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Male voice 1: On my far left are Secretary Ross Donovan. Male voice 1: Next to him, Male voice 1: we have our immediate past Male voice 1: Governor... [Audio skips] Male voice 2: The Honorable John J. Williams.

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[Loud applause] John J. Williams: Thank you, Mr. Chairman. John J. Williams: And having been introduced John J. Williams: as one of the monkeys,

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John J. Williams: I'm going to say John J. Williams: my brethren of the order. John J. Williams: I do appreciate this opportunity John J. Williams: of meeting with you and

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John J. Williams: discussing here today a subject and I John J. Williams: was wondering it's always hard to John J. Williams: find a title for a speech, John J. Williams: but I think Alex Abrum gave it to us as

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John J. Williams: he read this from the Constitution. So I just merely say that my subject will be that Congress shall have the power

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to levy and collect taxes. [Laughter] With that power goes responsibility as it goes with in power goes all other things.

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And so therefore, I shall speak here primarily on the question of how we should treat that, from a tax standpoint,

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the taxability of those stock dividends, which are would be distributed by a company under a forced court order. I venture to say that

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that question may be of interest to quite a few people in our state. Now this question might be raised, why should we even discuss it and

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why would it be any need of legislation? In the first place, we won't take the time to review. We all are familiar

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with the fact that in recent months, the courts have or they at least they have threatened that they're going to order certain companies,

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including the Du Pont Company here in our own state, to divest itself of its holdings in a subsidiary company.

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Now under existing law, these stock dividends would, if they're distributed under a force or under a voluntary distribution,

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be taxable at regular income. Therefore, there is a tremendous tax impact in the event these are distributed. That is recognized by all parties concerned.

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In the case of the DuPont company, it has been estimated that the tax liability would be in the neighborhood of one

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and a quarter billion dollars. Now, the question that we get now before us in Congress and the one we've been discussing

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the last three to four months is under what the form should the legislation be upon which we're going to enact, if at all.

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I want to discuss some of the different plans that have been advanced in the Congress during the last few months

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in proposing to deal with this question. But before discussing these plans, I would like to make one point very clear. And that is that while I

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shall point out very plainly why it is that I felt that the formula under Senate Bill 200, which was introduced by

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my colleague was not the answer. I should point that out and try to by analyzing the different formulas. Nevertheless, I want

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one point very clearly understood. And that is that nothing that I say should in any way be interpreted as casting any reflection

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from my standpoint on Senator Frear's sincerity or his that dedication to trying to solve this problem.

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He's worked hard on it. He deserves a lot of credit and I certainly extend that to him. And, but however, we are in a democracy.

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And in a democracy we have a right and a responsibility when we differ to express our differences. But we can do it and

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still maintain our respect. Now with that thought clearly established, I would like to proceed to discuss these formulas as they

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had been presented before the Congress. Now one of the first questions that we get asked by nine out of ten of the stockholders

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of any of these companies is, well, what is so difficult in solving this problem? After all, why don't you just pass a law

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simply deferring the tax on this stock until such time as I sell it. They will say that after all look at this. I bought DuPont stock,

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DuPont owns General Motors. They distribute the General Motors. And after all, I've only got two certificates were before I had one.

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I have not increase my wealth. Therefore, why should there be any tax till I pay it. And why is it you just don't pass a simple

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resolution or a bill deferring the tax until such time as i sell it. I'd like to answer that question first by stating this that there is not today,

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there are never has been introduced in either the House of Representatives or the United States Senate, nor has anyone ever

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suggested, that such a bill being introduced which would provide for a simple deferment of the tax until such time as the stockholder sell it.

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I will go further. I'll venture to say that if such were introduced today by any member the Congress, it would be vigorously

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opposed by every official of the DuPont company or any other company which may be under similar circumstances. Now the reason for that statement is

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this, under existing law, these taxes, these stock dividends would be taxable at regular income tax rates.

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A bill simply providing for a deferment of the tax liability that would be due to you as a stockholder upon receipt of that dividend,

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would merely be a deferment of a tax liability at what we all recognize at prohibitive rates or we would defer this one and a quarter

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billion dollar tax liability until you sell it. Therefore, that is recognized that that would not be the answer. Now what has been proposed under

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S200 under, under HR8126 and the various other proposals that have been before the Congress as this. They are in two parts.

