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October 23, 1959 - Image 1

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Publication:
The Michigan Daily, 1959-10-23

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Jr

Seventieth Year of Editorial Freedom

E it

CLOUDY, MID
High--70
Low'-47
Scatterd showers
iexpected tonight.

FIVE CENTS

ANN ARBOR, MICHIGAN, FRIDAY, OCTOBER 23, 1959

FIVE CENTS

S

4,r_!

$300,000 Daily
Professor Says Total Bill to State
Could Run $80 Million This Year
By THOMAS KABAIXER
The State of Michigan will lose $300,000 daily in tax revenues as
a result of the state supreme court's ruling that the Use Tax is un-
- constitutional, according to Prof. Harvey Brazer of the economics de-
partment.
Prof. Brazer said that revenues would be lost at this rate until the
legislature takes action by passing a new tax measure. The loss could
total as much as $75 to $80 million this fiscal year, if nothing has
been done by then.
Have Bills'
State Senator John P. Smeekens (R-Coldwater) said, however,

that the state's financial crisis is
U' Officals
.e r
: Say Nothing
On Deeision
University officials released
statement yesterday saying the
will have no comment on the ef
ects of the use tax decision unt
after the Regents' meeting today
However, the University pre
sumably faces the same "threat o
payless paydays" whieh Michiga
,State University President Joh
A. .Hannah yesterday told th
schools Board of Governors h
foresees for MSU.
Word that the State Supren
Court had declared the use tw
increase unconstitutional reache
the Board meeting just as th
trustees were discussing finance
Faces Threat
,"By using every cent of stu
dent fees collected in Septemb
we can meet our October payro
due next week," Hannah sai
"But without additional mone
we face a payless payday in No
vember.
F - Hannah criticized state officia
for what he termed "a. practic
of balancing the,state's books a
the expense of the universities."
"We are in for chaos unless th
Legislature acts quickly to find
new source of revenue," he adde8
Supports Schools
Both MSU and the Universit
are state-supported. Includin
Wayne State , University, the
monthly allotment from the stag
totals $6,500,000.
So far this month none of th
schools have received the Octobi
payment. Expected at the Stal
Administration Board m e e t i n
Tuesday, news of the already
delayed payment did not come.
At that time State Treasure
Sanford Brown said, "We hope w
will be able to pay, the univers
ties before the end of the month
and Vice-President for Busines
and Finance Wilbur K. Pierpo
said, "We expect to receive pay
ment."
'Anticipates' Payment
Yesterday acting governor Joky
B. Swainson, reported he "antic
pated' 'the state would finally re
lease the payment at the Stat
Administrative Board m e e t i n
next week.
However, the use tax decisic
puts the state back in its positic
of approximately a year ago -
when it had a defliciency of cas
-to pay out for operating expense
throughout the state. Only no
the deflicesicy has risen to near:
$100 million.
The University borrowed iron
the banks to meet its payroll fo
the first time last December. Ii
January, with little help agal
from the state treasury, it ,bo
rowed a larger amount, and con
tinued to do so throughout mo
of the spring semester.
The state finally paid back. th
University in June.
Murphy Sees
Berlin Crisis
Easing, Soon

only as serious as the state adminis-
tive board and Gov. G. Mennen
Williams are willing to let it be-
come. "They have a number of
bills, which the legislature in their
wisdom have passed," he said. He
called on the Governor to issue a
mandate to state agencies to cut
spending .to a- reasonable level in
view of anticipated revenues.
He also said Williams should
present a plan for solving the
state's crisis to the legislature as
a soon as possible.
y Williams, arriving from a four
- week trip abroad, called the finan-
" cial difficulties "the sad results of
y. the power of politics of a small
- group of Republican senators who.
f hold veto power over all legisla-
n tion."
n 'Created Mess'
le He added that the Michigan Re-
ie publicans "created the mess."
Prof. Brazer noted that a variety
ie of alternatives are open to the
x legislature. He felt that an in-
d come tax levied at a flat rate would
1e be most desirable. This would
s yield about $140 million in reve-
nue.
- The next best alternative, ac-
er cording to Prof. Brazer is a state-
ll wide referendum to change the
d. constitution and increase the sales
ay tax to four per cent. This would
-- make the use tax legal under the
state constitution.
Js , Worst Solutions
ce He said the worst of all possible
at solutions would be for- the legisla-
ture to cut back expenditures by
e a sufficient amount to make up,
a for the lost revenue. This would
mean as much as a $70 million
cut this fiscal year.
"This would set the state back
y so far in the provision of neces-
g sary services as to produce ex-
ir treme hardship in many cases -
te higher education, mental health,
hospitals, public safety, recreation
e -go down the list, and you've got
er it," he said.
te The Citizens Research Council
g called on Williams to make such
y cuts in appropriations. The Coun-
cil is a privateorganization, mak-
er ing research in governmental af-'
we fairs. a
1i During the early months of this
," year, the crisis became so acute
ss that the University was forced to
nt borrow funds to meet its payroll.

