Hon. WILBUR D. MILLS, COLUMBIA ARTISTS MANAGEMENT, INC., Chairman, House Committee on Ways and Means, 1102 Longworth House Office Building, Washington, D.C. DEAR SIR: As the attorneys for Columbia Artists Management, Inc. (“CAMI"), we have been asked to set forth its views with respect to the proposed travel tax now being considered by your Committee. It is requested that this statement be included in the printed record of the hearings. CAMI is entirely sympathetic with the Presidential purpose of deferring “nonessential travel outside the Western Hemisphere for two years" (statement of the Secretary of State before the Committee, February 5, 1968, at p. 23). It does, however, consider as ill advised the penalizing of normal business travel which is essential or important to the interests of the United States and its business enterprises. The situation which obtains with respect to CAMI is, we believe, a good illustration of the unwise reach of the proposed travel tax. CAMI's principal activity is the management of concert artists and attractions and the procuring of concert, recital, ballet and other engagements for such artists and attractions. One part of this activity requires that officers and employees of CAMI travel out of the Western Hemisphere for the purpose of arranging concert tours and the like for American concert artists. This type of activity not only has the important effect of propagating this country's cultural attainments throughout the world, but also results in a net flow of funds into the United States. A different and somewhat more extensive type of activity involves traveling abroad for the purpose of arranging for foreign attractions to come to the United States on concert tours, thus providing the American people with the full measure of musical culture which the world's artists can provide. This cultural interchange is obviously very important. In addition, virtually no outflow of funds is generated because most of the attractions which CAMI brings to the United States are not profit making enterprises. More often than not, these groups, such as the Berlin Philharmonic, Concertgebouw Orchestra of Amsterdam and the Royal Danish Ballet, are subsidized by foreign governments and foreign foundations and expend more money in connection with their tours within the United States than they derive from such tours. In any event, it is clear that the principle business activity of CAMI requires extensive travel by its officers and employees out of the Western Hemisphere. None of it is "nonessential" for CAMI and none of it ought to be considered “nonessential" for the United States. CAMI has no subsidiary, affiliate or branch office outside of the Western Hemisphere and does not wish now to establish one. In such a case, the proposed travel tax would have the harsh and probably unintended impact of producing a sharp increase in the cost of carrying on its normal and, we believe, useful business functions. This result is in glaring contrast to the generally understood thrust of the proposed travel tax which is simply to encourage the average American tourist to defer his pleasure trip to Europe. SUMMARY AND RECOMMENDATIONS For these reasons, we respectfully urge that the Committee consider a modification of the proposed travel tax so as to eliminate from its coverage bona fide business travel. It would be in order, of course, to place the burden of proof on this issue on a potential taxpayer; however, since workable principles and standards in this area have already been established for purposes of the federal income tax laws, this should not be too difficult a problem either for the taxpayers or for the administrators of the program. Respectifully submitted, ROSEN MAN, COLIN, KAYE, PETSCHER, FREUND & EMIL Hon. THOMAS B. CURTIS, U.S. House of Representatives, Longworth Building, Washington, D.C. SERVICE TOOLS INSTITUTE, DEAR CONGRESSMAN CURTIS: Since the present crisis in our balance of payments situation calls for immediate action to limit the outflow of American dollars to foreign countries, we would like to bring to your attention a condition which is causing substantial amounts of U.S. Government funds to flow to foreign countries. We refer to the present tool buying policy which the Bureau of the Budget requires our Government's tool buying agency, the General Services Administration, to follow. Under this policy, only a six percent differential in favor of domestic producers is allowed in contrast to a 50 percent differential in favor of U.S. manufacturers allowed by the Department of Defense. As a result of this inconsistent and unwarranted policy, many foreign producers are, because of their low labor costs, able to obtain numerous large Government tool contracts, which otherwise would be awarded to domestic manufacturers. Due to heavy and increasing demands for tools for the Viet Nam War and the new Korean Emergency, Government procurement of hand tools is increasing substantially. Listed below are examples of recent large hand tool awards being made by the GSA to foreign countries: Under the circumstances outlined above, we respectfully request and urge that an immediate effort be made to have the tool buying policy of the General Services Administration changed from the present 6% buying differential in favor of domestic tool manufacturers to the 50% buying differential in favor of U.S. producers