tempt to subject certain taxpayers to greater burdens upon their taxable property solely because they own some tax exempt municipal bond income. Further, the LTP provision and the allocation of deductions provision collectively impose a material impediment upon the borrowing power of Local Gov. ernments, particularly in view of the recent deterioration of the municipal bond market resulting merely from the consideration by Congress of the Bill. Probably each such provision alone will constitute such an impediment to borrowing by Local Governments, if the Bill is adopted. (We are unaware of any contention in Atlas that the 1959 Act imposed such an impediment and the decision does not indicate the Court felt that such was the case.) There is a divergence of opinion on what the outcome of such litigation would be. I am not here today to predict the result of this litigation. My purpose is solely to point out to this Committee that a reputable group of attorneys experi enced in this field of law hold the view that the questions presented by the tax reform proposals are so serious as to present questions which will undoubtedly be the subject of long and protracted litigation. As a result, the market for municipal bonds during this period of litigation will continue in the seriously disrupted condition prevailing at this time. This Committee is, no doubt, aware of the view that the doubts raised by the tax reform proposals have been a major source of the problems prevalent in the municipal bond market today. The continued existence of such doubts can only result in the continued disruption of this important market thereby making it increasingly difficult or impossible for necessary public projects to be financed. From October 2, 1968, to a recent date (September 4, 1968), The Bond Buyer's 20 Bonds Index rose 2.01% to a historic high of 6.37%, and is about the same now. During the two-month period from July 10 to September 4, 1969, when the money market for corporate securities and U.S. Governments was relatively stable, the same 20 Bonds Index rose about 4 of 1% (0.72%), presumably attributable solely to the increasing Congressional threat to tax exemption from a press release of the House Ways and Means Committee and the Bill's introduction and passage by the House. Predictions as to the length of time needed to settle the various legal questions that will be raised range from a minimum of two years time in the most agreeable circumstances to as long as ten years. As you can see, even the minimum period of time during which the municipal bond market would be disrupted is far too long. As bond counsel, my colleagues and I are, of course, deeply interested in the proposals presently before this Committee. However, I should like to make clear that regardless of the legislation finally adopted, Local Governments will continue to borrow money, even though at far greater expense than is necessary, and we will, in any event, be called upon to render legal opinions approving such obligations. We are relatively free of any adverse effect from the Bill's adoption and believe our analysis is objective and free from any possible compromise from self-interest. We hope to impress upon this Committee our strong view that the proposals do in fact raise serious constitutional questions, which undoubtedly will be the subject of protracted litigation resulting in a serious disturbance in the conditions of the municipal bond market for a period of up to ten years. Thank you for your consideration of our views. Yours truly, ROBERT M. JOHNSON. The CHAIRMAN. Next is Mr. Richard H. Wangerin, president, American Symphony Orchestra League. STATEMENT OF RICHARD H. WANGERIN, PRESIDENT, AMERICAN SYMPHONY ORCHESTRA LEAGUE; ACCOMPANIED BY WENDELL J. ASHTON, PRESIDENT, UTAH SYMPHONY ORCHESTRA BOARD; AND KENNETH LILES, TAX ADVISER Mr. WANGERIN. Thank you, Mr. Chairman. Senator BENNETT. I wonder if the witness would introduce the other men at the table. Mr. WANGERIN. On my left is the president of the Utah Symphony Orchestra Board, Mr. Wendell J. Ashton; and on his left, Mr. Kenneth Liles, the tax adviser for the American Symphony Orchestra League. Senator BENNETT. Mr. Chairman, I did that on purpose because I am very happy to welcome my friend, Wendell Ashton, here today. He promised not to talk too long. Mr. ASHTON. Thank you, Senator. Mr. WANGERIN. We are grateful to have an opportunity to speak orally on behalf of the symphony orchestras of the United States. Our written testimony indicated some of the statistics and the financial terms of the operation of symphony orchestra. We had here earlier today, but regrettably he had to make an airplane schedule, the distinguished music director of the Washington National Symphony, Dr. Howard Mitchell, who will be writing you shortly. We are asking him, however, in the light of his experience as conductor of many of the U.S. orchestras and as auditor to many others, and as conductor in Europe, behind the Iron Curtain, and in South America, to document the artistic level that has been achieved by symphony orchestras in the United States under the present private philantrophy system that has been in effect. He was prepared to document, and will, as I say, in writing to you, that the level of artistic achievement of symphony orchestras of the United States has no peer abroad despite the fact that many of the orchestras abroad are supported by massive funds, governmental funds, from all levels, Federal, State, and