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The first part and the most important is it's been suggested that we will rewrite existing law and provide for a new formula

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for taxing those such dividends that are being distributed under forced court order. Then, under S100,

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after this new formula has been written a portion of that tax would then be deferred until such time as you sell your tax.

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But you can't lose sight of the fact that when the Senate Finance Committee went in session and discussed this proposal,

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the first proposal which was before us, was, how can we rewrite the existing law, provide a formula which will be equitable, which will give relief under

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these circumstances, but one which will be fair not only to the stockholders of the DuPont company,

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but to the stockholders of all other companies who may be similarly placed. And there are other companies involved,

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or at least they are expecting and knowing. A tendency of our Department of Justice, as it is, we can expect that this will not be

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the last anti-trust case that will be tried. Therefore, we must recognize that we are trying to write, rewrite a new formula

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for taxing these dividends. And I'm going to discuss those formulas. But before discussing the formulas, I want to clear up another misunderstanding.

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And that is, the question has been raised. Why did I join in a majority of the Senate Finance Committee in rejecting a proposal which had already

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received unanimous or enthusiastic support of the Justice Department, the Treasury Department, and the Ways and Means Committee in the House?

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In fact on September the fifth, after the Senate Finance Committee had acted, these statements appeared in our press right here in Delaware.

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And I'm quoting first Senator Frear made this statement. 'Subsequently, both the Treasury and the Justice Departments gave their approval to

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the present Frear Bill and a companion measure, the Simpson Bill, which has been reported favorably by

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the House Ways and Means Committee,' end of quote. On the same day that appeared in the press, the statement by the president

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the DuPont company, and I want to make clear that I'm not questioning their sincerity of any of these men that made this statement,

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but I think there's been a misunderstanding and I think it should be cleared up. Mr. Greenwald said, and I quote, he was criticizing the action

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of the Senate Finance Committee at the time. 'It is my opinion that the Frear-Simpson bill, which has both Treasury and Justice approval and has

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been favorably reported by the House Ways and Means Committee, is a fair and equitable measure for the protection of

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the innocent stockholders.' End of quote. In an editorial appearing two days later in the Washington papers appeared this quotation.

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'Both the Treasury and the Justice Department has given the green light to the Frear bill and it's identical twin, the Simpson bill.

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The Ways and Means Committee had reported that legislation favorable to the House.' Again, this quote appeared in an editorial in one of our papers.

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'But the bill drafted by Senator Frear has some strong points in its favor. It has the merit of having

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already won the approval of both the Treasury and Justice Departments and the Ways and Means Committee,' end of quote.

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Therefore, the opinion has been given very clearly to the people in this state, the stockholders, the company, and all concerned that

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the Senate Finance Committee refused to go along on a proposal, when after all the Ways and Means Committee and the House,

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had approved a plan which had a approval of the Department of Justice and the Treasury Department.

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I made a statement then, I repeat it now categorically. The Treasury Department nor the Justice Department did not support

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the bill as it was reported by the Ways and Means Committee, unless their be any misunderstanding because it was

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a misunderstanding after these statements had been made and after they've been repeated and not, we were not getting the agreement,

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I directed a letter both Mr. Lindsay of the Treasury Department and want to Mr. Bicks of the Department of Justice,

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the head of the anti-trust division. And I have both of these letters. Any man interesting from the company or from the

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press wants to see them, in which they both emphatically state that they did not approve the bill as it was

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reported by the Ways and Means Committee. I'll read just one statement from Mr. Bicks, the Department of Justice. 'Accordingly,

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if HR8126 as reported, is not amended in any manner, we would not recommend it's enactment.' Now the point of controversy is this,

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the Treasury Department and the Justice Department, and I think this is a misunderstanding, I don't wish to leave

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the impression otherwise, but I think it should be cleared up. Both the Treasury Department and the Justice Department

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from the very beginning has indicated a desire to work with the Congress in for, in solving this problem.

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They said they recognize that the tax impact was such that something had to be done. They have indicated at times

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that they would go with the version of the Frear bill which had been introduced in recent months, that is the modified version.

