Bullneck & Buzzard

Congress, Congress, don't tax me,

Tax that fellow behind the tree.

--Congressional Record.

Last week the House of Representatives, hunting "that fellow behind the tree." took its orders from a tall, lanky North Carolina farmer, bald as a buzzard and a short, chunky New York lawyer with a mop of shiny black hair. The first was Robert Lee Doughton, a Democrat who has served 20 years in the House and is a member of the Ways & Means Committee. The second was Fiorello ("Little Flower") Henry La Guardia, an insurgent Republican in the House since the War. Poles apart on politics and personality they were united last week in a great and vehement opposition to the 2 1/4% Sales Tax on manufactures in the budget-balancing revenue bill. Together they were able to muster a majority of the House in a successful revolt against the combined authority of both Democratic and Republican leaders.

Team. Of the two men, bullnecked Congressman La Guardia was the more vital and forceful insurrectionist. Bora in Manhattan 49 years ago, the son of an Italian musician, he spent most of his early life at Whipple Barracks, Prescott, Ariz., where his father was Army bandmaster. Graduated from New York University in 1910, he turned to politics, was first elected to Congress in 1916. Instead of warming his seat during the War he became a major in the Army, was sent to Italy in command of U. S. aviation forces, flew bombing planes over the Austrian lines. Later he returned to the U. S. and to Congress where he has been a centre of constant legislative turmoil. In 1929 he ran for Mayor of New York City as a Republican, charged Tammany Hall with most of the things which have been subsequently disclosed by legislative investigation, was defeated by James John ("Jimmy") Walker. A widower, he married his secretary three years ago. He likes to cook Italian dishes for his friends. Personally "the Major," as they call him, is pleasant, affable, amusing.

As a House rebel Congressman La Guardia is a dynamo of hostile energy. Alert and quick-witted, he is always on the job. His oratory is loud, passionate, almost physical as his 170-lb. body crouches and bends and his chunky arms thrash the air. He is one of the best parliamentarians in the House. Representing a poor upper-East-Side district of Manhattan, he has developed a political philosophy which is definitely radical. He distrusts wealth, individual or corporate, believes it should somehow be redistributed for the good of all. Yet he does not sponsor crack-brained ideas for easy hand-outs to abolish poverty. He is sincere, earnest, hard-hitting, but even his legislative foes do not call him unfair. His chief weakness is that he has no responsibility except to himself and his own conscience.

Votes. With Congressman Doughton, he started from scratch three weeks ago to fight the Sales Tax, which was to raise about one-half ($595,000,000) of the sum required to balance next year's Budget. He had no organized backing except the dissatisfaction of members with this backlog tax, no political power except his own arguments. Yet so well did he regiment the opposition to the Sales Tax fortnight ago that the House, as a preliminary to replacing that levy with other forms of revenue, boosted the normal and surtax rates beyond those in the bill. Under his spurring last week the House:

1) Voted (190 to 149) to raise the maximum inheritance tax (on estates of more than $10,000,000) from 20% at present and 40% in the bill to 45%. Where a million-dollar estate pays $48,000 today, it would pay $126,000 under the new rates. Sponsors of this increased estate tax predicted it would bring in $80,000,000 additional revenue next year, $500,000,000 eventually. Secretary Mills promptly objected that these estimates were based on the "grossly inflated values" of 1929, that only about $20,000,000 more would reach the Treasury next year, $135,000,000 eventually.

2) Voted (223 to 153) to amputate the Sales Tax from the bill.*

Historically the Sales Tax is a product of the economist's study. Its prime feature is its universality. The Wartime excise ("nuisance") taxes on a few commodities were a limited form of sales tax. Such conservative Republican Senators as Utah's Smoot and Pennsylvania's Reed have from time to time proposed it as an equitable levy but have never pushed it because of what appeared to be a solid U. S. tradition against direct Federal taxes on everybody. Any wealthy man who agitated for a sales tax was suspected of trying to wriggle out of income taxes. Chief sponsor for the current Sales Tax was a wealthy capitalist, Publisher William Randolph Hearst, whose papers attempted to convince their poor plain readers that such an impost was good for them. Mr. Hearst sent a congressional junket to Canada to study the 4% Sales Tax there (TIME, Nov. 30). The idea was put before the Ways & Means Committee by his spokesmen when it was drafting the revenue bill with advice from an imported Canadian expert (TIME, March 7). Scant hearings were held. The rank & file of the House membership were not consulted. The Treasury made no recommendation. The committee put the tax into its bill simply because it appeared to be the easiest and handiest method of raising cash.