Stop
Court Dela
Taft-Hartley
Enforcemeni
PHILADELPHIA (JP) -- Thr
federal judges, delaying inde
nitely enforcement of a Tai
Hartley injunction against stri
ing steelworkers, were asked.l
the union yesterday to throw c
the writ altogether as uncons
tutional. -
As the hearing progressed b
fore the panel of jurists drav
from the seven men of the U,
Circuit Court of Appeals, the 1C
day-old strike continued pendii
a ruling on the validity of the 8
day injunction.
The writ was issued in Pitt
burgh Wednesday by Judge He
bert P. Sorg' of -the U. S. Distr
Court.
Hears Arguments
The appeals court heard arg
ments on two points:,
Is the injunction granted unC
Taft-Hartley illegal?
Is the strike of 500,000 ste(
workers endangering the nation
health and safety?
Arthur J. Goldberg, chief a
torney for the United Steelwor
ers, said "yes" to the first que
tion, "no" to the second.
The government said just t
opposite.
Arguments Finished
With the union's argumer
completed except for rebuttal a
the government's side present(
the Circuit Court could make1
its mind by the end of the d
This is not considered too like
however, since the judges a
known for taking plenty of til
reaching decisions.
Whatever the finding, it w
not settle the issue. Both the st
industry and the union have in4
cated they will go all the way
the United States Supreme Cot;
if necessary.
Goldberg told the judges-Jo
Biggs, Jr., William H. Hastie a
Herbert F. Goodrich that the gc
ernment obtained the injuncti

Steel

Action-

MACDONALD READS-The head of the United Steelworkers
reads-and the world listens for the news which he will play a
part in deciding. The steel strike is now 100 days old. How much
longer it will last is up to MacDonald, the steel industry, and the
courts.

USE TAX:
Merchants
To Cease
Collection
By NAN MARKEL
TheAnn Arbor Chamber of
Commerce mailed a letter last
night directing its members to
"discontinue immediately collec-
tion of the one per cent use tax."
Acting only "in service to the
membership" and not at the re-
quest of the state, chairman of
the Chamber Lawrence H. Quimet
advised local merchants:
"You, the merchant, must report
and pay to the Michigan State
Department of Revenue the extra
one per cent use tax collected
through yesterday."
'State Agents'
Merchants act as "agents of the
State" in tax collection. Legally,
they hold the monies in rust for
the state. State law provides that
no one but the state may benefit
from tax collections.
Oumet's letter continued, "You,
the merchant, are not authorized
to make any refunds to the cus-
tomer for the tax already col-
lected."
"Any such request must be di-
rected to the department of reve-
nue. They will -issue specific in-
structions to the public in the
next couple of days on how to
apply for thsee refunds."
Advises Return
He concluded by recommending
to the merchants a return t: the
sales tax brackets previously in
use-no tax on one to 16c pur-
chases, a penny on 17 to 49c pur-
chases, two cents on 50 to 83c
purchases, three- cents on 84c to
$1.16 purchases and four cents
tax on purchases from $1.17 to
$1.49. From here the rate repeats
as it goes up.
Meanwhile in Lansing the out-
look for refunds was dim-,
"A consumer will have to fur-
nish plenty of good proof before
we'll give him a refund,". State
Revenue Commissioner Louis M.
Nims said yesterday. He added it
will be some time before any re-
funds are made.
Must Verify
"Consumers will have to verify
their payments by showing the
state revenue bureau i bill of sale
stating purchaser, seller and date
of sale," Clarence W. Lock, deputy
state revenue commissioner, ex-
plained.
"We expect to meet all demands,
although we may be a little slow,"
he indicated, referring to the ru-
mor that the state would be able
to return only 20 per cent 'of the
use money it has collected, we3 it
all requested.
Lock guessed that merchants
would not receive official notice to
stop collections until the first of
next week because of the time it
takes to print and address 131,00
letters

