Stores Corp., Kline Bros. Co., who formerly operated fur departments, which were a source of supply of fur wearing apparel, and especially of moderatepriced fur wearing apparel for the entire country, have discontinued their fur departments and have given up the attempt to sell furs.

The industry is threatened with extinction. The production of fur garments is not a highly mechanized or production-line industry. Essentially, the manufacture of fur wearing apparel involves creative skill and individual artisanry. Producing units for the most part are small, low capitalized organizations. Continuous losses by reason of curtailed output and by reason of insolvencies, etc., as above set forth, and the continuance of overhead and operating costs despite shrunken production and sales volumes, have so undermined the capital structure of the industry as to have compelled producing units to pool their resources and combine their shrunken capital in order to be able to continue to operate at all. The end is in sight and if this narrowing-down procedure is to continue any longer, there will result a complete disintegration of the industry; an economic, industrial, and social disaster, which is not pleasant to contemplate.

POINT V. THE REPEAL OF THE 20-PERCENT EXCISE TAX ON FURS WOULD IMMEDIATELY RESULT IN A SUBSTANTIAL FLOW OF REVENUE INTO THE UNITED STATES TREASURY

At first blush, this statement seems paradoxical. Even though the receipts from this tax in 1952 amounted to only about $50,000,000, the repeal of this tax would apparently result in the loss of that revenue to the Government. Why, then, do we take the position that the elimination of this tax would result in an increase, rather than a decrease in revenue?

The answer is to be found in the following facts: Consumer sales resistance, which is the cause of the deplorable conditions that prevail in this industry, would fall away with the repeal of this tax. The dammed-up purchasing power of consumers throughout the country who have refused to buy fur garments so long as they were subject to this tax, would manifest itself in increased sales, thus restoring to this industry its normal operation, giving those engaged therein a measure of prosperity and restoring employment to tens of thousands of unemployed workers in the industry.

Profitable business and sustained employment would result in the payment of income taxes, both Federal and State, would terminate the drain on unemployment insurance funds by workers in the industry who are now without employment, and the added drain on welfare funds by those workers who are ineligible for unemployment insurance benefits because they have not had sufficient work in the last several years to meet the minimum contribution requirements of such funds.

As against the loss of $50,000,000 in revenue to the Federal Treasury if the tax is repealed, that is, the equivalent of the amount collected in 1952 as the fruit of this tax, we estimate the following returns to the Government from the collection of income taxes and the savings from unemployment and welfare disbursements:

The difference between the revenue realized by the Government from the collection of this tax in 1947 and the collection for 1952, is about $50 million. This indicates a loss in dollar volume of sales of about $250 million.

On the basis of an average aggregate income tax of 20 percent of this amount (predicated on the ratio of tax percentage to national income, it should be slightly higher), the income tax on this amount is $50 million, thus equaling the amount of the excise-tax loss.

In giving effect to this figure, it must be borne in mind that $250 million in dollar sales volume, based on 1947 values, would be substantially increased in computing material prices and labor costs at 1953 levels.

Also, effect must be given to the fact that the repeal of the 20-percent excise tax on furs would result in the elimination of the unfair competitive basis which now exists with respect to cloth coats and fur-trimmed cloth coats, thus adding substantially to the volume of fur sales.

To the increased taxes which would thus accrue to the Government must be added the savings in unemployment insurance and welfare payments which are now being disbursed to thousands of unemployed fur workers.

It is apparent that the Government will realize more revenue from the repeal of the 20-percent excise tax on furs than it will from the failure to do so, and that in the words of Senator Johnson of Colorado, “* this is a case in which the Government is taxing itself out of taxes."

POINT V

The 20-percent excise tax on the sale of furs should be eliminated.
Respectfully submitted.

Dated New York, August 6, 1953.

ASSOCIATED FUR MANUFACTURERS, INC.,
J. GEORGE GREENBERG, Executive Manager.

MANFRED H. BENEDEK, Counsel.

Mr. BENEDEK. Mr. Samuel Schulman, president of the Associated Fur Manufacturers, Inc., desires to make a brief oral statement, if you please, sir.

The CHAIRMAN. We will be very glad to hear you, sir.

Mr. SCHULMAN. Gentlemen, if you will bear with me, I might be repetitious, but it is because there are actual facts and they might bear repetition here.

The members of the fur-manufacturing industry make this appeal to the Ways and Means Committee of the House of Representatives to make provision for the repeal of the 20 percent excise tax on furs, in any new internal revenue bill or in any amendments to the existing internal revenue law.

The unjust and discriminatory nature of the 20 percent excise tax on furs has been discussed so much, and so much has been said and written about this unfair and unreasonable tax, that I am sure that the members of this committee are thoroughly familiar with these considerations, and I am not going to burden you with a repetition of these considerations.

