On or about January 1, 1950, it is understood, title to the property was invested in the United States Air Force Manufacturing Methods Pilot Plant. An assessed valuation agreed upon by the Government, namely, $2,633,500, has been used each year in good faith in determining the fair share of municipal services and expense this plant should pay. The above amount constitutes about 9 percent of the city tax receipts. So great a loss as $87,958.90 is a most serious calamity to a community the size of Adrian. It represents almost $5 for every man, woman, and child in the city.

The subject plant has paid a share of taxes during the past 5 years except 1952 as follows. The plant, incidentally, paid taxes since the time it became operative in 1944 to date. But we have listed here, insofar as the question of the amount is not concerned, only those taxes paid during the last 5 years-the division between city, school, and county, which suffer an amount of tax loss.

I would like to direct your attention to the similarity in the amount of taxes that have been paid in these years. You will note the taxes for the 4-year period are almost identical in that there is no advantage being taken, although the amount of service has increased to the plant. There has been a change in the assessed value of the city. We have had to make more service available to the plant, but the community has not made charge for it.

The subject plant receives all of the municipal services, facilities, and attention that is normally extended to other plants and industries in this city that pay their just share of taxes; and, in addition, the subject plant receives further necessary special services due to the nature of the activities carried on in the manufacture of critical war materials and the amplified local problems created by a plant of its size in a small community.

In addition to the services and facilities extended directly to the plant, it must be borne in mind that the large labor force brought into the community by such a plant creates major problems which indirectly necessitate still further services and facilities in every area of the city.

Currently, we believe this plant to be engaged in war-work activity of the utmost importance. There has been transported to and installed in this plant the only 15,000-ton aluminum extrusion press in existence at that time, together with the necessary complementary machinery and equipment. It was brought to Adrian from Germany as a part of the reparations settlement. At an earlier date, we are advised, Russia confiscated a similar but 30,000-ton aluminum extrusion press in Germany and transported it to Russia, at the same time kidnaping the engineers and taking them also to Russia to operate the gigantic press and to teach Russian workmen the skill to man this industrial giant. For security reasons, therefore, this plant is subject to above average plant protection.

this title to provide that when property having a taxable status is so transferred by a Government corporation, such property shall remain subject to taxation by local taxing authorities, regardless of subsequent transfers of such property among agencies of the Federal Government.

DEFINITIONS

SEC. 702. As used in this title

(a) the term "State" means the several States, Alaska, Hawaii, and the District of Columbia;

(b) the term "real property" means land, and includes those improvements on land and interests in land which, for the purposes of taxation, are characterized as real property by the State in which the land is located; (c) the term "local taxing authority" means a State, county, municipality, or other subdivision of a State, county, or municipality, which subdivision has authority to levy and collect taxes upon real property;

(d) the terms "tax" and "taxation" include special assessments;

(e) the term "Government corporation" means the Central Bank for Cooperatives and Regional Banks for Cooperatives; Commodity Credit Corporation; Federal Farm Mortgage Corporation; Federal Home Loan banks; Federal Land Banks; Federal National Mortgage Association; Federal Savings and Loan Insurance Corporation; Production Credit Corporation; and the Reconstruction Finance Corporation; and such term includes any corporation (1) which is incorporated after the effective date of this title by or under an Act of Congress, and (2) which is owned or controlled by the Federal Government; and

(f) the term "Federal Government” includes any Government corporation.

TAXATION OF PROPERTY OF GOVERNMENT CORPORATIONS

SEC. 703. When a Government corporation is incorporated after the effective date of this title, unless specifically provided otherwise, all real property owned by such Government corporation shall be subject to taxation by local taxing authorities to the same extent according to its value as other real property.

TAXATION OF PROPERTY TRANSFERRED FROM GOVERNMENT CORPORATIONS

SEC. 704. (a) When real property which is taxable by local taxing authorities is transferred from a Government corporation to any department, agency, or other instrumentality of the Federal Government, such real property shall remain subject to taxation by local taxing authorities to the same extent according to its value as other real property is taxed, notwithstanding such transfer or any subsequent transfer of such property to a department, agency, or other instrumentality of the Federal Government.

(b) In the case of any real property which

(1) was owned on or after June 22, 1948, by a Government corporation or any subsidiary thereof;

(2) was transferred prior to the effective date of this title to any department, agency, or other instrumentality of the Federal Government; and

(3) is owned by the Federal Government on the effective date of this title; such real property shall be taxable by local taxing authorities to the same extent according to its value as other real property is taxed, notwithstanding such transfer or any subsequent transfer of such property to a department, agency, or other instrumentality of the Federal Government. No taxes shall be paid under this subsection for any period prior to the effective date of this title.

(c) No payments in lieu of taxes shall be made to any local taxing authority with respect to any real property which is subject to taxation by such local taxing authority.

GENERAL PROVISIONS

SEC. 705. (a) The Federal Government shall not be subject to penalties or penalty interest nor shall its property (including rights of action) be subject to any lien, foreclosure, garnishment, or other proceedings because of its nonpayment or failure to make timely payment of taxes on real property; nor shall any subsequent purchaser be liable for such penalties or penalty interest.

