the secretary of state of each one of the 40 non-community-property States, at the suggestion of my friend, Mr. Frear.

We have a great number of members from those States who have asked to appear before the committee. We have tried to be absolutely neutral in the matter.

I want to say this to my good friend Mr. Frear. If we give it any thought, I think it is easy to understand why the people from the community-property States are appearing here in relatively greater numbers and presenting arguments at greater length, perhaps, than from the other side. They are the ones who are to lose something by the enactment of this legislation. They are the ones who feel that they are directly interested.

Therefore, it is only natural, it seems to me, that they should be here with strong representation, presenting their side of the case in the very best way they know how. So I do not think we can really charge these gentlemen with going beyond reasonable lengths in appearing here and making their presentations, even if they do take quite a little while.

They are doing the best they can for the States they represent. Mr. FREAR. Mr. Chairman, I accept the criticism

Mr. SHALLENBERGER. It is not criticism.

Mr. FREAR. Because I asked that all these gentlemen be notified. I felt it was their duty and their right to be here.

The question occurs to me that if a court were to go through these hearings and, of course, it will not-but if a court should go through these hearings to find out why one gentleman sitting here is paying the Federal Government $180 tax on his salary more than a man getting the same salary who happens to come from a communityproperty State, I am wondering if the court would get any light on that question.

That is a practical situation; it is a case of inequity. Everyone knows it. That is the one thing we are endeavoring to have presented here.

I am making no criticism. We have invited these gentlemen. But here an hour and a half is taken up with one witness, and no matter how competent he may be-and unquestionably the gentleman before us is very able—it is difficult for us to have other appointments to hear everybody at that length.

I have no criticism to make of my friend, the gentleman from Washington. I think he is a very able lawyer, and I think he has presented these cases frequently to us in the committee, so that I have a clear understanding of the distinctions in the cases.

Mr. FULBRIGHT. Mr. Chairman, may I say that I did not in the least take offense at the comment of the gentleman from Wisconsin. Mr. FREAR. Of course, no offense was intended.

Mr. FULBRIGHT. Of course, the question of the gentleman from Wisconsin-for whom I have for a number of years entertained the highest admiration and respect, whose career I have followed with great interest, and who, I know, wants to do justice and promote equality and will do so to the best of his ability-in answer to his question may I say in partial defense of myself that I did not refer to any of these cases in my Monday's presentation, but undertook to give the practical workings of the community system in the State of Texas, which had not been done, for the purpose of showing

that the husband did not have this character of control and enjoyment that you assume, and that he never did own his salary, as the Government here stated; that he did not control it, because of the various provisions of that law.

Now, I had made an extended discussion on that, perhaps too long. I hope I did not tire the committee too much with it.

This morning I asked merely to refer, and did briefly refer, to some of these cases, from an angle that had not to my mind been connected up with the position, as I understood it, of the Government. I was just trying to make that clear.

Mr. COCHRAN. May I ask you a question at that point?

Mr. FULBRIGHT. Certainly.

Mr. COCHRAN. Taking again the example of the lawyer who earns $100,000 a year, and who is a resident of a community-property State, who has a wife with no income whatever, could the wife go to the client and demand payment of the fee?

Mr. FREAR. In Texas.

Mr. COCHRAN. In Texas; yes.

Mr. FULBRIGHT. She could not do so unless she had gone through a court proceeding which enabled her to act as femme sole.

Mr. COCHRAN. As one of the marital community, could she do it? Mr. FULBRIGHT. She could not, because he has the control.

Mr. FREAR. If I may follow that up with a question: Could she, in the State of Texas, which you represent, go to court and say that she objected to having made a transfer of community property, real estate, in which she was interested, by her husband, providing it was to be a business transfer, and she did not sign the papers?

Mr. FULBRIGHT. She certainly could, if there was any question that her rights were being impaired or defrauded thereby.

Mr. FREAR. But she does not have any voice in it, ordinarily. Mr. FULBRIGHT. No.

Mr. FREAR. Unless there is some impairment of her rights, she could not go into court; that is, she has no voice at all. The deed signed by you is the deed that carries the property in Texas, without the addition of her signature?

