conomists Discuss
Solution
to
State
Tax
Crisi
By MICHAEL KRAFT,
Daily Editorial Director
Revision of Michigan'O~ ax structure and a state income tax
emerged as possible.isolutions to the current tax crisis as four econ-
omists addressed yesterday's meetings of the University Press Club.
Michigan has gone through a tax crisis "periodically every few
years" and the financing has been carried out on a crisis basis. As
a result, the state has a "patchwork tax structure," Prof. Robert S.
Ford, associate dean of the graduate school told the gathering of
Michigan newspapermen as he traced the state's recent tax history.
"The old structure needs a modernization and overhaul," he
said, pointing to the state's rising population and the "greater de-
mand for governmental services at all levels."
During the dinner session of the club's 41st annual meeting, Prof.
Harold Groves of the University of Wisconsin economics department
suggested that states pressed for revenue which do not have personal
income taxes should give "top priority" to this source of funds.
Prof. William D. Ross, Dean of the Louisiana State University
of Commerce said "a change is indicated in the composition of state-
local tax structures, if they are to serve the economy most effectively.
He warned the press club's afternoon meeting that "we cannot
continue to impose tax upon tax at each level of government; weI
cannot continue to expand the relative size of the public sector of
our economy without encountering a serious danger of undermining
our private-enterprise economic system and our democratic politi-
cal institutions."
Low Income Families Hard Hit
Prof. Richard A. Musgrave of the University's economics depart-
ment said that under the existing structure, low income families pay,
in both direct and indirect state taxes, a larger proportion than those
in the middle and upper income groups.
Prof. Groves described the Michigan tax system as a "hybrid fea-
turing sales tax, franchise tax and a levy on gross receipts."
In reporting to newsmen "Who Pays Michigan Taxes," Prof.
Musgrave said adoption of a flat state income tax with standard ex-
emptions would be "highly progressive" at the lower end of the
economic scale. This means an increase in the tax load carried by
middle income families (those with incomes over three or four thou-'
sand dollars.)E
Progressive Rates Not Helpful
He said progressive, tax rates - rising as incomes rose - would
not greatly increase the effective tax burden on upper income fami-
lies but might encourage them to move from the state. For this
reason, most states have not adopted income taxes with highly pro-
gressive rates, he added.
Prof. Groves told the newsmen last night that any reform in state
tax structure should be rational and equitable for all, so "when one
man asks why his taxes are higher than those of another you can
give him an answer and a rational one."
Proposes Tax Credits
To encourage adoption of state income taxes which he had called
"top priority" he said Congress might provide that payments up to
a certain level (two or three per cent) could be allowed as a federal
income tax credit, rather than a simple deduction. Under this pro-
posal, taxpayers could deduct state income tax payments (within
Congressional limits) from the amount owed to the federal govern-
The Wisconsin economist also suggested changes in personal
property taxes by reducing or eliminating levies. on inventories and
livestock while perhaps adding property taxes on automobiles.
Additionally, he said, Michigan should take another look at the
sales tax which is its biggest single source of revenue. He -advised
more taxes on services, such as automobile repairs and less on tan-
gibles, including sales between one business firm and another, ral
than the general public,. T b
Trouble in Store
Prof. roves warned that in the near future, states face "ser
and real" financial trouble.
Behind the current state tax shueeze, said Dean Ford, are
major factors of increasing population, spreading urbanization
continuing decline in the value of the dollar.
Meanwhile, state expenditures will have to increase in order
meet the growing population's needs for public schools and hil
education, hospitals and highways, he warned.
Dean Ford pointed out that concentration of population in ur
areas increases government spending at#an accelerating rate. Urb
ization has become the predominant pattern of living today."
He traced the state's deficit and tax crises back to the 1946 C
stitutional Amendment which diverted more than three-fourths
the sales tax revenue to schools and local governments.
Dean Ford said the state's general fund deficit as of June
1958 is expected to be about 25 million dolla'rs and it might re
ment.
