which rightfully belongs to the States and one which is desperately needed by them as their own principal and most lucrative means of raising money needed for roads.

It is also my feeling that for the Congress to enact any additional taxes of any kind on the Nation's highway users at this time would be premature and prejudicial to the final results of the study provided for in section 210 of the Federal Aid Highway Act of 1956 as to the equitable sharing of the costs of federally aided highways by all beneficiaries. If we go ahead and raise this tax now will we not be negating, in large measure, the efforts being devoted to this study?

There is another very important point I would like to make, and this concerns the inequity of our present Federal tax laws as they relate to the highway user.

From the inception of the Federal highway trust fund in 1956, highway users have borne the entire burden, currently amounting to well over $2 billion annually, despite the fact that the bulk of this money is being used to finance construction of the 41,000 miles National System of Interstate and Defense Highways. Surely, since Congress itself has agreed that this expanded highway program is vital to the defense of the Nation, as well as its economy, it would seem that a considerable portion of its cost should fairly be charged to the general revenues, so that all who benefit may do their shares.

And on top of the $2 billions annually which highway users alone are paying into the highway trust fund, they are pouring an additional $12 billions into the General Treasury in the form of other Federal automotive excise taxes born of war and depression. They are, at the same time, paying all the other kinds of general and special taxes that everyone else pays.

The injustice is compounded every time the highway user is asked to pay still more taxes into the highway trust fund.

Before we even think seriously about raising the rate of the Federal gasoline tax, or the rates of any other highway user taxes going into the highway trust fund, we should first explore the desirability of transferring these other automotive excise taxes, now going into the general fund, over to the highway trust fund. These amount to approximately $1.5 billions per year.

This action would provide an immediate solution to the deficits that are impending in the highway trust fund, not only for the next 2 fiscal years, but for the life of the highway program, surely as far as can now be foreseen. I believe the highway users would be happier with the arrangement than to have to pay still more taxes. At least they would then have the satisfaction of knowing that the special taxes levied upon them because of their ownership of motor vehicles were all being used for highway purposes.

The CHAIRMAN. Thank you, Mr. Merrow, for coming to us and giving us your views on this subject.

Mr. MERROW. Thank you, Mr. Chairman.

The CHAIRMAN. Our next witness today is our colleague, the Honorable Dean P. Taylor of the 31st District of New York. Mr. Taylor, while we know you well and favorably, we would appreciate your identifying yourself for the purposes of the record.

STATEMENT OF REPRESENTATIVE DEAN P. TAYLOR, OF NEW YORK

Mr. TAYLOR. Mr. Chairman and members of the committee, I am Dean P. Taylor representing the 31st Congressional District of New York. I appreciate the opportunity you have accorded me to appear before you and present my views with respect to proposals for additional financing for the highway trust fund to carry out the federalaid highway program.

I would particularly comment on the recommendation contained in the budget message for fiscal year 1960 to provide a 12-cent increase in the Federal excise tax on motor fuels. I have been advised that this increase is necessary to avert deficits in the highway trust fund, created by the construction of 41,000 miles of Interstate Highway System.

This project, initiated by the Congress in 1956, placed at $27.6 billion the overall cost of construction, of which 90 percent was to be paid by the Federal Government and the States to provide the balance. The Federal highway trust fund was to receive revenues from the following automotive taxes: Motor fuels (3 cents per gallon), tires, tubes, and trucks and buses; however, there was no earmarking of other Federal excise taxes such as the 10-percent Federal excise tax on new autos, the 8-percent tax on parts and accessories, and one-half of the 10-percent tax on trucks and buses which all go directly to the general fund. These funds totaling $12 billion during 1958 amount to 42 percent of the $3.6 billion collected that year from all Federal automotive taxes.

So much for background which is familiar to us.

The question I wish to bring to the attention of the members of the committee is, How much consideration has been given to the motorist in New York State whose tax this year was increased to 6 cents per gallon? This, combined with the Federal levy, brings it to a total of 9 cents a total tax today of 37.5 percent on the cost of a product which millions of New York State motorists and those in other States regard not as a luxury, but necessary to a way of life.

