The Tax Burden of the Retail Lumber lndustry of South ern California

By Everett C. Parker

(Everett C. Parker, of Lo1 Angeles, is fresident of the Patten-Blinn Lunr.ber Company, qnd qls,g presid,ent of the Southern California Retail Lwmber Association. On Septembir 26, 1951, Mr. Parker deliuered an ad.d,ress to the Retail Lum.ber Dealert Semi-Annial Conference, u,nder the auspices of the Southern Calif ornia Retai,l Lu.mber Associ.ati,on, held at Coronado, California. His speech uns entitled,, "Increased Operating Costs and Retail Problems." It .zaas a masteily array of facts and, figures. Mr. Parker is a-famous statistician of the retail lumber business, and' what he sai,d, to th,e canference woulcl make a d,etendable tertbook on the financi'at end of the retail lwnber businesi in Southern California. He discussed ta.res, insur.ance,-wages, salaries, and Eaae a remarkuble resunl.e of the cost of doi.ng bu,siness in th,e retail lum'ber yard, tod,ay. In fact, he covered a wide range of subjecti in nthich the lun+ber dealer i..s vi'tally intereited. The entire address was a piactical aialysis of the financial and econonoic problems of tlte industry in Sowtkern Califoinin, such as no other man could hazte drazw. Trra Cer,rponNre LuMsrn Mnncn.cNr finrJs sbace in this issue only for Mr. Parher's rentarks on the tares zuhi.ch the Southern Calif ornia ritail lumbeiman poys ioioy, os contra-sted, rui,th whqt he formerly paid. The tar department of his speech folloiui:)

One of the most evident items of increasecl operating costs is taxes. Somc bnsiness men consider Federal Income Taxes the most important taxes, but to me the most important taxes are City and Countl' Property Taxes, IJnernployment Taxes and Social Security Taxes. Whether you do any good or not you have these taxes to pay. First as to City and County taxes. These taxes have been increasing steadily ol'er the past ten years and prior to that; pressure groups Everett C, Pqrker for some years have been forcing Congress and the Federal spending agencies to give the people "something for nothing" and City and County bodibs are more and more being influenced by pressure groups into one extravagant service after another. In fact, it is not too much to say that practically everyone wants the Citv and Countv to give some service or additional frill that the particular persoll is very much interested in, but condemns the granting of a service he is not interested in. City and County politicians who rvant to be re-elected grant one frill after another and your tax bill increases year after year. Your tax rate may go down but over a period your tax bill will go up due to increased assessment. For instance, our company owns a yard in San Diego. From 1940 to 1950 the tax rate has gone up only 22/o but the assessment has gone up 84%% and the amount we paid for taxes rvent up 125%" On property we ol\rn in Los Angeles City, frorn 1940 to 1950 the tax rate has gone up lS/a but the assessment, or1 virr,'-ing properties, from 25/o to 150/o. This increased tax follorvs through on your stock of goods. On March 1, 1940 a tlrousar-rd feet of 2x4 #l Common cost laid don'n in Los Angeles Harbor $23.00, and rvas assessed at 45/c of $23.00 or $10.35, and this at $5.5155 per $100.000 amounted to 574 per tl.rousand feet. On March 1, 1951 a thousand feet of 2xl #l Common cost laid dorvn in Los Angeles Harbor $92.00 and assessed at 45o/a of $92.00 or $,11.40 times $5.9966 per $100.00 amounts to $2.48 per M. This item u-i1l be a continuing item of increased cost so long as people demand increased services of one form or another. \\rhen you were a kid you l'alked to school or got there the best s'ay you coulcl, but not now; you r.r'ait for the bus to come and get vou, and bring you back. l-umbermcn can help ther.nselves to some extent by supporting sollle of the propertv o\\rners associations l'ho are cloing a goocl jol>. The next most important lzix to my mind is the Federal ancl State Unerl-rployment Tax. This tax has been l'ith us since 193fi and at varying rates of 0 to 3/" on the first $3000.00 of each employee's earnings. The Federal Government receir.es 3/10 <fi l/o each year and the State taxes you in accordance rvith the condition of the State's overall reserve and also in accordance rvith vour own reserve. In our own company u'e paid the State nothing in 1948, l/10 ot l/o in 7949, and then due to the liberality with which money was doled out in unemploymeni cases practically all firms in 1950 were put at a 2-5/lO% rate, and in 1951 our company's rate is 2.7% At 2.7% for every ten people on your payroll you

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-the aII-purp"* *.:.:':;;airs_for roofs, gutters' assures lasting' postttut :"!i":^:;. "*- .o-utt,t.tt flashings,tanks'rarnprp'es'copings'countles! other quick'!ita" tT, sTAcK IT' 'ELL IT!

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-the incompt*Plt ^1*;.i., *u..o, brick, wincrack fi[pr-r.pr':t, t":.];.;'_;; no equal for 'l^w frarnes, wood sut .rl dow trarnes' wu"' f\;;;'t",ti"g l'Ji'^P?, srAcK rr, 'ELL rrr l"-l sro(

P ABco {t*h llJ :}.?, :,9,|J "T,:, -aluminum reintorceow^-i", f,*"y service and and asPhaltic'"'B::::";;;A;;, protecrive fine appearantt' .o:^t-; ;;;;iit. sr,'ieid against bond't-o anY surtacesun and *tn$8t* IT' sTAcK IT' 'ELL IT! i'o-' ot t"uti[t* IT, 'TACK IT' 'ELL IT!

