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In 1931 the total amount of community-property income was $293,040,437, which is 2.15 percent of the total amount, $13,604,996.128.

I have the total amount of tax paid by these community-property States, and the total surtaxes paid for 1921, 1929, and 1931. It will be seen that in these States, exclusive of California, the total individual income-tax was $24,573,493, for the year 1921; that the total surtax reported in that year was $8,963,077.

Mr. SHALLENBERGER. Your figures are to form a basis of an estimate of how much additional revenue will be received from community property if this bill goes into effect.

Mr. FAUNTLEROY. That is right.
Mr. SHALLENBERGER. What would be your estimate of it?

Mr. FAUNTLEROY. I was coming to the year 1931. There was $12,695,972 of surtaxes paid in all of the eight States, including California. So, I cannot see how in that year that the saving could have been more than—as I say, it is a hit and miss proposition, if you estimate 35 percent more the saving would be less than $4,500,000, if that is true.

No mind can make an accurate estimate without the statistics on which to go into all that. You can do like you have done, compare the income of certain States and then try to draw certain deductions from that. But of course the difference in tax savings depends on the graduated rates of tax and the income that would actually be reported.

Mr. SHALLENBERGER. Are these figures to show that we cannot determine anything from statistics, or to show that you have an opinion concerning them?

Mr. FAUNTLEROY. They are to show that the total taxes paid by all the States, if you take as an example 1921, the first year in which is reported separately community property on that analogy alone, it would appear you could not under normal conditions and rates of tax expect to get a saving far in excess of the estimate, at least, that the Treasury Department makes.

Mr. SHALLENBERGER. That is the point I am trying to get. Did Mr. McCoy give you an estimate, or have you an estimate of what he thought?

Mr. FAUNTLEROY. He said $5,000,000.

Mr. SHALLENBERGER. Do you feel that is a fair statement, or do you have a different opinion, after your close study of it?

Mr. FAUNTLEROY. I think for 1921 that was an eminently fair opinion.

Mr. SHALLENBERGER. Is that estimate under present conditions or for 1921.

Mr. FAUNTLEROY. His estimate was made under returns and statistics available as of the year 1921. He said 5 million.

Mr. SHALLENBERGER. You have not anything since that?

Mr. FAUNTLEROY. Now, in 1921, notice this: The total individual income tax paid for all the States was $61,011,925, whereas for 1929 it was $68,817,866, or there had been an increase in tax, apparently, if my figures are correct, of only about $7,800,000. The total tax for 1931 shrunk to $22,256,282 for all of the States involved. The surtaxes for all of these States in 1929, combined surtaxes, were $36,280,210. You must take into consideration a great deal of income

66247-34—16

subject to surtax is income of single individuals and also separate income of one or the other spouse.

Mr. Hill. And separate income returns of the married people?

Mr. FAUNTLEROY. Yes. There is not as much money involved, by anything like the amount, as I see it, as the general impression indicates.

Mr. SHALLENBERGER. The time for adjournment has arrived.
Mr. FAUNTLEROY. I am about through with all the statistics I have.
Mr. SHALLENBERGER. You have further tables to present?
Mr. FAUNTLEROY. No; I am practically through.
Mr. SHALLENBERGER. Do you wish to file that statement?
Mr. FAUNTLEROY. Yes; I would like to.
Mr. HILL. You may revise it and give it to the reporter.
(The tables referred to are as follows:)

EXHIBIT A

TABLE 1 The following table has been compiled from data contained in table 4, page 46, of the Statistics of Income (United States Treasury Department, Bureau of Internal Revenue) for the year 1921:

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18, 477 $48, 310, 197
22, 976 49, 737, 718
67, 960 197, 897, 146

9, 719 22, 455, 508
11, 780 27, 838, 165
200, 188 536, 897, 427
115, 688 262, 109, 642
446, 788 1, 145, 245, 803
386, 082 1, 168, 021, 448

832, 870 2, 313, 267, 251 5, 829, 306 17, 263, 945, 277 6,662, 176 | 19, 577, 212, 528

8. 62 6.88 23. 10 4. 66 8. 15 15. 13 12.88

14.98

.35

7. 59

24, 094 | 1 175, 684, 785

89

1 Statistics of Income for 1921, page 5, reports that the total tax paid on the community income was $11,629,922, or 1.62 percent of the total tax of $719,387,106 collected on all personal returns for that year.

EXHIBIT A

TABLE 2

The following table has been compiled from data contained in table 4, page 68 of Statistics of Income for the year 1929:

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Arizona..
Idaho.
Louisiana
Nevada
New Mexico.
Texas
Washington.

1, 225

717 3,830

357

$15, 395, 341

6,933, 196 49, 811, 063 3,799, 442

12, 448 $60, 788, 434

9,830 38, 525, 958 35, 093

170, 713, 998 5, 174 21, 597, 783

25. 33 18.00 29. 18 17.60 20.00 34. 07 26. 55 29.92 16. 78 22. 28

Total..
California

Total.
All other States

Total..