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However, as this was being voted on in the Ways and Means Committee, it was amended twice. The first amendment was opposed

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by Treasury but supported by Justice. It was adopted. After it was adopted, Treasury still indicated that their

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objections to this amendment was not so violent that they, that they would continue to still support the bill.

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The bill was amended again, however, and this time both Treasury and Justice withdrew their objections to the bill, I mean, withdrew their support to

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the bill as it was reported by the Ways and Means Committee to the House. So I don't wish to get into

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the merits or demerits or whether they were right or wrong in withdrawing their objections, but I do say I think that it

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should be clearly accepted and recognized that when the Senate Finance Committee began its deliberations,

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we're confronted with a situation that what that which the House it done had not met the approval of the two departments.

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And the approval of those departments was necessary if you're going to get legislation. Now, with that, I'd like to discuss

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other misunderstood... another I think what is a misunderstanding. And that is the bill that was approved by the Senate Finance Committee.

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And I want to say this in speaking that I made a statement the day we approved that bill that I did not think that we had the answer.

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I thought it was better than the other formula, but I do not think that we have the answer. We are dealing with one of

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the most complicated questions and one of the most troublesome problems that I've ever worked on. On various occasions, we have

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considered at least a half a dozen different formulas. On several times we have approached what I thought and many

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thought was a solution. In fact, I left one meeting and I thought we had it. I thought we had one upon

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which we would all in agreement. But after you get away, then you find that some gimmick in this bill or that bill,

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whereby that formula would not be fair to someone else and you'd have to start all over again. But I say that this bill I think

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that has been and are perhaps not understood. And I think in order to approach this problem, we must understand what is

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involved in these different formulas. And then judge whether or not we think they're right. Now one of the editorials

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and some of the comments in connection with the bill approved by the Finance Committee was that it was confiscation of the wealth.

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And it was described by one as being a strict penalty, levying a quarter of a billion dollars penalty against

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the stockholders of the DuPont company. I want to say that that is unfair. It is wrong. The Senate Finance Committee did

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not levy any bill which levied any penalty on the DuPont company stockholders. I say that for this reason.

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Now let's remember this. Under the existing law, if no legislation is enacted, the stockholders would be required to pay

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a tax of about one and a quarter billion dollars. What the Senate Finance Committee did was to approve a bill which

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reduce this liability from one and a quarter billion, to 242 million. And by what line of reasoning is a proposal that would reduce

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the tax liability of a group or stockholders by 75 percent can be considered as being worse

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than any legislation at all. It's just as ridiculous to say that that is confiscation merely because it reduced it

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only 75 percent as it would to be to accuse the Congress or the Delaware legislature some time of imposing

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a 90 percent tax penalty on you merely because they said it could give you a 10 percent reduction

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and could not eliminate all taxes. Now let's be reasonable and approach the fact that both of them or at least headed in the right direction.

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And we have made one constructive step. We've got a vote on a part of most of the committee members, recognizing that something must

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be done in this field, and that is a great step forward. Now I'd like to point out one other thing in connection with these formulas,

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I'll speak first on the partial liquidation formula which in speaking on it I want to be very frank to say that

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I don't think we've got the answer yet. I think that we are approaching it, but I don't think we've got the answer. And I'm willing to accept that.

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But the partial liquidation formula, assuming that it's left on the books and enacted into law as it was approved by the committee.

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And what would it do? This bill, which has been labeled as confiscation, if you bought DuPont stock at

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$275 a share and it was $250, the day the distribution would be ordered, you would get a credit for your tax loss. You would be assigned 28% of

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your cost factor to the cost of General Motors. You would have a tax credit. If you bought DuPont

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at $250 and it was distributed in the market was still $250, the Senate Finance Committee bill provided a 100% reduction in

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your tax liability as compared with existing law. Under existing law you would be required if you're in the 50 percent bracket to pay

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If assuming General Motors at $50, $25 tax. This was 100% reduction if the cost of your Du Pont was three fourths of the market valuation

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now the date of distribution, the Finance Committee bill reduced it by 87.5%. If your cost of your Du Pont was one half

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of the present market value on date of distribution. In other words, it was $250 on date of distribution,

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you paid a $125 for it, the Finance Committee bill reduced your tax liability by 75 percent as compared with existing law.