(b) The Federal Government shall be exempt from any taxes on real property which is devoted to uses which would cause such real property to be exempt from taxation if it were privately owned.

EFFECTIVE DATE AND EXPIRATION OF THIS TITLE

SEC. 706. This title shall take effect on January 1, 1953, and shall expire on December 31, 1955.

Mrs. ST. GEORGE. We have had word from Mr. Ikard that he cannot be with us this morning, but that he wants us to continue, which we are about to do.

First, I am going to call on Mr. Hillelson, the author of the bill, to read his statement.

STATEMENT OF HON. JEFFREY P. HILLELSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MISSOURI

Mr. HILLELSON. Madam Chairman, H. R. 5605 is a bill that I have introduced after much study and many conferences with members of the staff of Intergovernmental Relations Subcommittee, a subcommittee of the House Government Operations Committee. Also, I have consulted with authorities in different Government agencies concerning the merit and wisdom of this bill.

This bill amends the Federal Property and Administrative Services Act of 1949 to provide that transfers of real property from certain Government corporations to other Government agencies shall not operate to remove such real property from local tax rolls providing the property has before the transfer been on local tax rolls.

In many cases where real estate has been owned by Government corporations and subject to local taxes authorized by the Federal Government to be paid by the corporations, this tax revenue to the local taxing agencies has been lost or terminated when this real property has been transferred to another Federal agency which is not authorized to pay such taxes. It has long been established that Federal property is not subject to State and local taxation without the consent of the Federal Government. However, for many years the Federal Government has given this consent under certain circumstances and, in particular, with respect to real property owned by Government corporations which Congress created or authorized. Many hundreds of war plants were established and operated under the corporate form and were authorized to pay State and local taxes on their real property to the same extent as private industry is required to pay taxes on similar real property. In most cases this afforded local taxing authorities much needed assistance in their tax problems.

At the end of World War II the corporations owning these properties began to dispose of them either by sale, transfer to other Federal agencies, or to the War Assets Corporation or its successor, the General Services Administration, as excess or for handling under the Industrial Reserve Act. In an effort to take care of the tax situation the War Assets Corporation, in regulations promulgated under the Surplus Property Act of 1944, made certain provisions for the payment by the disposal agency of taxes due for periods after assumption of responsibility for surplus real property. Appropriations made to carry out the Surplus Property Act of 1944 (Public Laws 785 and 862, 80th Cong., 1st and 2d sessions) provide for payment of amounts in lieu of taxes on real property declared surplus by Governmentowned corporations under that act.

This authority was continued by section of the Federal Property and Adore TE SEPTIE A LOS POR LA▼ 12

(2) The Government is authorized to pay these local taxes on real property described in this act.

(3) That any Government corporation created after the effective date of this title their real property will be subject to taxation by local taxing authorities to the same extent as other real property unless specifically provided otherwise.

(4) Provides that the effective date of this bill be as of January 1, 1953, and that the date of June 22, 1948, shall be the date which will exclude from the provisions of the proposed legislation any real property owned and disposed of by Government corporations prior to that date.

(5) The Government will make no payments in lieu of taxes on this real property described and also will not be subject to penalties or penalty interest. The real property mentioned in this bill will not be subject to any lien, foreclosure, garnishment, or other proceedings because of its failure to make payments of taxes on such real property. This provision was included to protect the United States Government from paying such penalties which in many cases are common in many taxing authorities. This is necessary so that if Congress should be negligent or tardy in appropriating sufficient funds to take care of the taxes that the Government corporations or Federal agencies would not be penalized for being 1 to 4 or 5 months late, as it is not always possible to have appropriation bills passed by certain dates in order to make prompt payment to taxing authorities.

(6) This act shall expire as of December 31, 1955, unless renewed by Congress. The reason for this expiration date is that it is hoped that this problem of local taxes on Federal property will be included as a subject of study, investigation, and recommendations by the proposed Commission on Intergovernmental Relations.

Mrs. ST. GEORGE. Thank you, Mr. Hillelson.

You have heard no criticism or opposition to this bill, have you, except that I have heard it said that it did not go quite far enough, to accomplish the results.

Mr. HILLELSON. I have heard this, too, Madam Chairman. That is, many people consider it piecemeal where they feel another law on the books would help complicate the whole tax structure of our Government. That is one of the primary reasons why I made it effective only through 1955, because I did not mean it to be a permanent piece of legislation.

Mrs. ST. GEORGE. You do not want it to interfere with a permanent setup that might come later?

Mr. HILLELSON. That is right.

Mrs. ST. GEORGE. I think that is a good explanation because I had heard that was one of the criticisms, that it expired in 1955.

Mr. Meader, have you any questions that you would like to ask Mr. Hillelson?

Mr. MEADER. No, I do not care to ask Mr. Hillelson any questions. When the time comes I would like to make a little statement of my

own.

Mrs. ST. GEORGE. I think we would like you to make your statement now, if you will. I know you have another committee meeting and I think it would be well if you would do it at this time.

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