•
GOVERNMENT
Research Tax Exemptions Debated House committee probes question of whether nonprofit research institutes should retain tax exempt status X F a nonprofit research institute makes its research results immediately avail able to the public, thte organization should b e tax exempt. But if the re search institute reveals the results only t o the sponsor of trie research, the or ganization should not fce tax exempt. This . seemed to b e the consensus of the H o u s e W a y s and Means Commit tee a t the end of a panel discussion o n tax exempt organizations. The c o m mittee is holding a l o n g series of panel discussions on broadening the tax base (C&EN, Nov. 2 3 , page 4 0 ) . As committee chairman Rep. Wilbur Mills (D.-Ark.) sees i t , nonprofit re search institutes are tax exempt be cause they operate in t h e public inter est. The problem is t o define "opera tion in the public interest." In Rep. Mills' opinion, more legislation will not solve the problem ι an administra tive decision is n e e d e d t o clarify the basis for tax exemption. N e w rules proposed b y the Treasury Depart ment's Internal Revenue Service (C&EN, Dec. 14, page 4 2 ) , may be the solution. • Abuse of P r i v i l e g e . Nonprofit re search institutes devote only a very small portion of time and effort to basic
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research for the p u b l i c good, Lewis E. Harris of the American Council of In dependent Laboratories, told the com mittee. Contrary to their charters, he says, these institutes operate outright commercial businesses i n applied re search. In doing sponsored research, they keep the results confidential for exclusive use of trie sponsor and assign patents exclusively to the sponsor. "This method of operation is a serious abuse of tax exemption privileges." To be tax exempt, nonprofit research institutes should d o only basic research and should make their findings freely available to the public, Mr. Harris says. Income from sponsored applied re search should be taxable in t h e same w a y that commercial laboratories* in come is taxed. • Examine the Purpose. "The fact that a taxable business may attempt to conduct a similar activity should not detract from the basic reasons for tax exemption under present laws," Nor man A. Sugarman, a Cleveland attor ney, told the committee. The historic U . S . policy has b e e n that educational, charitable, and scientific activities are in the public interest; where nonprofit organizations are devoted primarily t o
Harry K. Mansfield • . . some test is needed . · .
these purposes they are entitled t o the encouragement of exemption f r o m in come tax. Present laws provide safeguards against exempt organizations straying into fields inconsistent with their pur pose, Mr. Sugarman says. Scientific activities should not be regarded as taxable business merely because they generate income. Income from research conducted by nonprofit research institutes should not be taxed even though the same kind of research might be conducted b y profitmaking businesses, Harry K. Mans field, a Boston attorney, told t h e com mittee. This income should remain ex empt w h e n it sterns from activities of the organization w h i c h have statutory approval as activities in the public in terest. If the principal test is d i e sim ilarity of the exempt organization's ac tivities to activities carried on b y busi ness, h e says, then the activities of non profit research organizations will b e confined t o fields not occupied b y busi ness. But some kind of test is needed t o determine if research is being con ducted in the public interest, Mr. Mans field says. Publication of results as a test for tax exemption makes a good deal of sense, he says, but this may not b e the best test for the purpose. How ever, he can recommend no other sim ple w a y t o separate the taxable from the tax exempt.
Wage Hearings Set On Jan. 2 6 t h e Labor Department will hold public hearings to determine the minimum wage rates that prevail in the industrial and refined basic chemi cals industry. U n d e r the Walsh-Healy Public Contracts Act, the Secretary of Labor is authorized to issue industry minimum wage determinations based on the minimum wages he finds to be pre vailing. Firms with government supply contracts in excess of $10,000 can't pay employees less than these minimums. T h e present minimum wage in t h e industrial and refined basic chemicals industry is $1.15 an hour. However, in some so\iti .rn states the rate is $1.00 an hour. T h e Labor Department defines t h e industry as **that industry which manu factures or furnishes basic industrial* inorganic or organic chemicals including industrial gases and basic plastics mate rials/' However, many products usu ally considered part of the chemical
industry are excluded. Some exclusions: synthetic rubber; synthetic fibers; soap and detergents; paints, varnishes, lacquers, and enamels; agricultural chemicals; adhesives; fatty acids; cyclic coal tar crudes; drugs and medicinal chemicals; perfumes and cosmetics; gum and wood chemicals; explosives; bone black, carbon black, and lamp black. In fiscal 1 9 5 8 , the latest figures available from the Labor Department, the Government purchased $ 3 0 million worth of chemicals from the industry. Some 78,000 production workers were employed in 7 1 8 plants. Prevailing minimum wages will b e the principal topic discussed at the hearings. However, other topics open for discussion include: whether the définition of the industry should b e changed; whether a single wage rate should be determined for the whole country or whether individual determinations should be made for smaller geographic areas; and whether trainees should be paid less than the minimum wage.
Potomac
pumping...
Postscript
• Oil import q u o t a s for the first half of 1960 will be 80,000 barrels a day higher than those for the previous six-month period. The n e w quotas, just announced by the Interior Department, will permit imports of 1.53 million barrels daily of crude and unfinished oil, finished petroleum products, and residual fuel oil; the previous quota was 1.45 million barrels a day. Biggest increase is in residual fuel oil destined for the East Coast. The Interior Department sets import quotas on the difference between demand and domestic supply. For the area east of the Rockies, the new quotas will increase imports of crude and unfinished oil, and finished petroleum products b y about 35,000 barrels a day. On the West Coast the n e w quotas will cut imports of these products about 52,000 barrels a day below the figure based on the supply-demand ratio. Reason for the cutback, says Interior Secretary Fred A. Seaton, is the increase in oil coming i n from Canada via pipeline. Interior includes Canadian oil in domestic production.
^ o b j e m to «& "All things are difficult before they are easy," runs an ancient proverb. And pumping was difficult before it was seized and solved like a problem, and made easy. The solving gave us apparatus t o handle liquids: bland liquids, fierce liquids, searing, burning, corroding liquids. Apparatus to pump, to proportion, to control flow . . • to bend i t t o the pattern of a thousand processes. The solving gave us pumps for industry. And industry uses Wallace & Tiernan Metering Pumps in applications usual and unusual. I n the Wallace & Tiernan line there's a pump witih the design, capacity, power, and construction to fit your process exactly. Discover for yourself how Wallace & Tiernan matches the pump to the process · . . helps solve your pumping problems. Write Dept. L-4.22.
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