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It reduced to 66 and two thirds percent if your cost was one third. And what is even more important,

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it kept that provision in our tax law, whereby the tax would be levied against the what start tax that would be would be levied against

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the stockholders on the basis of your gain that is represented by the stock that's being distributed,

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which is not true on the other bill, as I will point out. However, before discussing the other formula, I'd like to point out one other factor that

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is raised in the Finance Committee bill, and it's very properly been criticized by those who disagree it. There is another section

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whereby that those who were supporting the plan, with which I agree, we would change the present law as

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it regards to the taxation of corporations. In 1954 or prior to that, corporations receiving dividends would pay on a market value of

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the stock which they received as a dividend less the regular 85% dividend tax credit. That meant that they would pay 52% or 15% of

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the market valuation of the stock. Now in 1954 in order to plug what was a loophole developing as a result of

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corporations passing from one to the other so-called warehouse receipts, which I won't go into the technicalities of that. We also

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unintentionally and I have yet to find any member of the committee who said they intended it that way, that we unintentionally worded

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the language whereby corporations could, under this law, compute their tax liability on the basis of either the market value or the lower.

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Now this had the effect in the case of Christiana. They would take the cost of DuPont, General Motors at $2.10,

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reduce it by 85 percent, and pay 15 percent of 52% of 15% of $2.10 or $0.16 per share. If the proposal which I

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was reporting is enacted they will pay $3.90 based on the other end, that is an increase. I accept that as criticism

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to those who do not like it. And I say this bill would go on and amend the law as it regards all corporations,

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not only DuPont whether they were voluntary or involuntary distribution. Then the bills would carry with

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them the usual savings clause where they could elect to be taxed either under partial liquidation or under

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the existing law as it would have been amended. In the case of Christiana, again, no doubt it would be cheaper

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if they were forced to distribute stock and sell it. That is, they may elect the partial liquidation and

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avoid the corporate tax and sell it direct. But anyway, they would have this election clause. Now in the bill which was

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supported by the sponsors of S200 are not necessarily in the bill. This provision of the corporate tax was not in our bill,

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but I told the company to take into consideration of our plan, the fact that it would either be in the same bill or in a bill running parallel

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because that was a part of the plan that those of us who were backing this intended to see in the law before the savings clause went in.

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But also included in the plan which is supported by the sponsors of S200, is a proposal where they would retain the present corporate tax credit,

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whereby this would be computed as it is under existing law. But they would amend existing law for all taxpayers alike

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in the computation of the dividends and eliminate the 4% dividend tax credit. This is applicable not only to the stockholders

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of DuPont, but to all stockholders. And that too is a part of their plan. And while this... I've been it's been, emphasis has been placed

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upon the fact that in the past four months by in the votes in the Senate Finance Committee, and in the conference committee,

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I have broken the tie which defeated the proposals offered by the sponsors of S200. That is true.

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I have defeated those proposals and I'm not apologizing. I thought it was right. But I say this. I also defeated the proposal which was

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likewise supported by the sponsors of S200, whereby they would repeal the dividend tax credit and that would too would have been repealed

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had I voted on the other side. So you cannot separate these. They are inseparable. They are a part of the plans

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as they are adopted by the sponsors of the two proposal on each side. And I think that many stockholders who had been asked to like it,

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reject or endorsed this plan or that plan, have overlook the fact or have not recognized that you have at the same time, many of you been endorsing

00:20:43.430 - 00:20:51.260

the repeal of the 4% dividend credit. Now, I recognize that there are many arguments can be made in favor of the repeal of that, I'm not questioning

00:20:51.260 - 00:20:58.880

that. I differ with it and I am opposed to it. Those who are for it, and my colleague, I respect them. They have reasons and I don't

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certainly don't question their sincerity. But I do say this. Let's take that all into consideration. And what effect would that have on

00:21:06.440 - 00:21:12.980

the stockholders of the country? The repeal of the dividend tax credit would cost the stockholders of America

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$375 million additional taxes. But for the moment we're speaking here on forced divestors. What would these plans

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adopted, if they were adopted cost the individual stockholders of the DuPont, General Motors and Christiana