G'' Regents
To Convene
The Board of Regents will meet
at 11 a.m. today, when they are
expected to release the Univer-
sity's operating budget request for
the fiscal year 1960-61.
They will also hear a report on
the University's financial condi-
tions during the fiscal year 1958-
59.

as the industry seemed on the
verge of settling the contract dis-
pute over wages and work rules.o
'Under Pressure'
"It was done," he asserted, "just
as the industry was under econ-
omic pressure. This is the moment
when economic forces and pres-
sures should lead to a settlement."
Goldberg said the injunction
was unconstitutional because it
was handed down "as the result of
a non-judicial finding. Judge Sorg
was asked to decide an economic
dispute, not a legal one. The ques-
tion of whether the nation's health
and safety are under threats is not,
a judicial finding, but an econ-
omic one."
t ' Could Continue
He said the strike could con-
tinue into early next year "with-
out any effect on the- nation's
economy, adding that despite the
strike more people are employed
now tha~p there were at this time
a year ago.
The union attorney said the'
steel plants that are not struck-
about 15 per cent of the total
number -by his estimate - are
turning out every kind of steel
product.
"The government : has laws
which provide for the invoking of
priority powers," he went on, "and
it can get all the steel it needs for
defense purposes.
More Clear Cut
Goldberg told the court that at
certain other times when the
Taft-Hartley Act was invoked, the
matter of public safety and health
was far more clear cut. He cited
a walkout at an atomic plant, a
coal strike, a tieup in the copper
industry during the Korean War,
and a, longshoremen's strike af -
fecting the distribution of - food
and other essential goods.
George Doud, Assistant U.S. At-
torney, said the Taft-Hartley Act
had- been invoked by other Presi-
%ients even before strikes started
Student Ends
50=fHour Fast
Against ROTC
BERKELEY, Calif. OP) -- The
18-year-old son of an Air Force
colonel ended his hunger strike
against compulsory military train-
ing five days ahead of schedule.
Faint and weakened by hunger
--he lost eig'ht pounds in his 50-
hour fast-Frederick L. Moore, Jr.,
of Arlington, Va, said he thought
he had accomplished his purpose.
More than 1,000 students at the
University of California signed

and before they could have had
any affect on public health and
safety. He cited wartime injunc-
tions against coal miners and
longshoremen.
SEC Probes
Stocks' Rise
WASHINGTON () -- Govern-
ment investigators said yesterday
illegal shenanigans by some brok-
ers apparently helped skyrocket
some recent new issues. of low-
priced glamour stocks.
Announcing a continuing in-
quiry, the Securities and Exchange
Commission said it expects to take
legal action against a number of.
firms "once all the facts are in."
Some cases already have been
referred to the National Associa-
tion of Securities dealers, it said.
This group can suspend or revoke
brokerage licenses for certain in-
fractions.
The SEC would not name any
of the stock issues or brokers con-
cerned. However, it made public
a report which alleged that some
stock dealers have pushed up prices'
and made fat profits by holding
back newly issued shares for them-
selves and their friends.
This practice may deceive the
public and violate fraud provisions
of the securities law, the agency
said.

can be devised.
Bans Expenditures
The board within four hours of
the Supreme Court's announce-
ment banned out-of-state travel
by state employees, filling of job
vacancies and all but emergency
purchases of supplies and equip-
ment.
Members recognized that the
savings to be thus achieved were
token, that the basic answer
would have to be supplied by the
legislature which returns Thurs-
day.
The use tax increase represent-
ed the heart of a 128 million dol-
lar Republcian revenue package
adopted Aug. 29 after eight
months of bitter legislative wrang-
ling. It was counted on to yield
120 millions.-
Little Revenue Left
The high court did not, as first.
supposed, wipe out the new enact-
ment entirely. However, little of
revenue value was left.
Reliable legal authorities read
the majority opinion by Justice
Talbot Smith as leaving intact
provisions applying the four cent
use tax to motel and hotel room.
occupancy and to materials used
by contractors in federal govern-
ment projects.
These represented new areas of
use taxation counted on for about
These represented new areas of
use taxation counted on for about
10 million dollars of the total an-
ticipated additional revenue yield.
Core Invalidated
Invalidated was the core of the
new act which attempted to apply
a one per cent use tax on retail
transactions already subject to
the three per cent sales tax.
Justice Smith, writing for the
court majority, said the main ef-
feet was to put an extra cent of
tax on the sale of "every loaf of
bread, every pair of shoes and
every stick of furniture."
Smith and the four other jus-
tices who accepted his view were
nominated for election to the
court by Democratic state con-
ventions. The three dissenters 4ll
have Republican backgrounds.
Justice Leland W. Carr, writing
for the minority, argued that the
use and sales taxes were separate
and distinct levies.

