Page Twelve 



THE I. A. A. RECORD 



February, 1933 



Smith 



(Continued from page 11) 



Company, were to be distributed, after 

 the payment of stock obligations, ac- 

 cording to tiie provisions of a contract 

 running between the Illinois Agricul- 

 tural Association and the Illinois Agri- 

 cultural Holding Company. These con- 

 tracts were duly presented, considered 

 and approved by the delegates and 

 stockholders in attendance at previous 

 annual meetings of the Illinois Agricul- 

 tural Association and the Illinois Agri- 

 cultural Holding Company. 



"The real purpose of this Holding 

 Company is to provide a legal way in 

 which excess savings and earnings ac- 

 cruing from Its ownership of stock in 

 Country Life Insurance Company can 

 be distributed to Farm Bureau mem- 

 bers holding policies in Country Life, 

 and to holders of the First Special poli- 

 cies issued by the company immediate- 

 ly after its organization. 



"I am particularly pleased to report 

 that the board of directors of the Illi- 

 nois Agricultural Holding Company, at 

 its last meeting, authorized the distri- 

 bution of $48,000, according to the terms 

 of the agreement mentioned, which will 

 be distributed in the very early future. 

 Such a distribution coming at the end 

 of a period such as we have been pass- 

 ing through again furnishes proof as 

 nothing else could, as to the soundness 

 of and great possibilities In organized 

 effort. The Holding Company occupies 

 a peculiar position. Ordinarily we think 

 of a holding company as an organiza- 

 tion set up for the purpose of absorb- 

 ing excess earnings resulting from its 

 stockholdings. Our Holding Company 

 is set up to make possible a legal dis- 

 tribution of all earnings over and above 

 cumulative dividend requirements. 



"I cannot refrain from expressing a 

 feeling of satisfaction and pride at the 

 achievement of these various business 

 service corporations operating under the 

 general management of the Service 

 Company. In a large measure credit for 

 the continued success of these com- 

 panies is due to the active and aggres- 

 sive attention given to the affairs of 

 each comnany by its active manager, 

 and by others participating in different 

 degrees of responsibility. 



"I do not hesitate to say most defi- 

 nitely that the results obtained by each 

 company and the splendid relationship 

 existing between companies and their 

 active management fully justify re- 

 peated statements I have made to an- 

 nual meetings of the Illinois Agricul- 

 tural Association, that the Illinois Agri- 

 cultural Service Company Is essential 

 as a safeguard to the progress of each 

 companv and In addition, assures a 

 proper balance between business serv- 

 ices and co-ordination of all efforts." 



State Legislation 



Reviewing the passage of the income 

 tax act and the subsequent adverse 

 opinion of the State Supreme Court as 

 to Its constitutionality in which the 

 court held that "income" is "property," 

 he said: "I recommend, therefore, that 

 the delegates take action authorizing 

 and directing the oflficers and board of 

 directors of the Association to Immedi- 

 ately seek full application of the prin- 

 ciple of law (place incomes on property 

 tax rolls and relieve tangible property 



thereby of one-fourth its tax burden) 

 as laid down by the court in this de- 

 cision." 



Mr. Smith also advocated revenue re- 

 form to spread the base of taxation, and 

 reviewed unemplojnment relief measures 

 and the $20,000,000 bond issue which due 

 to the I. A. A.'s axjtive support and the 

 co-operation of other groups was 

 passed. As a result, Illinois farms were 

 relieved of $5,000,000 additional taxes in 

 1933, a saving of approximately $25 per 

 farm. 



On the question of a state sales tax, 

 he said: "We believe the sales tax pro- 

 posal now pending in the General As- 

 sembly to be unfair and unsound, par- 

 ticularly in its provision for distribution 

 of the revenue derived therefrom. We 

 believe that any law providing new 

 sources of revenue should insure its full 

 use to reduce or replace taxes now lev- 

 ied upon property. We are told by the 

 defenders of this bill that It Is a tem- 

 porary measure and will be repealed as 

 soon as the Government can be relieved 

 of responsibility ior taking care of the 

 large number of unemployed. History 

 discloses, however, that when we pro- 

 vide new sources of revenue for tem- 

 porary purposes, they usually become 

 permanent and seldom, if ever, are re- 

 pealed. 



"When new sources of revenue are 

 provided, we believe that such revenue 

 should be distributed fairly among the 

 various counties of the state. Certainly 

 no one can defend the fairness of a 

 sales tax that enables Cook County to 

 use all of the revenue collected therein. 