municipal. Incidentally, also there are virtually no individual gifts being given to the cultural performing arts organizations abroad, probably due to the fact that there is no tax incentive, no tax deductibility for such gifts. Very quickly, we would like to support the position that a tax on foundations is really a tax on the beneficiaries of foundations' largesse, rather than on the foundation itself, and we favor instead a 2-percent filing fee to make sure that there are funds to assist in the policing of the foundation effort. The Treasury Department reports that, taking all proposed tax changes into account, there will be a revenue increase to the Treasury in the charitable contribution area in the neighborhood of $100 million. But the Treasury does not indicate how charity can recoup that amount. Now, since symphony orchestras traditionally get the last few pennies of the contributed dollar, a cut of $100 million in the charitable area that is not replaced could spell the end of the operation of many of the U.S. symphony orchestras. We cannot dare to follow Professor Surrey's suggestion that we try it out because there would not be any time left, in our opinion, to restore the patient if the experiment failed. Also, as to the proposal to raise the standard deduction, we would hope that the committee could see fit to carve out the charitable gift for separate deduction in addition to the standard deduction. We feel that this would have a positive psychological effect, rather than necessarily a great tax loss to the Government, on both the solici tor and the donor, and would give the small donor, as well as the solicitor, the idea that the Government is hand in hand with him in his support of these semiprivate or semipublic, if you will, organizations. You have heard a lot of theory already. So we thought maybe someone should testify who has actually labored in the vineyard, and doing a very good job, I might add. because the Utah symphony has a higher percentage of earned income, that is revenue from ticket sales, than is the national average. So we have asked Mr. Ashton. who is its president, to give you a firsthand account of the difficulties of raising money and financing a symphony orchestra. Mr. Ashton. Mr. ASHTON. Thank you very much. Mr. Chairman, I asked Senator Bennett beforehand if he had any advice for me when I appeared here, since it was my maiden attempt. He gave me all of his advice in three words, "Keep it brief." So, if I may, I will just read a short statement here that I think might reflect the picture across the country as it is protrayed in our Utah situation. The ratio of operating costs for our Utah symphony which we must obtain from contributions is climbing steadily, even though the number of concerts and the total audience are gaining markedly. Five years ago, for example, approximately 70 percent of our op erating costs were met from earned income, by the sale of tickets primarily. During our fiscal year which just ended, June 30 of this year, 61 percent of our operating costs came from earned income. As has been indicated, we do better than the national average. The national average for symphonies is that 48 percent of total operating costs come from earned income Thus, our earnings-to-cost ratio has dropped 9 percent in 5 years. Our decrease came despite an increase of over 50 percent in total audiences this year compared with 5 years ago. Our symphony, like others, cannot trim our major costs, which are for musicians' salaries, with technology. No one has yet figured out how to replace a violinist with a computer. All of this means we are constantly pounding, and I do mean pounding, for more contributions-from both the wealthy and those of modest means. Many people in Utah continue to be generous, but we are also hitting some stiffening resistance from givers. Despite the growing challenges of this job of raising more money for symphonies, many of us still believe the effort is worth it. If for no other reason than what our symphony is doing for youth, I sincerely believe the effort is worth it. Yesterday, here in Washington, the National Commission on the Causes and Prevention of Violence, under the chairmanship of Dr. Milton S. Eisenhower, reported that our American youth is getting far too much violence in its entertainment. Symphony music gives a positive answer to this problem. Our orchestra this season is giving 40 school concerts in 31 different school districts. We estimate that the orchestra's total concerts this season will be attended by some 350,000 people. That will be approxi mately 100,000 more spectators than attended the home football games of Utah's three major universities last year, that is, the University of Utah, Utah State University, and Brigham Young University with a spectator total of 266,000. Senator ANDERSON. Of course, the new field house helped. Mr. ASHTON. You said the new field house? Senator ANDERSON. Helped it. Mr. ASHTON. It will help basketball but not football, Senator. Mr. ASHTON. I think we will take care of New Mexico this year. (Laughter.) Senator BENNETT. Is that on the record? Mr. ASHTON. That is on the record. Senator ANDERSON. I almost asked for that myself. Senator BENNETT. You walked into that. Mr. ASHTON. When school boys and girls attend a symphony concert, we find they comb their hair and strive to look their best. The orchestra's music seems to draw and motivate the loftier inner self. This fact was underscored a year