See TAX, Page 2
,I
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HIGHER EDUCATION
AND ALUMNI
See Pale 4
Sixty-Eight Years of Editorial Freedom
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SIXK PA
ANN ARBOR. MICHIGAN, SATURDAY, UCUTOBER 11, 15
riXrs VMINlM
I~ yaua.. a .
+[.aw "rr ' XT- 99
Vol,. I.XIXI NO., Z -
now"
Body in Quebec
Revealed as Cary
Prof. Price To Remain at Camp,
Contjnue Search Efforts for Son
By THOMAS HAYDFPN
A body recovered last week from Quebec's Nottaway River has been
identified as Robert Cary, '58E, one of two University students who
disappeared in Canadian bushland six weeks ago.
His remains will be buried today at Rupert House outpost on the
shores of James Bay.
Meanwhile the search for Cary's companion, Alan Price, '59E, is
to continue. Price's. father, Burton Tower carillonneur Prof. Percival
Price, has arranged to stay another week at James Bay and join
Indians in combing the river region. Little hope was given for finding
'Mr
In.
rid ers
Host
Navy
Toda
[op
Intersectional
SGC Board
ToConsder
Writing Code
The Student Government Coun-
cil Human Relations Board yes-
terday de'cided to look into the
possibility of drawing up an anti-
discrimination code. -
When and if it is set up, the
Board will ask the University to
adopt it as a policy statement.
Vice-Presioent for Student Af-
fairs James A. Lewis recommend-
ed the written policy, to be mod-,
eled after the Fair Educational
Practices Code recently adopted
at the University of Illinois.
Need Policy Statement
Such a statement, he said,
would give notice of "ground
rules." University policy is not
written down anywhere in one
place, hednoted,"and I do think
we need very much on this cam-
pus a statement of exactly what
our policy is."
Lewis explained that a written
code could also serve as a "check-
list" for the Human Relations
Board.
Members of the Board com-
mented tpat much of the Illinois
statement against discrimination
is already in effect at the Univer-
sity,
'Would Be Educational'
"But," Nan Murrell, '59, point-
ed out, "a written policy would be
an educational factor. It may not
do any good, but it can't do any
ha rm."
The Illinois code says that the
school will not in any way dis-
criminate "because of race, creed
or national origin." It also en-
courages non-discriminatory
practices in off-campus accom-
modations, services and recrea-
tional facilities.
It provides that room assign-
ments not be made on the basis
of race, creed or national origin.
It also encourages student social
organizations to eliminate re-
strictive clauses in their consti-
tutions and by-laws.
Pope Pius X11
Lies in State
At St. Peter's
VATICAN CITY M)-- The re-,
mains of Pope Pius XII lay in
state last night under the tower-
ing dome of St. Peter's Cathedral.
2young Price by Corporal J. A.
Dowell of the Royal Canadian
Mounted Police.
May Not Find Price
"Just how wide a search it will
be, I don't know," he said last
night. "But I don't think they're
going to find him."
He said that although little snow
has fallen in the area, tempera-
tureslhave been consistently below
freezing.
McLean Camp, at the mouth of
the Nottaway River, is scheduled
to close for the winter within ten
Lodge Say s
Stop Tests
Indefinitely
UNITED NATIONS, NY. (M-
Ambassador Henry Cabot Lodge
declared yesterday the United
States is ready to suspend nuclear
weapons tests indefinitely pro-
vided there is reasonable year-to-
year progress in other fields of
disarmament.
But Soviet Deputy Foreign Min-
ister Valerian Zorin replied Mos-
cow would agree to halt tests only
if the United States and Britain
accept an immediate ban "for all
time."
He accused the Western powers
of doing all in their power to
"barricade and block the. way"
toward agreement.
Talks May Fail
Western sources said the sharp
United States-Soviet exchange in
the United Nations' 81 - nation
Political Committee foreshadowed
possible failure of the United
States-British-Soviet talks to be-
gin in Geneva Oct. 31 on nego-
tiating a test ban.
