 to $90,000.
$90,000 to $92,000.
$92,000 to $94,000.
$94,000 to $96,000-
$96,000 to $98,000-
$98,000 to $100,000.
$100,000 to $150,000-
$150,000 to $200,000.
$200,000 to $300,000.

$300,000 to $400,000.

$400,000 to $500,000..

$500,000 to $750,000.

04444 ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞

$750,000 to $1,000,000.

$1,000,000 up.

Mr. GRAY. Referring again to deductions, may I state that one thing which no longer should be permitted is the large salaries which

corporations pay, it is thought by many, on purpose to absorb profits in salaries and thereby secure deductible amounts. The Reconstruction Finance Corporation has followed the rule recently that salaries must be limited in the corporations that get its loans. It is no doubt timely to put the same sort of salary limitation for deductible purposes in the Federal tax law.

There is offered for the record at this point a table which shows increases in salaries between the years 1929 and 1932. This goes to prove the point that large salaries should not be deductible amounts and that limits should be imposed in this regard. (The table referred to is as follows:)

Salaries of executives of life-insurance companies from 1929 to 1932
[Inserted in Congressional Record of May 24, 1933, by Congressman McFarlane, p. 4199]

Mr. GRAY. Another source of revenue which may be used is that of taxing the incomes from tax-free securities. At the present time fully $20,000,000,000 are invested in these securities in the United States. They could be taxed by any one of three methods:

1. The tax could be retroactive as well as for the future on all old and new issues;

2. The tax could be only for the future on old and new issues; or 3. The tax could be for the future only on new issues.

Even if the last procedure should be followed it would be an entering wedge gradually to split away this tax-free proposition from our Federal tax structure. Some say it would be ridiculous to tax the income from these securities retroactively. Maybe so. But the Congress is now enacting a retroactive annulment of the so-called "gold clause" in contracts, both private and governmental. That is a good precedent for doing a similar thing in regard to tax-free securities. Some say also that there is no basis in the Constitution for taxing the income from these securities. Note, however, the sixteenth amendment, which made it possible to have an income tax:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

It will be noted that income taxes can be secured "from whatever source derived." This undoubtedly supersedes and annuls any provision of law to the contrary. We do not need another constitutional amendment to tax the income from tax-free securities. The sixteenth amendment settles that question. From this source alone we could get no doubt a hundred million dollars annually.

All of these plans, namely, the limitation of exemptions and deductions, the increase of the individual and the corporation income tax, the limitation of salaries as permissible deductions, and the taxing of the income from tax-free securities, make it absolutely unnecessary either to increase the Federal tax on gasoline or to resort to a general sales tax.

Turning now to other features of the pending bill, S. 1712, on the tax question, it is well to recommend that on page 16, lines 16 and 17 be deleted. It seems not fair that the secondary roads be required to be maintained by the State or responsible political subdivision when the primary roads are not subjected to a similar requirement. This provision, if left in the law, might seriously restrain States and counties from asking that secondary roads be constructed. It should be eliminated.

In subparagraph (b) on paragraph 2, section 203, beginning on page 16 and extending to page 17, change should be made so that the reapportionment of Federal funds for highway building be left exactly as they are at the present time, namely one third to total population, one third to rural free delivery mileage, and one third to total land area. This can be accomplished by striking the words "three fourths" in line 25 of page 16, and by striking "and one fourth" in the ratio which the population of each State bears to the total population of the United States, according to the latest decennial census, in lines 3, 4, and 5 on page 17.

There is little reason why we should undertake a reapportionment of Federal highway funds in an emergency law. It might become a precedent for permanent legislation that must follow for every Congress.

This reapportionment, if left in the law, will result in a severe shifting of Federal highway funds as is indicated on the attached table.

(The table referred to is as follows:)

Amounts of road funds gained or lost by various States as a result of the change in allocation of funds proposed in H.R. 5755

[Prepared by Congressman Fuller, Cong. Rec. May 26, 1933, p. 4424]

Mr. GRAY. If it shall be decided to include the so-called "oil control bill, S. 1736," as a new title in the national industrial recovery act, it is recommended that the following language be included:

The Reconstruction Finance Corporation is authorized and empowered to make adequately secured loans, based on mineral acreage, and self-liquidating in character, to recognized and established managing agencies of farmers' cooperative mineral rights pools not engaged in drilling or mining operations, said loans to be made for the purpose of defraying the cost of organizing such pools.

The main purpose of this amendment is that farmers under whose land minerals such as crude oil are discovered may pool in a cooperative way their rights so that the profit will go to all members of the pool rather than to the one on whose land the particular discovery is made. This is an extension of the cooperative principle which is already in the Federal statutes in several forms and merely seeks to make it

possible for farmers to sell their undersoil crops cooperatively in a manner similar to that in which they have been selling their soil crops for many years.

STATEMENT OF JOHN L. LEWIS, REPRESENTING THE UNITED MINE WORKERS OF AMERICA AND THE AMERICAN FEDERATION OF LABOR

Mr. LEWIS. Mr. Chairman and gentlemen of the committee, I appear here to sum up briefly the position of organized labor in America with regard to this industrial recovery bill. We stand squarely behind section 7 as reported to the Senate in the House bill, as amended by the Ways and Means Committee. It will place upon the statute books a good safe declaration in the form of a statute that will give to the workers of this country some rights, the same rights now enjoyed by the employers and the corporations, the right to organize, and to bargain collectively for their labor, and to be represented by representatives of their own choosing, in precisely the same form, gentlemen, that the American Iron and Steel Institute is represented before this committee this morning by a former distinguished Secretary of Commerce, Mr. Lamont, a representative of their own choosing.

This measure came from the House of Representatives largely as an agreed measure on the part of labor and industry in this country, industry speaking through the United States Chamber of Commerce, the National Association of Manufacturers and their various subdivisions, and labor speaking through the American Federation of Labor. Mr. Harriman, president of the United States Chamber of Commerce, appeared before the Ways and Means Committee of the House and unqualifiedly endorsed every provision of section 7 in this measure. The CHAIRMAN. As now in the bill?

Mr. LEWIS. As now in the bill.

Senator GEORGE. In the House bill?

Mr. LEWIS. Because he was there, following Mr. Green on the stand, when the so-called "company union amendment" was recommended by Mr. Green and later adopted by the Ways and Means Committee.

Senator GEORGE. You mean as in the House bill?

Mr. LEWIS. As in the House bill.

Now, according to press reports, Mr. Harriman has addressed a communication to this committee in which he expresses the fear that section 7 will violate the true principle of the open shop, and afterthought, doubtless brought to his attention by some of those irreconcilable units of industry who, with their last breath, will oppose any recognition of labor by the extension of any privilege to labor.

Mr. Lamont appeared this morning for the iron and steel industry, and stated that the Iron and Steel Institute, which represents 90 to 95 percent of the producing units of the steel industry, likewise stands for the open shop. That carries the implication that the open shop is an institution or a policy whereby the employees of the steel industry can at will belong to a union or not belong to a union, as they choose, and that the employers are protecting the principle of the open shop and the right of employees to either belong to a union or not belong to a union.