The fact that furs are the only articles of wearing apparel which are subject to an excise tax, the fact that cloth garments, which are sold in competition with furs are tax free, the fact that cloth garments even when richly trimmed with expensive furs are still tax free, the fact that furs are rated as luxuries along with jewelry and cosmetics and taxed accordingly while costly evening gowns, costumes, negligees and a score of other items which unquestionably belong in the luxury classification are free of tax-any one of these would be sufficient reason to urge the repeal of this tax.

However, the fur-manufacturing industry is confronted with an economic reason for urging this relief which is more vital and more urgent than any or all of the others.

The consumers have become tax conscious and sales resistance to the purchase of fur garments and the payment of the 20 percent excise tax on furs has reached the point where it is almost impossible to sell fur wearing apparel. Sales volume has declined by 50 percent in the last 5 or 6 years. Insolvencies, voluntary dissolutions, and so forth have cut down the number of manufacturers by one-third. Many of those who remain have suffered impairment of their capital and have been compelled to consolidate in order to be able to stay in business. About 40 percent of the workers in the industry are unemployed, most of them collecting unemployment insurance or relying upon welfare agencies for support in those cases where they have not had enough work in the preceding year to be eligible for unemployment insurance. The revenue received by the Government from the collection of the 20 percent excise tax on furs has declined from close to $100 million in 1947 to about $50 million in 1952. The situation has reached a point where the repeal of the tax and the resulting boom in the industry would yield a larger amount of revenue to the Government in in

creased income taxes from all branches and levels of the industry which, coupled with the savings by the Government in unemployment insurance nad welfare payments, would exceed the rapidly diminishing receipts from the collection of this tax.

A recent survey of the New York State Department of Labor shows that approximately 25 percent of fur-production workers will be ineligible for unemployment insurance because they have worked less than 20 weeks. Therefore, these workers will have to go on home relief, old-age relief, and other forms of State and Federal aid. In 1950, 10 percent of all the workers in the industry earned less than $500; 10 percent earned less than $1,000; and 20 percent earned less than $2,000.

The situation in the industry has had its effect on the fur farmers and the fur trappers, of whom there are hundreds of thousands in the United States. According to data furnished by the Wildlife Service of the Department of the Interior, about 25 to 30 million pelts are annually produced in this country. Figures of this department show that in the State of Louisiana, there was a drop from 5,800,00 pelts in 1947 to 1,011,000 in 1951; in Kentucky, a drop from 300,000 to 86,000 pelts; in New York, from 193,000 to 90,000; in Pennsylvania from 500,000 to less than 100,000; in Kansas, from 124,000 to 62,000, and in Missouri 236,000 to 138,000.

Mr. SIMPSON. Do you have any figures there indicating how much the imports of pelts has dropped in a comparable period?

Mr. SCHULMAN. No; but, Mr. Greenberg, do you have any? Mr. GREENBERG. Russian imports dropped from 1946 which was $68 million to last year a figure of $12 million. That is from Russia alone. I do not have the other countries.

Mr. SIMPSON. I thought we had an embargo on those.

Mr. GREENBERG. On certain furs only.

Mr. SIMPSON. Do we allow them to come through yet?

Mr. GREENBERG. These are Department of Commerce figures.

Mr. SIMPSON. We allowed some to come through, $12 million worth, from Russia?

Mr. GREENBERG. Yes, sir.

Mr. SIMPSON. We have to help the Russians out, I guess.

Mr. BENEDEK. The embargo was confined to furs in the raw state; it does not cover furs in any state of fabrication.

Mr. SIMPSON. They got dollars out of it-that is what I mean.
Thank you, sir.

Mr. SCHULMAN. Mr. Greenberg, the executive manager of the association, and Mr. Benedek are here to furnish statistical and factual information with respect to the circumstances of the industry and the effects of the tax and to answer any questions which the members of the committee may see fit to ask. I can only urge upon you gentlemen to give consideration to the plight of the industry and the urgent need for relief.

Thank you very much.

The CHAIRMAN. We thank you, sir, very much—each of you. Now, we will hear Mr. Greenberg.

Mr. GREENBERG. Mr. Chairman, my name is J. George Greenberg. I am the executive manager of the Associated Fur Manufacturers. My remarks will be brief because I know that you and the members of your

committee are more than familiar with our situation and that a lengthy appeal and description of our desperate plight is not necessary.