Lodge warned that if the Soviet
Uion continues its present. tests
after Oct. 31 the United States
will call off its own one-year test
moratorium.
Offers To Suspend Tests
He asserted the United States
offer to suspend tests is not con-
ditional on existence of an entire
disarmament plan.
"We ,will suspend tests for one
year without controls unless the
Soviet Union continues testing in
that period," he said.
"And we are ready to extend
our suspension indefinitely each
year as long as we know that an
inspection system is working, and
we are making reasonable pro-
spects on other aspects of dis-
armament."
*Challeng
/
Teamis Plagued
BYKeyInjuries
All-American Prospect Riefsnydei
Michigan's McNitt To Miss Game
By SI COLEMAN
Asciate Sports Editor
Navy will place a 10-game winning streak on the line when
opposes Michigan today at 1:30 p.m. in the Michigan Stadium.
The game, which promises to be one of the top intersections
battles of the year, is the seventh in the series which began in 192
Michigan has won three, Navy two, and there was one tie,
Tackle Injured
Both teams will not be at full strength. Navy's prospective A
American, Bob Reifsnyder, has missed the Midshipmen's first tic
games of, the season because of a severely bruised Achille's heel. T
outstanding tackle made the trip'
-Daily-william Kimball
PRE-GAME PREPARATION-Navy's unbeaten football team enjoyed a steak dinner in an Ypsilanti
hotel after working out in the Michigan Stadium yesterday. The midshipmen will stay in Ypsilanti
until game time and return to Annapolis immediately after the Michigan-Navy football game.
U.S. Agrees
To Parleys
WASHINGTON (P)--The United
States agreed yesterday to East-
West talks starting Nov. 10 on
ways which might be adopted tor
guard against surprise attack on
any nation.
The talks will be technical. If
agreement should be reached that
it is feasible to set up an effective
warning system, political nego-
tiations aimed at putting it into
effect presumably would follow.
This would follow the = pattern
set by international negotiations
aimed at ordering into effect a
ban on nuclear weapons testing
under worldwide inspection safe-
guards.
Scientists meeting at Geneva
reached East-West agreement last
summer that such a workable con-
trol system is technically feasible.
Unemployment Decline
Continues in September
WASHINGTON (IP)-Another recession death pang was recorded
yesterday with word that unemployment declined by 588,000 in
September.
This matched a similar decline in August. The August drop was
expected, but the September improvement was twice the customary
seasonal change, and the Septem-'
ber data showed solid gains in Ca e
hard-hit factory employment. Polio Cases
President Dwight D. Eisenhower ,,
hailed the report as indicating a Rise in Detroit
noteworthy improvement in the
employment picture at a -time DETROIT O) - Two more
when the cost of living has been deaths were attributed to the De-
relatively stable. troit area polio epidemic yester-
Perhaps with an eye to the day, bringing the total for the
November elections, President year to .19.
Eisenhower said in a statement The city has reported 561 cases
issued at Gettysburg that there while the total for the city and
are good reasons to expect con- Wayne County now is 733. At
tinuing economic recovery in the this time a year ago Detroit had
months ahead. 174 cases.
ROBERT CARY
. . . found dead
days, Dowell disclosed.'
Prof. Price may remain at the
camp until that time, he added.
Cary Drowned
A district coroner who flew into
the bush last Sunday with the
search party, reported Cary had
drowned approximately a month
and a half ago.
Cary's father, Robert Cary of
Roselle, Ill., left Moosanie, Ont.
yesterday, apparently heading
back to the United States, accord-
ing to Dowell. He had arrived in
Moosanie two days ago.
See BODY, page 2
Lawyers Stop
Own Motion
NORFOLK (P)-Attorneys for
17 Negro pupils yesterday with-
drew a motion to reopen Norfolk's
six integration-closed schools after
a federal judge said he would dis-
miss it because "the proper
parties" were not made defend-
ants.