allowed by the Department of Defense. We shall appreciate it if you will have this letter entered in the record of Hearings on the President's Balance of Payments Proposals now being conducted by the House Ways and Mean Committee. This urgent request is respectfully submitted in behalf of our member manufacturers whose names and addresses appear on the attached list. Yours sincerely, GEORGE P. BYRNE, Jr., LIST OF SERVICE TOOLS MANUFACTURERS A & E Manufacturing Co., Racine, Wisc. Apex Machine & Tool Company, Dayton, Armstrong Bros. Tool Co., Chicago, Ill. Boker Manufacturing Company, Sub- Hardware Mfg. C & G Wheel Puller Co., Inc., Scio, N.Y. Cameron Manufacturing Corp., Emporium, Pa. Channellock, Inc., Meadville, Pa. Secretary. Cleco Division, Reed International, Inc., Cornwell Quality Tools Co., Magadore, Crescent Niagara Corporation, Buffalo, Crescent Tool Division, Crescent Niag- Dowley Manufacturing, Inc., Spring C. Drew & Co., Inc., Kingston, Mass. Duro Metal Products Co., Chicago, Ill. Fleet Tool Corporation, Schiller Park, Kennedy Manufacturing Company, Van Stevens Walden, Inc., Mathias Klein & Sons, Chicago, Ill. McKaig-Hatch, Division of Tasa Coal Company, Buffalo, N.Y. Metal Box and Cabinet Corp., Midwest Tool & Cutlery Co., Inc., Milbar Corporation, Greenfield, Mass. New Britain Machine Co., P&C Tool Company, Portland, Oreg. Park Manufacturing Co., Grant Park, Ill. Parker Manufacturing Co., Worcester, Mass. Petersen Manufacturing Company, Inc. DeWitt, Nebr. H. K. Porter, Inc., Somerville, Mass. Proto Tool Company, Los Angeles, Calif. The Quality Tools Corporation, New Wilmington, Pa. Reed & Prince Manufacturing Co., S-K Wayne Tool Co., Sub. of Symington-Wayne Corp., Worcester, Mass. Stream Line Tools, Inc., P. A. Sturtevant Co., Superior Tool Company, Thorsen Manufacturing Co., Torque Controls, Inc., So. El Monte, Calif. Upson Bros., Inc., Rochester, N.Y. Utica Tool Company, Inc., Vaco Products Company, Chicago, Ill. Vaughan & Bushnell Manufacturing Co., Hebron, Ill. Vlchek Tool Company, Cleveland, Ohio. Waterloo Industries, Inc., Waterloo, Iowa. Wilde Tool Company, Inc., J. H. Williams & Co., J. Wiss & Sons Co., Newark, N.J. Wright Tool & Forge Co., Orchard Park, N.Y. Rosenberg Bros. & Co., ABRAHAM & Co., Hon. WILBUR D. MILLS, New York, N.Y., February 7, 1968. Chairman, Committee on Ways and Means, DEAR MR. MILLS: My continued concern for this country's Balance of Payment problem is well known to you. You will recall my repeated testimonies before your esteemed Committee in which I gave wholehearted support to steps to be taken to increase participation by foreigners in the United States securities markets, especially on the basis previously proposed by Secretary Fowler in the "Fowler Report". You will, therefore, understand my desire to assist with proposals in restricting American tourist expenditure. Allow me, however, to call to your attention that the methods of restraint through taxation of spending at graduated rates is cumbersome. It will be difficult to administer and must invite wholesale evasion. I warned at the time of the original Interest Equalization Tax that loopholes exist and will provoke evasion. I refer to my appearances before your Committee in 1963, 1965, February 17, 1967 and July 17, 1967. The subsequent changes in the Interest Equalization Tax have proved that my warnings, based on many years of experience both here and abroad, were justified. I believe we should be aware of the expenditure involved in policing, collecting and enforcing such ill prepared deterrent. As you have previously asked me if I could suggest something better, I give you an alternative which I consider constructive: A fixed tax, say 30% on tickets for all foreign travel outside this hemisphere should be levied. Payees should have the right to reclaim part or the total of the 30% for exempt travellers such as students, businessmen travelling for the purpose of producing foreign exchange, sick people on doctor's certificates, etc. I feel confident that such procedure will be most effective in providing the desired restraint and will act at the same time as a deterrent for unnecessary travel. The present proposal is too tempting for too many people to make use of loopholes. In fact, the present proposal will create a black market in dollars abroad which would undermine further the financial prestige of the United States. It appears to me that there is a certain similarity between the Interest Equalization Tax and the present proposed travel tax, and we thus have an opportunity to avoid past mistakes. I would appreciate your including this letter in the record of the hearings on the travel tax. DEAR MR. CONGRESSMAN: The enclosed Resolution is forwarded to you with the urgent request that you oppose the Treasury Department's plan to have a travel tax imposed upon Americans traveling outside the Western Hemisphere. This Resolution was adopted unanimously at the February 27th meeting of the Hawaii Chapter of ASTA and allied persons in the travel and transportation industry. The travel and transportation industries have pledged their fullest support to the proposals of the Special Presidential Task Force for the encouragement of travel in the United States by tourists from abroad as a means of easing the balance of payments problem. We respectfully solicit your support of these proposals as an alternative to the