Pro. During the House debate, proponents of the Sales Tax did their best in its defense. But their words lacked fervor and conviction. They explained how, broadening the Federal tax base, it bore on all equally, how it did not discriminate like an excise tax among industries, how it could be easily collected and. above all, how it would bring in enough money to balance the Budget. They also argued that the tax would be absorbed by competing manufacturers and middlemen, would not be actually felt by consumers.

Con. Into this line of argument the La Guardia-Doughton bloc tore as follows: The tax would be passed on by manufacturers to the poor man. It would become a tax on destitution and poverty. It was a consumption tax and would thus stifle economic recovery. Once incorporated in the Federal tax system, it could never be got out. Precisely because it was easy to collect, it would stimulate governmental extravagance, thwart economy. To match the Hearst Press's whoops for the Sales Tax, the Scripps-Howard chainpapers whooped loud against it in "defense" of housewives and wage-earners. The manufacturers' lobby quietly rejoiced.

"Soaking." The defeat of the Sales Tax brought down severe criticism upon Congress. The Democrats were accused of "soaking the rich" and "conscripting wealth." Speaker Garner was denounced for failing to control his party in an emergency. (This week he took the floor with a budget-balancing plea.) The Democratic "chaos" was taken to prove that the party was not "fit to rule." But the House majority against the Sales Tax clearly reflected the sentiment of the country as a whole where the revolt against the staggering mass of direct and tangible taxes has been steadily progressing. Anti-sales-taxers argued that it was much better to "soak the rich" than to "soak the poor" if somebody had to be "soaked." The Federal Government today is supported by only about 2,000,000 tax payers out of 125,000,000 and therefore, it was argued, increased rates on this well-to-do class are only a change in the degree of taxation, not in principle. To tax a million-dollar-per-year man $500,000 is no more "confiscation" than to tax him $1. To the charge that they had run riot, Democrats pointed to the fact that the proposals to increase the normal tax, the surtax and the inheritance tax all came from Republicans and could not have carried without strong Republican support.

Tariffs. With the Sales Tax out of the way, the La Guardia-Doughton coalition dissolved and the House, exhausted by long sessions, depleted by grip, began casting about for other means to raise a Budget-balancing half billion dollars. First moves were to:

1) Defeat (216-10-132) a proposal to raise $350.000,000 by legalizing 2.75% beer and taxing it 3-c- per pint.

2) Adopt a 1-c--per-gal. import tax (i. e. tariff) on crude oil and gasoline. Unsuccessfully (190-10-97) did Representatives from the Atlantic seaboard attempt to block this concession to the Southwestern oil producers. Next day the House chaplain opened the session by reciting . . . Thou preparest a table before me in the presence of mine enemies; Thou anointest my head with oil; my cup runneth over. (Psalm 23:5.)

Full Cry. Once the House smelled Tariff, it set forth at full cry on a new and different rampage, this time under pressure from protectionist Republicans whose pet items had failed to get into the Hawley-Smoot Tariff Act. Before the Democratic leaders knew what had happened, the House had voted (113-10-67) a $2-per-ton duty on coal & coke at the behest of Pennsylvania. Republican Leader Snell supported this tariff upping. Also proposed were "import taxes" of: $3 per ton on fluorspar; 1-c- per Ib. on manganese; 22-c- per Ib. on butter; 100% on all products of convict labor.

Bared Breast. Before he could check the stampede, acting Chairman Crisp of the Ways & Means committee had to appeal thus to the House:

"This is a sad day for me. I love my country and I have endeavored to serve her. I have bared my breast to every shaft of criticism, and I have done so because I believed I was right.

"I also love my party, and today I am seeing my party destroy itself. I am witnessing my party put on higher tariff rates than even the Republicans put on. . . .

"I have tried to stem the tide. I realize that I am impotent. I realize that I have not had the majority of this House back of me. I have been long-suffering and patient. But patience ceases to be a virtue.

"If these amendments and other things continue to be added to the bill, I shall myself vote against it."

*Last week the Mississippi Senate also defeated a 3% Sales Tax, the passage of which by the House had caused opponents to storm the Governor's office in the capitol.

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