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or those affected most? In a ten-year period, supposing that this stock was all all divested. Suppose that the revised formula

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of S200 as it was rejected by the Finance Committee was enacted into law. Here is the effect that would be put out,

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and I have these figures confirmed by the Treasury Department for anybody wishes. In a ten-year period

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as a result of the repeal of the 4% dividend credit, and as a result of that taxing on the stock at $2.10,

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they would pay $40 million under the formula of S200, which was rejected. They would pay $230 million as a result of the increased taxes on

00:22:05.510 - 00:22:13.580

the repeal of the 4% dividend credit, or they would pay in the federal treasury 10 years from the date this became a law under the plan

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supported by those in back of S200, they pay a total, the individual stockholders of 270 million dollars. On the other hand, under

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the plan supported by the Finance Committee, they would pay a total in ten years of $242 million. Now that is the revenue

00:22:29.060 - 00:22:35.420

the Treasury said they would get under these two plans if they were adopted in their entirety. I know there are those who say, well,

00:22:35.420 - 00:22:41.480

I'm only for a part of this plan. I'm against the other plan. You're only for a part of my plan but you're against the other.

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But I'm saying this, the votes have been down the line in the committees in a conference, committees on the two plans.

00:22:47.720 - 00:22:53.570

I broke the tie in the last four months on all of these plans as they've done. So you're taking the choice

00:22:53.570 - 00:22:59.690

to them collectively. Don't forget that. And I want to point out another point that's assuming for

00:22:59.690 - 00:23:06.360

the moment you can separate the 4% dividend credit. And we'll accept that as an argument momentarily and it can't be.

00:23:06.360 - 00:23:14.060

Now let's discuss this plan under S200. I've already call to your attention how the plan, the partial liquidation

00:23:14.060 - 00:23:22.160

progressively reduces the tax. Now what this is the formula under S2 00 for individuals? The formula under S200,

00:23:22.160 - 00:23:29.090

and I don't think it was intended, but the formula under S200 has this mathematical result: the greater the profit,

00:23:29.090 - 00:23:34.970

or gain as you call it, that is represented by the stock dividend which you receive, the less will be the tax.

00:23:34.970 - 00:23:40.700

The less profit or gain that is represented by your stock dividend, the higher would be the tax. Now I want to explain

00:23:40.700 - 00:23:47.420

that to you very simply. Under S200 if it's enacted, yours tax on DuPont stock for each share of General Motors would be

00:23:47.420 - 00:23:55.880

computed on the basis of $2.10 per share of General Motors. Now just for the moment, suppose the cost to Du Pont was $21 per

00:23:55.880 - 00:24:02.570

share instead of $2.10. That's not too hard to conceive on a $50 stock. I venture to say that a lot of

00:24:02.570 - 00:24:10.760

you got it, you paid more for it. But suppose they pay $2.10 instead of I mean, $21 instead of $2.10.

00:24:10.760 - 00:24:20.100

Then under S200, your taxes would be exactly 10 times higher under the S200 which we rejected than they would under the present circumstances.

00:24:20.100 - 00:24:30.710

Then again, suppose it was $42 a share or it was just 20 times as much high, then your taxes would be 20 times higher. And I emphasize that for this reason,

00:24:30.710 - 00:24:38.470

there are other companies effected. We are not legislating a private bill. This is not a bill for the relief of the DuPont company or the Christiana.

00:24:38.470 - 00:24:45.750

This is a bill, a general law for to deal with all corporations that may be similarly placed. And we have one company which has

00:24:45.750 - 00:24:52.670

come before our committee and pointed out their circumstances where they too are expecting to receive a court order. The

00:24:52.670 - 00:25:00.410

president of this company pointed out that his cost factors are 80 percent of the present market valuation. And under this bill, if it becomes

00:25:00.410 - 00:25:07.250

a general law and they have owned their stock for 20 some odd years, they would be ordered to distribute their stock and they

00:25:07.250 - 00:25:14.080

would get no relief whatever otherwise it would be a penalty and that it would be exactly the same thing because they,

00:25:14.080 - 00:25:21.020

their stockholders would pay regular income tax rates on 80% of the market valuation of the stock on data distribution.