The Interfraternity Council's ex
ecutive committee, in a specia
session last night, found three fra
ternities in violation of rush regu
lations.
Sigma Phi Epsilon, which wa
found with two violations, wa
most severely penalized. It wa
given a total of $650 in fines, c
which $300 was suspended, an
recommendation for a semester'
social probation, Paul Becker, '601
IFC executive vice-president, saic
Theta Xi was fined $350 of whic:
$200 was suspended and Phi Sigm
Kappa was fined $150, all of whic:
was suspended.
Four Year Suspension
The period of suspension in a:
cases is four years-through th
rush period of 1963, these house
cannot be found in violation of an
rush regulation or the suspende
fine will be automatically invoker
The Sig Eps' two violations I
one rush period were a definit
factor for the strength of its pen
alties, Becker said.
They had had rushees over t
lunch at an illegal time, and ha
women at an open house, both c
which are prohibited in the rus
regulations.
After the meeting Sig Ep Pres'
dent Louis Grimaldi '60BAi
said'
41 14m very disappointed thE
any fraternity on this campu
while acting in good faith, can t
so severely penalized. We will a:
peal."
Theta Xi was also found to hav
had women over at an open housi
Penalty Modified
In other action last night, th
committee modified Sigma Nu
penalty for having accounts re
ceivable in excess of $200 at th
end of the last academic year. Th
committee suspended the mont
of social probation, given .previ
ously, and gave an additional $10
fine.

Deals Bad Blow
To State Coffers
Split Decision Along Party Lines
Prompts State Outlay Clampdown
LANSING 0 ) - Michigan's 52-day-old use (sales) tax
increase was gutted yesterday by the State Supreme Court,
striking a body blow to already precarious state finances.
The high court split five to three, with the majority hold-
ing that the tax hike was basically a sales tax increase in dis-
guise. It thus conflicted with a three per cent rate limitation
embedded in the state constitution.
Acting Gov. John B. Swainson promptly summoned the
State Administrative Board into emergency session to clamp
restrictions on state spendlig--
until a substitute tax program,''I. A

i

a.' juuges
Rush Rules
Not Follow
By JOHN FISCHER

.i.

Appointments and gifts, grants
and bequests will be considered.

o

BJECT TO POLICIES:
c'Hang' EMU Head

.. q

POLITICAL SCIENCE ROUNDTABLE:

.

Search' Behind Supreme Court Policies

By JEAN SPENCER
Prof. Carl B. Swisher of Johns Hopkins University yester
characterized the purpose behind the Supreme Court action of to
as a search for the underlying pattern of beliefs in American soci
The president of the American Political Science Association
dressed a roundtable sponsored by the University political scie
department yesterdayon "Traditional Roots of Supreme Cc
Behavior."
Political institutions, he began, are made up of perpetuities
re-rationalization of the things that abide. While the courts "s
to place emphasis on brand-new things, their purpose in examir
new material is to attempt to find" and express the underlying ox
of American beliefs.
Prof. Swisher then outlined the areas of the search.' Am
external areas, he mentioned traditional court dress for Supr
Court Justices.
The judge's robes, he said, symbolize his attempt to put a
personal predilection and operate in terms of the deeper contiin
of the law. In putting on his court robes, the judge tries to ach
an abstraction of the man, a withdrawal of the individual, in unl
taking to find the order that abides. Prof. Swisher averred.
Another A1 ld in which the search is being carried on is
traditional mode of giving the opinion of the court, he continued.

A ?

-EI--..

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