Much of the information that I have has been entered in the record in our memorandum and in other speakers' remarks to the committee. It has been stated before the collections of income tax have dropped 50 percent, and the first 5 months of 1953 show a drop of 22.9 as compared to 1952. In other words, we are reaching the point of diminishing returns. In addition to the Department's figures of fur manufacturers' income tax returns which show that almost 50 percent of over a thousand returns processed have reported net losses, unemployment insurance in the State of New York for 1952 for fur workers reached a total of $5 million.

In our industry, we have a welfare fund maintained by payroll contributions by the employers and administered jointly by the union and the employers' association, pursuant to the terms of a collective agreement. The records on this fund disclose that total earnings of workers and actual working time have been declining consistently, and that whereas in 1947 earned wages for productive workers amounted to $42.7 million, in 1952 they dropped to $31 million. The aggregate loss of wages to workers in that period amounts to $26 million.

It may be of interest to note that the number of workers in the industry has declined, according to figures compiled by us, by 25 percent, and that a corresponding drop in the wages of workers in other branches of the industry and in related fields brings the total cumulative wage loss to $43 million for that period.

The problem of the industry is very simple and very real. Over 50 percent of the trade is operating at a loss and a great many old and well-established firms have given up operations completely. Some of the largest have now become the smallest. Many have cut their working staffs from one-half to two-thirds, thus creating more unemployment. In fact, our own membership figures are the best indication of the general trend. Our peak in 1944 was 738 members. In 1952, it dropped to 570 members. The average number of workers employed in the factories of our members has dropped from 111⁄2 in 1947 to about 8 today.

As of this moment about 50 percent of the workers are employed and even of this number a large proportion are only working part time in a period which is normally the height of our production

season.

Projecting these figures over the country as a whole would show a loss of income to the Government from the lack of earnings of workers and from the loss of corporation taxes and individual employer income taxes, which in the aggregate would more than offset the loss of the fast-diminishing returns from the obnoxious 20 percent excise tax-a war measure, outmoded, illogical, and destructive of business.

These are only a few spot checks of the conditions that are being brought about by this discriminatory tax. As an industry, we have the ability, the capacity, and the desire to contribute more revenue to the Government as well as the means to a livelihood, if the Government will give us the opportunity to work on a full scale, help us to break the barrier of the public's refusal to buy our product so long

as it must pay, as an additional charge, the 20 percent excise tax, for the privilege of owning a fur coat.

Thank you.

The CHAIRMAN. All three of you gentlemen made a fine presentation, and we thank you.

Mr. GREENBERG. Thank you, gentlemen.

The CHAIRMAN. The next witness is Mr. J. H. Wishart, research director, International Fur and Leather Workers Union. Mr. Wishart, if you will give us your name and the capacity in which you appear, please.

STATEMENTS OF JAMES H. WISHART, RESEARCH DIRECTOR, INTERNATIONAL FUR AND LEATHER WORKERS UNION, NEW YORK CITY, AND SAMUEL MINDEL, MANAGER, LOCAL 2, FUR AND LEATHER WORKERS UNION

Mr. WISHART. My name is James H. Wishart, research director of the International Fur and Leather Workers Union, 251 Fourth Avenue, New York City.

Our statement will be presented by Mr. Samuel Mindel, manager of local 2 of the Fur and Leather Workers Union and a member of the international, accompanied by Mr. Ben Paskoff, education director of the Joint Councils of New York City.

Mr. MINDEL. This statement is made in behalf of the International Fur and Leather Workers Union of the United States and Canada on fur and luggage excise taxes to the House Ways and Means Committee. Gentlemen, the Federal excise tax has created heavy problems for many of the industries upon which it has been imposed. It has put industry after industry at a competitive disadvantage in the hardfought race for available consumer dollars.

For the American fur industry, however, facing a number of grave problems of its own, the continuing levy of a Federal excise tax has become something more than a competitive handicap. It has come close to being an industrywide death warrant.

In this period of nationwide prosperity, with national income breaking all records, the fur industry is in acute depression-in many ways more severe than the economic catastrophes of 1932 and 1933.

Between 1947 and 1952, while total consumer spending in this country increased by more than 35 percent the total of dollars going to the fur industry declined by 40 percent. In 1947, about $3.10 out of every $1,000 spent by consumers had gone to fur sales. In 1952, the fur industry received only $1.42 out of every $1,000 spent by consumers. For the thousands of workers and employers in the industry the picture is one of even sharper danger than such dollar totals by themselves would indicate. Until recent months sales of high dollar value mink coats had been expanding. But production and sales of the industry's bread and butter lines-the fur coats worn by wives and daughters of workers and farmers-have been almost wiped out. Facing the competition from the big producers of cloth coats-who are burdened with no excise tax-hundreds of small firms producing fur coats at popular price levels have either been forced out of business entirely, or into frantic efforts to subsist on an occasional sale of mink coats.