Before the committee are proposals increasing the Federal 3-cent levy by anywhere from 12 to 11/2 cents a gallon. It seems to me that this singling out of a particular segment of taxpayers as those who will underwrite this program is unwarranted. Let's not forget that when the highway program was conceived several years ago much stress was placed on the important benefits that would accrue to all segments of the economy, and the contribution such a highway system would make to national defense.

Beyond this, we must seriously question if we can afford the imposition of an additional Federal tax on gasoline. Perhaps the point of diminishing returns has already been reached. For example, it is painfully evident that more and more motorists are purchasing the small foreign economy car which certainly does not constitute a boon to the Nation's economy and more and more families are asking the question, "Is this trip necessary?"

I firmly believe that the fiscal problems which we seem to face in our present highway program do not have their proper solution in an increase in the present Federal levy. Other proposals such as an earmarking of all highway user revenues, a stretching out of our pres

ent program, and use of general funds have been made, and others will certainly follow but, assuredly, the proposed increase is not proper nor can it be justified.

Mr. Chairman, I again express my sincere appreciation for this opportunity to appear before the Committee on Ways and Means. I recognize that you have a difficult problem before you, and as a member of the House Committee on Public Works I stand ready to be of whatever service I can in finding an appropriate solution to it.

The CHAIRMAN. Thank you, Mr. Taylor for giving us the benefit of your views.

The CHAIRMAN. We will now hear from our colleague, the Honorable Albert Rains, from the State of Alabama. We are happy to welcome you, Mr. Rains.

STATEMENT OF REPRESENTATIVE ALBERT RAINS, OF ALABAMA Mr. RAINS. Thank you, Mr. Chairman.

Mr. Chairman, I am opposed to the President's request for a 12-cent-per-gallon increase in the Federal gasoline tax for the next 2 years, and I am also opposed to the graduated tax on gasoline as represented by H.R. 7969.

Both of these proposals have been described as temporary taxes, but the fact is that we have rarely, if ever, imposed a temporary tax. The luxury taxes levied in wartime were temporary taxes which came to stay. Admissions taxes to theaters and sports events were supposed to be temporary. Hundreds of sales taxes levied in the respective States were designed as temporary-to bridge the gap or to meet some emergency need. But most often we find when the time comes for such a tax to expire the emergency which prompted it either has continued or a new crisis has arisen to require revenue produced by the temporary tax.

In the case of the Interstate Highway program, I, for one, did not anticipate paying for this construction as it is done, but rather over a period of time, just as most of us pay for our homes. And I subscribe to the view that before we consider levying a gasoline tax we should first transfer to the highway trust fund the estimated $1.5 billion in automobile and excise taxes which go into the Federal Treasury and are used for other purposes.

In the 1958 fiscal year highway-related tax collections by the Federal Government totaled $3.6 billion. But only $2.1 billion was earmarked for highway purposes. The remaining $1.5 billion, or 42 percent of the total amount collected, was paid into the Treasury's general fund for other Federal activities that have no relation to highways.

It seems to me that if we must pay for the highway construction at a faster rate, then Congress should earmark for that purpose taxes already being paid by highway users, and not place any higher taxes on our motorists. It is estimated that 75 percent of all American automobiles are used to transport people to and from places of employment. For millions of American motorists an increase in Federal taxes on gasoline might be considered in the same light as an increase in the transportation taxes, most of which, we may recall, were originally offered as temporary measures.

I would like for the committee to note the high rate of the gasoline tax levied by many of our States. We in Alabama pay a State gasoline tax of 7 cents per gallon. This is the highest rate among the States, but Alabama is not the only State with such a gasoline tax. A 7-cent-per-gallon tax is also levied by Florida, Kentucky, Louisiana, Maine, Nebraska, Mississippi, North Carolina, South Carolina, and Tennessee. Certainly our States cannot remove their gasoline taxes, for they are sorely pressed for revenue from all sides, and their participation in the highway program requires what revenue is obtained by the gasoline tax.

Mr. Chairman, there has been no convincing evidence that we need to pay for this vast highway program immediately, and certainly as long as $1.5 billion from related tax revenues is being diverted for other Federal projects I cannot go along with any move to impose higher gasoline taxes on our citizens.