630 14, 771

5, 372 26, 902 15, 887 42, 789

6, 175, 192 201, 873, 023

80, 247, 961 364, 235, 218 283, 564, 029 647, 799, 247

6, 874 30, 875, 636 113, 555 592, 518, 704

65, 240 302, 258, 404 248, 214 1, 217, 278, 917 309, 047

1,689, 896, 424 557, 261 2, 907, 175, 341 3, 487,066 21,893, 560, 223 4,044, 327 24, 800, 735, 564

42, 789

647, 799, 247

2.61

EXHIBIT A

TABLE 3

The following table has been compiled from data contained in table 4, page 66, of Statistics of Income for the year 1931:

[graphic][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small]

The following is taken from Statistics of Income for the year 1921, table 1,

page 38:

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The following is taken from Statistics of Income, year 1921, page 5.

Classification of income, year 1921

Income

Percent of total

0.

Total community income.
Total noncommunity income-

$175, 684, 785 19, 401, 527, 743

99.

Total income..

19, 577, 212, 528

10).

ЕхнвІт с The following is taken from Statistics of Income, for the year 1929, table 9, pages 80 to 151:

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The following is taken from Statistics of Income, year 1929, page 6:

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EXHIBIT D The following is taken from Statistics of Income, year 1929, table 9, pages 75 to 124:

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Arizona. Idaho Louisiana Nevada.. New Mexico Texas. Washington.

$28, 745, 823

18, 350, 071 107, 673, 824 14, 041, 657 18, 231, 469 333, 673, 467 174,858, 452 695, 574, 763 967, 099, 004

0.10 .02 . 36 . 14

$139, 706

40, 884 455, 064 76, 935

57, 097 2, 541, 240

$107, 574

5,161 436, 848 272, 091

60, 239 2,093, 119

$247, 280

46, 045 891, 912 349, 026

117, 336 4, 634, 359 1, 238, 044

.05

Total.. California..

576, 368 3,887, 294 5, 673, 016

661,676

1. 88
.50

3, 636, 708
9,059, 264

7,524, 002
14, 732, 280

3. 05 5. 99

Total. Noncommunity States.

Total..

1, 662, 673, 767 9, 560, 310 11,942, 322, 361 50, 488, 729 13,604, 996, 128 60, 049, 039

12, 695, 972 173, 382, 266

22, 256, 282 223, 870, 995

9.04 90.96

186, 078, 238

246, 127, 277

100.00

The following is taken from Statistics of Income, year 1931, page 6:

Classification of Income, year 1931

Income

Percent
of total

Total community income.
Total noncommunity income.

$293, 040, 437
13, 311, 955, 691

2.15 97.85

Total income.

13, 604, 996, 128

100.00

STATEMENT OF HON. FRITZ G. LANHAM, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF TEXAS

Mr. SHALLENBERGER. The committee will next hear from Mr. Lanham.

Mr. LANHAM. Mr. Chairman and gentlemen of the committee, I realize that it is time for the House to meet and I realize also that you have heard this matter presented in detail by these various gentlemen, and I should like to say a word or two very briefly with reference to the fundamental principle involved in the proposed legislation, insofar as the State of Texas is concerned. It seems to me that the crux in the consideration of a matter of this kind must be the fundamental principle, and not the incidental item of whether one State pays more tax than another State. I desire to discuss this very briefly from the standpoint of Texas, because, naturally and necessarily, I am more familiar with the law of that State than of any other.

We of Texas feel that we should have a continuation of the present practice, not as a matter of special privilege, but as a matter of right, and that right inheres in the nature, and the essence, and the substance of our property laws, and we feel that this proposal is a frontal attack upon that right.

Now, very briefly and from the standpoint purely of the principle involved, what is the situation with reference to Mr. and Mrs. Texan? When they are married, their separate property at the time of marriage remains their separate property. The income from that separate property and the income from all their endeavors becomes thereafter community property. In the usual sense, maritally, Mr. and Mrs. Texan are one person, but with reference to their property relationships, they are decidedly and distinctly two persons, because each spouse has the right to one half of all the property accumulated after the marriage. Each spouse owns that one half. It is true that the husband has control of the community property because, necessarily, in the very nature of things, someone must have charge of the administration. But it is no more equitable to charge the taxes against the one spouse who has control of the property of another than it would be to charge any agent or any administrator with the taxes upon property administered by him. Now, not only is this property half and half owned by the respective spouses, but that relationship continues; after divorce, each gets half. If one should die, either according to our statutes of descent and distribution, or by testamentary disposition, neither can be dispossessed of that half. mere right of ownership each has one half of the property; it belongs to that spouse; it cannot be taken away from that spouse. If there is any fraudulent practice in control, the courts will give the relief to the spouse that is affected thereby. And so, for the purposes of taxation, the property belonging separately and distinctly in equal halves to the two spouses, each should make a separate return of the property belonging to him or her. It seems to me that this is so sound fundamentally and as a matter of right that it cannot be questioned, and I believe that that right, under our property laws, would be upheld in the courts.

Mr. SHALLENBERGER. Do you know of cases where that thing, which you say is the crux of the situation and, as I view the matter,

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