Mr. FULBRIGHT. Yes; and it would be exactly the same in Wisconsin, where you made an exclusive-agency contract, giving to a trust company or an individual the right to act with the property's owner and sell it and dispose of it and convey it.

You could not interfere with that person doing it to save your life unless you could show that they were trying to defraud.

Mr. FREAR. The marital state in Wisconsin is such that the wife must sign, she must acknowledge with witnesses, when she relases her interest in the property.

Mr. FULBRIGHT. Yes.

Mr. FREAR. But that is not true in Texas. I am not criticizing the situation, but I am giving you a picture that confronts us, and ought to confront any court, as to the question of how far community-property and noncommunity-property States should be permitted to go.

Mr. FULBRIGHT. Yes. But it is exactly analogous to the illustration that I gave you of your agent, your trustee, in Wisconsin.

While she owns it there is an agency in the person to handle it as agent as long as he does not try to defraud her.

Mr. FREAR. But this is a marital proposition entirely, and that is the only reason she acquires the property.

Mr. FULBRIGHT. It largely comes about through applying commonlaw concepts to the marriage relationship when we are used to the community-law concepts.

I should like to make one other observation in conclusion, Mr. Chairman, because it pertains to a question which the gentleman from Wisconsin has propounded here.

When the Government, the Secretary of the Treasury, made his report in December, he recommended that this committee give consideration to doing away with the privilege of the husband and wife to make separate returns altogether.

That would apply to Wisconsin as well as to Texas. In fact, he was having in mind to do just what the Wisconsin Legislature had

done.

Mr. FREAR. Are you quoting what he said?

Mr. FULBRIGHT. I do not want to go over that again, but

Mr. FREAR. I mean, you referred to the Secretary of the Treasury. I did not know that he had taken that position.

Mr. FULBRIGHT. In December, as shown in the revenue division hearings, 1934, at page 113-Mr. Summers went over that, and I do not want to repeat it, except to make the reference, which is as follows:

The Treasury Department therefore recommends that the committee consider whether a husband and wife living together should not be required to file a single joint return, each to pay the tax attributable to his share of the income.

Mr. FREAR. That is right, "his share of the income." Of course, I would take his thought to be that where the wife had a separate estate, she would make a report as to her property and the husband would make a report as to his property.

Mr. FULBRIGHT. But that would not accomplish anything. That would not give the Treasury any benefit from all of these transfers that have already occurred.

If you really want to go into this thing, why not adopt the philosophy that the legislature of Wisconsin adopted, namely, to consider the family as a unit?

Mr. FREAR. It could not do that, and it would not, in any State. Mr. FULBRIGHT. Could not do it?

Why could you not do it? Because it is taking one person's property and taxing another person on it. That is exactly what we say here. If you are going to have the constitutional question involved, why not make it universal, to apply everywhere, and let it be tested out as to all of the States.

If you did that, you would get a lot more of it; in other words, if you can tax it on that basis as you did in Wisconsin, you will get a lot more than any $16,000,000 or $28,000,000, which has been the figure suggested here.

Mr. FREAR. The Supreme Court has said that we cannot do that and, it seems to me, properly, but I do not see how, until the Supreme Court passes upon these other questions, such as salary, and things of that kind

Mr. FULBRIGHT. If you are talking on the question of salary I might in that connection refer to a suggestion that was made by a representative of the Department of Justice, and that is that you trace back the source of the property that went into the community. Then you would have interminable administrative difficulties.

Mr. COCHRAN. Would you, considering the treatment by the Treasury of estate by entireties, and determining the Federal estate tax? Mr. FULBRIGHT. On estates by entireties?

Mr. COCHRAN. Yes. The administrative difficulties do not stand in the way there.

Mr. FULRBIGHT. Yes: But, mind you, under the community sytem, where we have gone ahead and each has done some trading in this and that and the other, for 40 years, there is no way on earth by which you can unscramble the eggs and tell how much each contributed?

Mr. COCHRAN. You will recall that the Treasury

Mr. FULBRIGHT. In estates by entireties they have to guess at it a good deal, as you know.