Oliver W. Hill, attorney for the
National Association for the Ad-
vancement of Colored People,
to Ann Arbor but is not expected
to even dress for the game.
Michigan will definitely be lack-
ing the services of sophomore
halfback Gary McNitt. The con-
dition of two linemen, Willie
Smith 'and Tom Jobson, make
the possibility of either of them
playing very doubtful. Late yes-
terday afternoon,. Michigan line
coach Jack Blott said, "I doubt
very much whether Jobson will
play. Smith might see some ac-
tion."
Navy Undefeated
Today's game is the third con-
test of the season for both teams.I
Navy defeated William and Mary,.
14-0, in its opener, and last week7
easily rolled over Boston U., 28-14.
Michigan has won one and tieda
one thus far.
Predict Defensive Battle
Today's game may very well7
turn out to be a defensive battle.
Both lines are big. Navy's forward
wall, despite the absence of Reif-
anyder's 240 pounds, still aver-
ages 200.
The probable starting lineup for
the Midshipmen will have ten let-
termen in it. Right tackle Ronald
Erchul is the only non-letter win-
ner in the starting lineup.
Tranchini Stars
Navy's offense -willundoubtedly
be centered around quarterback
Joe Tranchini. Tranchini, in only
two games this season, has proved
what a capable passer he is. He
has completed 21 passes of 36 at-,
See WOLVERINES, page 6
lBagwell Backs,
Labor Rights
Republican candidate for Mich-,
igan's governorship Paul D. Bag-{
well said that as governor, "I will
never sign any law which does,
not fully protect the rights of
labor or which attempts to inter-
fere with the right to organize
and bargain collectively."
Speaking to a union convention,
West Urges
Cease-Fi re
Extension.
WARSAW (A'-- The Unit
States yesterday urged Red Chit
to extend the cease-fire at Qu
moy, authoritative sources said
Whether Red China agreed w
a deep secret.
The cease-fire ordered by t
Peiping government last. weekei
is technically due to expire
midnight tomorrow.
United States Ambassador Z
cob Beam andChinese Comm
nist Ambassador Wang Ping-Na
met for two and one-half hot
in a, palace ;here.
Afterward, all they would a
was that they had agreed to me
again next Wednesday.
Many diplomats concluded ti
continuation of the meetin
meant the shootings would not
resumed in the meantime.
But skeptics pointed out th
yesterday's seventh session w
the only one the two have he
without guns blazing and sa
there seemed no reason to belie
continuation of the talks depen
ed on continuation of the ceas
fire.
The Chinese Communists we
still pressing for an immediE
evauation of Uited States mi
tary might from the Formc
Strait area - which in effe
would mean -the abandonment
Chiang Kai-Shek.
While the two ambasssd
were dickering on questions whi
could mean= war or peace in tl
far Pacific, top directors of t
Communist Warsaw Pact we
gathering in this Polish capit
Quemoy Gets
Trann'_ Gjiu~
NUTTING OUTLINES SURVIVAL PROGRAM:
West Needs All-Out Political-Econonic Offensive.
By JEAN HARTWIG
Establishment of a trans-Atlantic free trade area and payment
plan combined with an all-out political-economic offensive are neces-
sary for the survival of the Western world, according to Britain's
ex-foreign minister, The Right Honorable Anthony Nutting.
"Russia is out to win the uncommitted nations of the world by
selling them its goods and services," he said yesterday in a lecture
"Resources for Survival."
NATO Machinery 'Inadequate'
Calling the present NATO machinery "totally inadequate" for an
all-out directed political-economic offensive in Western Europe, he
said the free countries must organize, synthesize and cooperate to force
the Russians to the defensive.
"If the West is to surmount the, Communist challenge, I believe
that productive capacities will have to be joined together in a free
trade area embracing the whole Western world," Nutting said.
Citing such a movement among six countries of Europe, he ex-
. . .