ago when we took our orchestra to the State Penitentiary. The orchestra did not on that occasion play rock and roll. The orchestra presented Bethoven, Bach, Brahms. There were seven standing ovations, and the warden said the concert was one of the best stabilizers that had come to the institution in months. For these and other reasons, we believe the Government should not discourage, with tax revisions, volunteers giving to our symphonies. If we cannot get our principal support from contributions, we must go to the Government as our prime source. No thinking American, I believe, wants that. In the first place, we all know that too often dollars that go through the Federal Government laundromat have a way of shrinking before they reach the place of need. Further, you will not attract to the symphony cause the numbers or the quality of dedicated volunteers you now have. Some of our leading Utah citizens now serve as volunteers in raising funds and selling season tickets for our orchestra, and they work hard. Gentlemen, I appeal to you to use your best efforts to keep our symphonies American, supported principally by those who volunteer both their time and their means. Thank you very much. Mr. WANGERIN. Thank you, Mr. Ashton. (Mr. Ashton's prepared statement follows:) STATEMENT OF WENDELL J. ASHTON, PRESIDENT OF THE UTAH SYMPHONY ORCHESTRA BOARD, BEFORE THE FINANCE COMMITTEE OF THE UNITED STATES SENATE, SEPTEMBER 25, 1969 The ratio of operating costs for our Utah Symphony which we must obtain from contributions is climbing steadily, even though the number of concerts and the total audience are gaining markedly. Five years ago, approximately 70 percent of our operating costs were met from earned income, principally ticket sales. During our fiscal year ending June 30, 1969, 61 percent of our operating costs came from earned income. This was despite an increase of over 50 percent in total audiences. Our symphony, like others, cannot trim our major costs (for musicians' salaries) with technology. No one has yet figured out how to replace a violinist with a computer. All of this means we are constantly pounding, and I mean pounding, for more contributions-from both the wealthy and those of modest means. Many people in Utah continue to be generous, but we are also hitting some stiffening resistance of givers. Despite the growing challenges of this job of raising more money for synphonies, many of us still believe the effort is worth it. If for no other reason than what our symphony is doing for our youth. I sincerely believe the effort is worth it. Yeserday, here in Washington, D.C., the National Commission on the Causes and Prevention of Violence, under the chairmanship of Dr. Milton S. Eisenhower, reported that our American youth is getting far too much violence in their entertainment. Symphony music gives a positive answer to this problem. Our orchestra this season is giving forty school concerts in 31 different school districts. We estimate that the orchestra's total concerts this season will be attended by some 350,000 persons. That will be approximately 100,000 more spectators than attended the home football games of Utah's three major universities last year (University of Utah, Utah State University, and Brigham Young University. with a spectator total of 266,000). When school boys and girls attend a symphony concert, we find they comb their hair and strive to look their best. The orchestra's music seems to draw and motivate the loftier inner self. This fact was underscored a year ago when we took our orchestra to our State penitentiary. The orchestra did not play rock and roll. The orchestra presented Beethoven, Bach and Brahms. There were seven standing ovations, and the warden said the concert was one of the best stabilizers that had come to the prison in months. For these and other reasons, we believe the Government should not discourage, with tax revisions, volunteer giving to our symphonies. If we cannot get our principal support from contributions, we must go to the Government as our prime source. No thinking American, I believe, wants that. In the first place, dollars that go through the Federal Government laundromat have a way of shrinking before they reach the place of need. Further, you will not attract to the symphony cause the numbers or the quality of dedicated volunteers you now have. Some of our leading Utah citizens now serve as volunteers in raising funds and selling season tickets for our orchestra. And they work hard! Gentlemen, I appeal to you to use your best efforts to keep our symphonies American, supported principally by those who volunteer both their time and their means. All of us need to remember that the men who stood up and battled at Lexington and Concord were volunteers! Mr. WANGERIN. Earlier this morning, there was a clergyman on a local radio station who had as his text-I happened to hear it"Give. But, if you are going to give grudgingly to the church, don't give." Well, we know the Lord loveth a cheerful giver, and certainly symphony orchestras do, too. All we can plead with you is that you do all you can to give us the incentives for the givers to remain cheer ful in their support of symphony orchestras. Thank you. The CHAIRMAN. Thank you very much, gentlemen. Any questions? Senator MCCARTHY. The symphony would take gifts even from uncheerful givers? [Laughter.] Mr. WANGERIN. Yes, sir; and we do. Senator MCCARTHY. You do not want to push this cheerfulness too far. [Laughter.] |