00:25:21.020 - 00:25:29.210

That's the same as saying General Motors would be worth $40 a share today and you would be taxed at $40 on regular income and

00:25:29.210 - 00:25:35.690

at the other $10 be capital gains. And I ask you in all fairness, how many of you would endorse that bill for DuPont if that was

00:25:35.690 - 00:25:44.580

your cost factor today? You know that that would be then many times above the formula that we've got.

00:25:44.580 - 00:25:51.920

I want to point out briefly one other circumstances and this can happen in passing general law that will affect all taxpayers.

00:25:51.920 - 00:26:00.230

We have to recognize this. Suppose that corporation A has owns one share of stock of Corporation B for each share of

00:26:00.230 - 00:26:06.350

its outstanding stock. Corporation a stock cost three... it's selling at today at $300 a share or was a year ago,

00:26:06.350 - 00:26:15.320

we'll say. And corporation B at $100. You buy a share of that stock. Or it could be go back ten years. You've bought one share of each.

00:26:15.320 - 00:26:24.500

But corporation B selling at $100. Corporation A was selling at 300. We will say that the market declines and I've seen markets decline on stocks.

00:26:24.500 - 00:26:32.740

The market goes down to $250 for the price a corporation A, and the market price of cooperation B declines to $70 a share.

00:26:32.740 - 00:26:39.830

You as a stockholder, but this stock though at $300. And then they are ordered to divest their stock under this law,

00:26:39.830 - 00:26:47.900

that would be a general law of the land. You'd have this situation. You, as a stockholder, would be required to pay a tax on

00:26:47.900 - 00:26:54.170

a stock which represented a loss both to you and the company itself. First, the company would be required to divest

00:26:54.170 - 00:27:02.540

itself of a stock which cost it $100, and which was only worth $70 and he would get no credit for the tax loss. Second, you as a stockholder,

00:27:02.540 - 00:27:10.570

would have a $50 paper loss on your stock, and yet you would be required to pay regular income tax rates on the $35 on

00:27:10.570 - 00:27:17.610

$70 valuation of stock or if you are in the 50 percent bracket, you would pay a tax of $35. Would you endorse that proposal?

00:27:17.610 - 00:27:25.220

If a man had a formula which actually taxes a situation where both the stockholder and the company has a loss,

00:27:25.220 - 00:27:32.840

and on the other hand, a formula which completely exempts a stockholder where it represents all gain because carrying it to

00:27:32.840 - 00:27:40.070

an extreme the other way, if the cost was $1 at whereas a market valuation was $70, the tax would be just a penny

00:27:40.070 - 00:27:47.930

or two or insignificant. Now there's one other factor in this, the formula which is supported in which we take quite a difference,

00:27:47.930 - 00:27:55.730

which I would like to explain. And that is the manner in which both foreign ministry corporate dividends or the tax for corporations.

00:27:55.730 - 00:28:05.000

I have already explained how under the formula which I supported, we would increase the tax of corporations, and primarily I have explained how it

00:28:05.000 - 00:28:13.220

would affect that of Christiana securities, and that's the only one we have available, but it is primarily, the one that represent...

00:28:13.220 - 00:28:19.220

that is represented in this case. And I might say that in closing this is what many of us think was

00:28:19.220 - 00:28:28.250

an unintentional loophole in the law in 54, the Treasury Department has advised us that it's not a question of having lost revenue. It has not been used,

00:28:28.250 - 00:28:35.030

that's reason it hasn't been noticed. But when that DuPont case came up, it was sharply focused to their minds how it would be treated.

00:28:35.030 - 00:28:42.620

And therefore, many months ago, early last February or March, they have advised the committees very strongly that something must

00:28:42.620 - 00:28:52.510

be done in this connection with or without legislation is for, as a company is concern. So, but anyway, I've told you what our plan would do with Christiana.