 On the surface, such a proposal may 

 seem fair, but only casual information 

 forces one to other conclusions. A sales 

 tax Is ordinarily not paid by the seller 

 of goods, but by the consumer. Our 

 large mail order houses ship goods to all 

 portions of the State but would pay 

 sales taxes thereon in Cook County. 

 But who pays the tax? It Is usually 

 consumers of the wares and goods sold. 

 I am Informed on good authority that 

 more than 90 per cent of the tremen- 

 dous sales at retail by the mail order 

 houses of Chicago are made to people 

 in other regions than this great metro- 

 politan county, a very large part of 

 them In the State of Illinois. . . . 



"I believe we should immediately seek 

 substantial reductions in maximum tax 

 rates for each unit of government in 

 the State of Illinois. In addition, I be- 

 lieve all minimum fees and salaries pro- 

 vided by statute for officers and em- 

 ployees of county and lesser units of 

 government should be repealed. Until 

 such reductions are accomplished, I see 

 no way of bringing about substantial 

 economies in the cost of our local gov- 

 ernments. 



"We must realize that after securing 

 every economy of government that Is 

 in the realm of possibility, we must 

 still find new sources of revenue If we 

 are to remove from property Its unjust 

 portion of the cost of government. 



"It seems that the time has arrived 

 for the enactment of a state-wide sales 

 tax. We must face the situation square- 

 ly, and see to it that the provisions of 

 such a tax are equitable and fair and 

 conform to the principles of taxation 

 for which this Association has fought 

 in the past. 



"Therefore, I recommend to this an- 

 nual meeting its approval of a state- 

 wide retail sales tax of two per cent on 

 all commodities except food and food 



products, with the understanding that 

 any such measure, to have our support, 

 must provide for the division of the 

 revenue therefrom in a manner similar 

 to that worked out by the 57th General 

 Assembly for the distribution and use 

 of revenues derived from state income 

 tax. So far as we are informed, no one 

 has ever questioned that the provisions 

 of this plan adequately insure the full 

 use of new revenues to replace taxes 

 levied on property. 



"In order to provide temporarily for 

 our unfortunate among the unem- 

 ployed, I believe we would be justified 

 in approving a provision that In the 

 year 1933 or 1934, any portion or all of 

 the fund so allocated to any county 

 may. by a two-thirds vote of Its county 

 board, be used for the purpose of tak- 

 ing care of its unfortunate. The provi- 

 sions of statutes such as I have de- 

 scribed would make the sales tax a re- 

 placement tax, and would provide a 

 way by which such revenue could tem- 

 porarily be used to meet urgent need 

 for relief of unemplosmient in any 

 county of the State." 



Pointing to the enormous tax delin- 

 quency in Cook county which owes the 

 state $22,000,000 and soon will owe $17,- 

 000,000 more. Smith said: "It is time to 

 impress the leaders of Cook County 

 with the fact that a depression exists 

 in all of the other counties of the state, 

 and that not only is each county forced 

 to practice strict economy, but Its citi- 

 zens are making every effort to keep all 

 their governments in operation by the 

 pavment of taxes. They must not be 

 called upon to assist great metropolitan 

 centers, either because of tax delin- 

 quencies bv individual taxpayers or be- 

 cause local government in one county 

 h«is failed in its obUgations to the State 

 of Illinois. 



"It Is conditions of this and similar 

 kinds that demand eternal vigilance on 

 the part of the organized farmers of 

 Illinois, and thev are entitled to and 

 should receive the co-oneratlon of all 

 downstate units of government, all 

 other citizens and particularly all home 

 owners and other property taxpay- 

 ers. ..." 



National Legislation 



V 



Summing up the efforts of organized 

 farmers over a ten year period seeking 

 government recognition of the agricul- 

 tural situation, he said: "Your Associa- 

 tion has repeatedly and continuously 

 Insisted that the longer we delay a 

 sound, adequate and permanent solu- 

 tion of our steadily Increasing surplus 

 problem, the more serious would be- 

 come Its effect upon all lines of Ameri- 

 can Industry, and that sooner or later 

 such neglect would undermine the eco- 

 nomic structure of the nation. We all 

 know that such a condition now pre- 

 vails." 



He traced the decline of net farm 

 Income from nine and a quarter billion 

 dollars In 1920 to less than one billion In 

 1932; showed how taxes had mounted 

 and farm Indebtedness multiplied dur- 

 ing this period. 



"Other coimtries have had the genius 

 and courage." he said, "to adopt policies 

 that bring fair returns to their farmers 

 while the United States, richest In nat- 

 ural resources of any, has been stand- 

 ing Idly by. 



"As a result of national policy based 

 on legislation, wheat In November, 1931. 