P AB co co-ox IL*c gll lT 9,rha,, and -purs a protective :lll:iril;;;:,*'ai dererior' tai roof surfaces-reslsts ittti'lll:^l"..rior temffi "r';;'y" *1-T:: ffffi::iffi'Jfi i'f; ' Peratures' "t, l:::ttt*'

Ask Your Pobco rePresenloliveiiirn uP wirh PABco's "BlG 4' iN

Bob Taube Back On Job

Bob Taube, salesman for Larvrence-Philips Lumber Co., Beverly Hills, who r,vas laid up for four-and-a-half months due to an ac,cident, reported back to work on October 1.

Bob was spending a week-end last May at the Mataguay Ranch near Warner's Hot Springs and while on a hiking trip with a group of friends fell off a cliff, receiving internal injuries. lIe rvas in the hospital seven weeks ancl underwent trvo operations.

The above picture shows Bob seated at his desk in the company's nerv offices in Beverly Hills. After spending a week in the office, he is now back on his old tqrritory calling on the retail lumber dealers.

Bob's many friends are glad to see him back on the job again.

Los Angeles Building Permits lncrease in September

Building permits issued in the city of Los Angeles during September, totaling $24,198,745, reached the highest figure since May, and represented a rise over August's $r8,537,995.

In September there rvere 4039 pe:mits issued compared rvith 4205 in August. Of the 4039 permits issued in September, 1604 were for housing units, compared with 14O3 for August. There were 1502 housing units completed in September.

Building permits in Los Angeles County unincorporated territory totaled $22,496,068 during September, an increase

Veneer Plcrnt Begins Operction

The new Pacific Veneers plant in Elk Valley, Del Norte County, Calif., is now in operation. The new plant has a production aim of 30,000 board feet per shift and eventually plans to operate three shifts, according to John Hoffelner, office manager. All veneer produced is to be fir. The veneer will be trucked to Medford, Ore.

The plant, completely modern lvith the latest in veneer plant equipment, is built on a cement base, all on ground lcvel, in an all-metal quonset type building. Al Coble is irlant superintendent. Loren Haugen is president of Pa,cific \.'eneers. Inc rvhich also has ooerations in Medford.

The Tax Burden of the Retail Lumber Industry of Southern Califiornia

(Continued from Page 16) pay the State $810.00 and 3/10 of l/o or $90.00 to the Federal Government, or $900.00 per year for each ten people. You are all acquainted with the abuses of the unemployment tax administration. You knorv horn' easy it is for a person to quit you and collect unemployment insurance for a period of twenty-six weeks, chargeable to your reserve, and never find a convenient or suitable place to work. The Social Security Taxes are at the rate of lft/o on the first $3500.00 the employee earns, and since the average yard employee earns $3692.00 you would pay the full amount on practically all of your ernployees. Using lfu/o on only $3500.00 this tax costs you $525.00 per year for each ten employees.

Then there are the relatively smaller taxes such as City license fees, increasing continuously as the years go on. Auto license fees and tax have doubled since 1940. Then there are the nuisance taxes and the collection of same such as the transportation tax and the sales tax. Did a sales tax or transportation tax auditor ever come to your place of business and not find additional tax for you to pay out of your pocket?

Then there are the withholding provisions of the Revenue Acr and the withholding of the State Disability Benefits. You are all familiar with the additional costs the collecting, transmitting and reporting of these withholding taxes make.

The rates on the State Franchise Tax have been increasing. Thc budget of the State of California is now the highest it has ever been, b:ought on partly by liberality in old age security. The average payment of aid for the month of July 1950 r''i'as $70.69 and the averag'e of all other states rvas $40.(,6. In October 1950 a proposed legislative initiative qualified for submission to the State legislature rvhich colvened January 1951. The legislature refused to pass it and therefore it must be submitted to the people at the next general election. This would add $110,000,000 to old age security cost or an increase of B5/o in that item.

Then there is the Federal fncome Tax. You are all quite familiar rvith this. It is uppermost in the minds of the people. Expenditures by the Federal Government are and have been tremendous. Whether they have been justifiable I will leave it up to each one of you to decide, but the realistic fact is, that we have got to pay for them. The corporation income tax rate in l94O on incomes over $38,500.00 was 24/o and it is pretty well settled that the rate from January 1, 1951 is to be 52/o on incomes over $25,000.00. lf any lumber dealer in 1951 is fortunate enough to have a better showing than the best three years out of 19461947-1948 and 7949 he will also pay an excess profits tax in addition. The excess profits tax in my opinion is wrong; it is manifestly unfair to many firms. It is intended to retake profits from those profiting excessively on account of war preparation, but the renegotiation act which is in effect rvould r€capture any such excess. High Federal Income Taxes will be with us for some years to come. An accounting oddity is that Federal fncome Taxes are not considered as operating expenses; you are only setting rside that which belongs to the government at the time it is earned. Inheritance and estate taxes are not operating expenses and need not be discussed, but when the controlling stockholder of a company passes away and his estate is largely represented by the pavement, buildings, land and inventory the company owns it can put the company in a most embarrassing position. The case of Henry Ford is a good example. The death of two prominent lum t'rermen in the northwest a few weeks ago may or may not be a case in point. The Revenue Act of 1950 recognizing this situation has however alleviated it to a certain extent.

Enough has been said to show that taxes, exclusive of income taxes, are the highest they have ever been. fn fact, exclusive of any income tax it is my opinion that taxes ainong lumber yards in Southern California in 1950 were about 7l/o more than in 1940. The most effective statement on taxes that I can make is this-that City, County, State and Federal Governments are still spending and will continue to spend extraordinary amounts and that California's share of the Federal, State and Local debt of which each of you has a part is estimated at $19,146,186,938.00, or 1.447 ttmes rlre assessed value ($13,227,731,114.00) of all the land, improvements and personal property in the state and will eventually have to be paid, and you will be asked to pay vour share. Some will pay more and some will pay less, l.ut the per capita sl,are of the public debt for each pers,>n in California is $1825.