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--..