Mr. COCHRAN. But in such an unscrambled condition in estates by entireties, the Treasury in arriving at a Federal estate tax, assumes that the estate by entireties was created equally.

Mr. FULBRIGHT. And they usually have to wind up with just that assumption frequently, too, because they cannot trace it.

Mr. COCHRAN. That could be done in this instance.

Mr. FULBRIGHT. That is what we do now. That is what our law does. It assumes that it is equal. That is exactly our community law.

So far as salaries are concerned, that involves the same constitutional question as is involved in the original bill here, as to whether it is vested property.

Mr. COCHRAN. But it does not present the difficulties that are presented by an estate by entireties.

Mr. FULBRIGHT. It does not present the administrative difficulties, perhaps, to find out who earned the salary or to find out who was on the pay roll, or something like that. But it has exactly the same basic constitutional question as is involved in the original bill. I do not see that you get away from that question by just limiting it to salaries.

Mr. FREAR. Take the situation that would be presented to the court in the final determination. It would show that one man on this committee, having a $100,000 salary (which I hope he would have in just payment of his efforts) and another man sitting at this end of the committee having the same salary would have to pay 42 percent greater tax to the Federal Government; that is, for the same salary. One comes from a community-property State and the other does not. Now, that is the question that I have in mind. The figure as given here is 42 percent difference in tax on a salary of that size. Mr. FULBRIGHT. The simple answer to it is that it is not his salary in that State. It is not his.

And not only that, but his wife can encumber it, she can go out and buy dresses and anything she desires, and charge it. She can go off and leave him, and have the money divided. She can call him to account on it. He cannot devise it. He has not the unfettered control

of it. She has the right of the economic enjoyment of her half of it. She gets it. Mr. FREAR. Isn't this also true? Suppose this subcommittee passes on this question. Then let us say the question arises in the next Congress in just the same way. Then it will come up in the following session. And why?

Because of the inequity that is apparent on the face of it. If the Supreme Court passes upon it once, it is settled, just as it was in the Wisconsin case. That is the difference.

Mr. FULBRIGHT. We thought we had it settled with the previous administration, when we agreed to the test cases in the Supreme Court. The previous administration did not disturb that understanding, so long as they were there, and made no further effort to bring it up, because their contention was that this right of enjoyment of the husband was equivalent to ownership.

Mr. FREAR. But take a salary case.

Mr. FULBRIGHT. The salary was involved in those cases. That was one of the things in there, salary.

We sat down with the Government and tried to pick out cases that involved both salaries and dividends and other kinds of gains. It was done deliberately, because, by agreement, we sought to get these cases up, and we thought it was settled for all time, at least, so far as the Republican administration was concerned.

Now it has bobbed up again.

Mr. COCHRAN. You realize that that is just one added reason why the administration should not have changed?

Mr. FULBRIGHT. I do not think so, because they were contending that what the husband had was his, that this salary was his salary, using the exact words the gentleman here has used. The Supreme Court has said, "No; it is not his salary."

Mr. FREAR. I am frank to say that this was new to me in this session. Of course, I knew that there was a difference in the laws of the States. But the thought occurred to me that perhaps an amendment might be offered that would reach the basic proposition in

some way.

Mr. FULBRIGHT. I do not see how merely limiting it to salaries changes the proposition.

Mr. FREAR. I do not know that you and I would agree on that, and I am not criticizing your position at all, of course.

Mr. SHALLENBERGER. Mr. Fulbright, along the line which my friend from Wisconsin has brought up here, we are spending a lot of time this morning on a matter which I think we have gone over pretty thoroughly.

Mr. FULBRIGHT. I have finished, Mr. Chairman.

Mr. SHALLENBERGER. There are other gentlemen here and there are some Congressmen who have been notified they would be heard, if you can finish briefly.

Mr. FULBRIGHT. I have finished, Mr. Chairman.

Mr. FREAR. Let me say this, too. I have met Congressmen coming out of this room and they have said they did not know when they were going to be called. They could not stay here, they had other appointments, too. I am not criticizing anybody taking all the

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