00:28:52.510 - 00:29:02.120

It would cost over a period, Christiana $65,715,000 tax based upon Treasury estimate over a period of 10 years or

00:29:02.120 - 00:29:13.790

$6,571,500 per year for the 10 year period. And that is now under the bill supported by the sponsor of S200 and

00:29:13.790 - 00:29:19.850

which the Finance Committee rejected and again, I say I voted for the rejection and would do it again for the reasons that

00:29:19.850 - 00:29:26.000

I think that formula wasn't fair. But here is the mathematics of this formula, and I don't think they were intended that way,

00:29:26.000 - 00:29:33.990

but they cannot be disputed. This is what would happen. Under the Senate, under the bill which we rejected, if this stock was distributed,

00:29:33.990 - 00:29:40.640

Christiana would receive a stock dividend in General Motors of 16 million, some odd thousand shares of General Motors with

00:29:40.640 - 00:29:50.580

a market valuation of approximately $850 million. They would pay a tax of $2,696,000 spread over a period

00:29:50.580 - 00:29:58.700

of ten years or eight, an average of $269,600. Now when this stock would be redistributed, however,

00:29:58.700 - 00:30:06.170

to the stockholders, it would be redistributed to the stockholders. And the stockholders would pay a smaller tax on

00:30:06.170 - 00:30:11.320

the receipt of their General Motors stock than would any employee or any stockholder of DuPont.

00:30:11.320 - 00:30:16.850

I repeat, under the formula of S200, which we rejected, a stockholder of Christiana,

00:30:16.850 - 00:30:23.900

and I don't care if he bought it at $10 a share, under that formula and it's selling at 17,000, would receive his one share

00:30:23.900 - 00:30:30.200

of General Motors stock, which would be distributed first to the corporation upon which they would pay corporation tax,

00:30:30.200 - 00:30:37.250

then to the individual upon which they would pay an individual tax. And that combined tax on that share of stock both at

00:30:37.250 - 00:30:43.760

the corporate level and at the individual level, is less than would be paid by any employee who has

00:30:43.760 - 00:30:49.070

before or is today buying his DuPont stock and would receive his General Motors stock direct from the company.

00:30:49.070 - 00:30:57.170

Now how can you justify that? How can you justify the fact that an employee of the company who is buying stock

00:30:57.170 - 00:31:06.110

today under the stock purchase plan, or you buy it, would pay a higher tax on stock you receive direct from the company than would be paid by

00:31:06.110 - 00:31:13.400

the stockholders of Christiana. That's because again, it goes to two ways and that cannot be denied. And I think that that should be

00:31:13.400 - 00:31:19.010

put out and should be understood, but that's not all of the gimmicks that's in this bill. As I said before,

00:31:19.010 - 00:31:26.960

if this bill passed and assume that this stock was all distributed as of today for computation, there would be a tax of $2,696,000

00:31:26.960 - 00:31:34.340

under the bill which we rejected. However, that would be an immediate elimination. Now the present taxes

00:31:34.340 - 00:31:39.920

which are being paid both at the corporate level on a $2 dividend being distributed by General Motors,

00:31:39.920 - 00:31:45.710

first paid by the DuPont and then by the Christiana, and the elimination of those taxes would bring

00:31:45.710 - 00:31:56.360

a savings to the stockholders of Christiana amounting to $5,686,875 a year. And this would be the result at the end of 10 years

00:31:56.360 - 00:32:03.320

if this bill which we rejected had passed. At the end of 10 years, the stockholders are Christiana would have paid into

00:32:03.320 - 00:32:12.650

the federal treasury little less than $12 million in extra taxes. They would have received in extra cash dividends, as a result of the taxes which

00:32:12.650 - 00:32:20.630

would be eliminated under this formula, $56,868,000, which would give them a net gain, they would have the 800 and

00:32:20.630 - 00:32:26.180

some million dollars worth of stock distributed and would give them a net gain of $40 some million over and

00:32:26.180 - 00:32:33.110

above what they would have had, had they been no law passed. Now, we cannot approve a formula which will

00:32:33.110 - 00:32:41.900

give in one circumstances not only no tax on one who has a large percentage of profit, a 100% tax in another instance where

00:32:41.900 - 00:32:48.810

there is no profit, or in some cases where the cost factors are very low, it had not only

00:32:48.810 - 00:32:57.030

eliminate practically all the tax, but actually passes onto those stockholders in return for a very small tax,

00:32:57.030 - 00:33:04.070

many times more than that in tax savings. I don't think that it is fair. And I personally am not going to support it.