restrictive program proposed by the Treasury. Anything you can do will be greatly appreciated. Very truly yours, (Mrs.) MARY K. ROBINSON, President. RESOLUTIONS PROTESTING THE TREASURY DEPARTMENT'S PROPOSALS TO RESTRICT TRAVEL OF AMERICAN CITIZENS OUTSIDE THE WESTERN HEMISPHERE Whereas, on February 5, 1968, the Secretary of the Treasury submitted to the House Ways and Means Committee of the United States Congress proposals for legislation which would restrict travel outside the Western Hemisphere of residents of the United States, and Whereas, one of such proposals would tax such travelers spending from $7-$15 per day at 15%, and above $15 per day at 30%, and Whereas, this proposal, if enacted into law, would strike hardest at the middle and lower income earners, effectively checking the movement and spending abroad of United States residents; it would not deter higher income travelers, but would curtail travel by students, teachers, clergy, retired persons and the average citizen unable to afford the increased costs, and Whereas, the mandatory declaration of how much money is being taken out of the country and the need to account for it on return would subject travelers to a burdensome and intimidating mass of paper work and the threat of penalties and fines for failing to accurately assess or report expenditures, thus making it $9-749-68-pt. 3- -23 obvious that the intent of these proposals is to ban travel outside the Western Hemisphere and not just to deter travel, thereby curbing the free movement of a free people, and Whereas, the proposed travel tax represents an abridgment of the historic liberty of Americans to travel freely to the destinations of their choice and would effectively isolate Americans from the cultural traditions which are a treasured element in the nation's heritage; and Whereas, the proposed new tourist tax would make a mockery of the established principal of voluntary compliance of taxpayers, because if Americans are to be asked to estimate their travel expenses and are made subject to spot checks to determine just how much money they are taking with them, they will inevitably fall into the kind of evasive practices that has become almost normal in some other countries, and such a result could thoroughly undermine taxpayer morale and morality, and Whereas, the administration proposal would be expensive and ineffective as well; it would inevitably create the need for a large government bureaucracy maintained at additional costs to the taxpayer and would almost surely result in retaliation through similar restrictions by foreign governments, even to the extent of outright prohibition of their citizens to travel to the United States, and Whereas, the Special Presidential Task Force under the chairmanship of Robert M. McKinney has proposed some far better ideas than the travel tax to ease the balance of payments problem, which proposals would increase tourism to the United States as the soundest means of resolving our present balance of payments deficit, and Whereas, such proposals would have behind them the full resources of the travel industry and would embody the positive principal of encouragement to travel instead of the negative approach by the Treasury Department. Therefore, be it resolved: 1. That the undersigned do protest the proposed travel tax and urge the Congress of the United States to decline to enact legislation putting it into effect. 2. That the administration abandon its proposals for the restriction of travel, and instead adopt the recommendations of the Special Presidential Task Force to attract foreign visitors to the United States and otherwise promote a positive encouragement of travel. 3. That copies of this resolution be forwarded to Senators Fong and Inouye, Congresswoman Mink and Congressman Matsunaga urging them to assist in preventing the restrictive tax, and to aid in the positive encouragement of foreign visitors to this country. [The Resolution was signed by 92 individuals representing numerous travel and related businesses.] AIR, LAND, SEA, TRAVEL AGENCY, Mr. WILBUR D. MILLS, Committee On Ways and Means, DEAR MR. MILLS: Never having the opportunity to meet you personally, I feel that I know you from the numerous times that I have voted for you and we have many mutual personal friends-namely Dr. Bob Robins for one, whom I have heard speak of you on numerous occasions, HOWEVER, this is the first time that I have had occasion to send an official letter to you regarding a problem close to my heart since it affects so many of us small business people directly to the extent that we could be put out of operation should the Fowler Proposed Tax on Travel go into effect. As a Travel Agent, we have such a small number of members as a whole, that I realize we carry no weight as a group, but when you take into consideration the other business associated with Travel who would be involved not to mention the people who book our services, it seems highly unfair and certainly not our usual Democratic Way of Life to be told WHERE, WHEN, and HOW MUCH we can spend on the Vacations which some of us work for years to enjoy that TRIP OF A LIFETIME—namely EUROPE. Should the tax go thru, it will make people who want to avoid the tax simply purchase their tickets thru Canada or Mexico Offices, whom we have been informed are already set up to handle tickets for U.S. Travelers to avoid the Tax. |