The CHAIRMAN. Thank you, Mr. Rains, for coming to us and giving us your views on this subject.

Mr. RAINS. Thank you, Mr. Chairman.

The CHAIRMAN. We will now hear from our colleague, the Honorable R. Walter Riehlman from the State of New York. We are happy to welcome you, Mr. Riehlman.

STATEMENT OF REPRESENTATIVE R. WALTER RIEHLMAN, OF NEW YORK

Mr. RIEHLMAN. Thank you, Mr. Chairman.

I appreciate the opportunity to contribute my views to the study presently underway in the Ways and Means Committee concerning the crisis that exists with respect to financing the Interstate Highway System. It is a crisis that bears directly on the lives and livelihoods of countless people across the country. The breakdown of this program will have an indirect, but equally important, bearing on the lives of a great many others. Of no small importance, I am sure you will agree, is the fact that curtailment at this time will materially deprive this Nation of a segment of its transportation network that is of vital importance to its growing population and expanding

economy.

The Federal-aid highway program has for some years been, to the great majority of the American people, a thoroughly acceptable and respectable undertaking. It is one of the few Federal-aid programs designed to operate on a pay-as-you-go basis. There has been some extravagance and waste, as might be expected in a program of such magnitude, but the overall effect has been one of which Congress and the American people can be justifiably proud. I therefore urge, in the strongest possible way, that the committee make every effort to arrive at an economically sound solution permitting the continuation of this worthwhile program.

The economic factors contributing to the present situation are quite clear. Due to the financial position of the highway trust fund, the Secretary of Commerce has informed us that unless additional funds. are made available by the Congress, it will be necessary to completely forgo any apportionment of interest funds for fiscal year 1961 and the apportionment during fiscal year 1962 would amount to only

$500 million. So, the problem confronting Congress, although simple on its face, is difficult of solution. To continue the program, we must provide more money. Several alternatives are before the committee. The committee is faced with the problem of choosing that alternative which is in the best interest of the country, both from the standpoint of continuing the interstate program and from the standpoint of consistency with economy and responsibilty in government.

It appears to me that the problem lends itself to one of four broad areas of solution: First, do nothing and allow the program to ride out a barren fiscal year 1961 and part of 1962 and then resume on a slightly reduced level; second, increase revenues to support the program at its present and projected levels; third, continue the program at its present and projected levels by making up deficits from the general fund of the Treasury or by issuing special bonds; and fourth, establish a minimum annual level of expenditure and maintain it by borrowing from the general fund in lean years and and making repayments from the highway trust fund in good years.

It is my firm belief that the first three of these solutions are less desirable than the fourth. If we do nothing and let the interstate program weather as best it can the present financial storm, we will seriously disrupt the programs that are now either in the planning stage or underway in the States. It is my understanding that interstate programs will come to a substantial halt in most parts of the country sometime in the fall of 1959, should Congress decide not to act. When funds once again become available, the job of organizing the necessary personnel and equipment to renew the program will represent a time-consuming and costly process. The fact that this program is in the best interests of the Nation, plus the uneconomical aspects of curtailment, plus the obvious effect on the many people who depend on this program for their livelihood, certainly places this first solution in an unfavorable light.

The second alternative is embodied in the President's request for a 112 cent per gallon increase in the gasoline tax. The prospect of a further increase in taxes has certainly met with less-than-favorable response in most parts of the country, particularly among my own constituents in the 35th District of New York. The fact that the Federal Government has authorized and planned expenditures that are far beyond actual and anticipated trust fund receipts certainly, in my opinion, invalidates any justification for demanding increased revenues from the taxpayers. The taxpayer should not be made the whipping-boy when there is another solution available that is, economically speaking, equally sound.

The third alternative, that of taking the program off a pay-as-yougo basis and either financing it from the general fund or issuing special bonds, is, in my opinion, the least desirable of those solutions permitting continuation of the program. In a nutshell, this would result in supporting the Federal-aid highway program through deficit financing. The net result will be that one more otherwise worthwhile program will, year after year, make its contribution to an increasing national debt. At a time when there is so much public concern over inflation and the manner in which our fiscal system is operated, I feel that a course of action indicating our willingness to surrender one more program to the permanent expediency of deficit financing would

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