00:33:04.070 - 00:33:13.160

Now. I think this that we can get a formula and I think we need legislation in this direction. But I think that this legislation must be

00:33:13.160 - 00:33:20.600

enacted in a manner in which whatever taxes levied, and I'm not disputing whether it should be two hundred million,

00:33:20.600 - 00:33:25.670

one hundred or three, I don't think that that is the important factor, but I do think what is

00:33:25.670 - 00:33:32.900

important that the tax be levied in direct proportion against those stockholders who have the largest percentage of

00:33:32.900 - 00:33:41.830

gain represented as they receive that tax. I don't think we can sit back and figure that this formula will help one group of stockholders at one company.

00:33:41.830 - 00:33:48.460

Or it will help all of the stockholders or one company. And that I don't care what happens to other stockholders.

00:33:48.460 - 00:33:56.600

Certainly I, as a senator here from the state of Delaware, appreciate the fact that I was elected. I appreciate the fact that we're dealing with

00:33:56.600 - 00:34:03.950

this tax formula which effects one of the principal companies of our state. I appreciate that and I respect it.

00:34:03.950 - 00:34:10.670

But I'm certainly trying to work out a solution which will be fair to all of the stockholders of this company.

00:34:10.670 - 00:34:18.140

And I am thoroughly convinced that legislation is necessary in this direction. But at the same time as a member of the committee,

00:34:18.140 - 00:34:26.030

I don't think any of you want us to close our eyes to the fact that when we amend the general law, we are not only amending the law as it

00:34:26.030 - 00:34:35.000

affects one company in our own state, we are amending the law as it affects all taxpayers in all the states. And we cannot close our eyes to

00:34:35.000 - 00:34:45.620

the fact that that the formula which we rejected in the committee was a formula which would levy directly that tax in

00:34:45.620 - 00:34:52.280

a larger tax on those who had the least gain. And it gave no relief, whatever, to the company who, through

00:34:52.280 - 00:34:58.620

no fault of its own, made a bad judgment in investments and didn't make quite as much money as was made on this one.

00:34:58.620 - 00:35:04.970

Now, I think that, as I said before in conclusion, I think that the answers are, can be found if all of us

00:35:04.970 - 00:35:12.890

recognize there are... that this is a complicated question and that maybe none of us as yet have got the right answer,

00:35:12.890 - 00:35:19.370

but we've got to do it by sitting down and working it out together. And we've got to do it also by putting before

00:35:19.370 - 00:35:25.990

the people and those interested, the facts as they exist and not the facts as we wish that they had existed.

00:35:25.990 - 00:35:32.610

Now, I know that your time for closing here is 1:30. I thought they'd be time for questions and I haven't

00:35:32.610 - 00:35:41.490

tried to filibuster this. I will say in closing, I'm going to quit here, but after this meeting is over, to any of those who wish to ask questions,

00:35:41.490 - 00:35:48.620

I would appreciate them. I don't say that I can answer them. But I'll say this if you can raise questions which couldn't be answered,

00:35:48.620 - 00:35:56.500

they are questions which I would be glad to try to get the answer because the only way that we're going to get this solved is all of us talking

00:35:56.500 - 00:36:02.960

our open and above board and recognizing that we are dealing with a very highly complicated question.

00:36:02.960 - 00:36:09.620

And one which while on the surface, when you look at it from an individual standpoint, we oftentimes think I've got the answer

00:36:09.620 - 00:36:18.000

because this solved my problem. But remember, your neighbor's problem is just as important to him as ours is to us. Thank you.

00:36:18.000 - 00:36:43.240

[Applause] Male voice: Senator Williams, I'm sure Male voice: that the attention you received from Male voice: your audience attests our

00:36:43.240 - 00:36:51.800

Male voice: interest in this most Male voice: important subject here in Delaware. Male voice: We are most grateful Male voice: and appreciate very much

00:36:51.800 - 00:36:57.460

Male voice: your coming and talking to us today. Male voice: Thank you very much. Senator Williams: Yes sir, thank you. [Bell clangs]

00:36:57.460 - 00:37:05.350

Male voice: Well i am sorry, I hope Male voice: that it wasn't my fault here Male voice: that you got... Senator Williams: No, no... that's alright I had enough.

00:37:05.350 - 00:37:10.000

[Silence on tape]