Evening star., 1961-08-10

lngS and loan commissioner OF
Wisconsin, appeared before the
committee in opposition to the
proposed tax change for mu-
tuals and was questioned
sharply by Representative Cur
tbs. Republican of Missouri.
Mr.. Winkowski urged Con-
gress to recognize the mutuals'
need for substantial reserves
and said it has been difficult
under present conditions for
these institutions to maintain
adequate reserves.
Il shudder to think what
would happen if Congress would
agree with the Treasury that
2 or 8 per cent loss reserves
are adequate" he declared.
Commenting on a report by
Mr.. Winkowski that reserves of
Wisconsin savings and loans
had declined to 8.5 per cent
from 9.6 per cent back in 1851;
Representative Curtis asked
why reserves we're allowed to
decline if they were so impor-
tant.
Mr.. Winkowski said the per-
centage of reserves had declined
because rapid growth pushed up
savings faster than reserves.
Mr.. Curtis said he did not
wish to detract from the i'm
portant role taken by the mu-
tuals in home financing, but
said he believed they had
elected to expand lending as
fast as possible rather than
build reserves.
Didn't the associations S
choose to grow at the expense
of reserves" he asked. The wit
ness seemingly asSented.
Mr.. Curtis repeated an
observation of yesterday that
he felt the percentage formula
for reserves is basically un-
sound. ,.
When savings go, up. the
reserve percentage in relation
to them goes down and taxes
decrease, and conversely if
savings should contract, the
required reserves would be cut
and the tax liability would in
crease just when the associa-
ton could least afford to pay
higher taxes, he contended.
League Chief Testifies
Higher Federal taxation of
savings institutions would up
set the Nations economic
applicant and crimp taxpayers
pocketbooks, declared Charles
A. Wellman of Glendale, Calf. j
legislative chairman for the
National League of Insured
Savings Associations.
The homeowner will join the
saver and the Government in
sharing the burden of the tax
change proposed by the Treas
ury staff and backed by the
commercial banks, he said.
Mr.. Wellman declared a tax
increase would be passed on
to more than 40 million Ameri-
cans = including practically
every adult in the Nation who
has accounts in savings as
sociations or mutual savings
banks.
He warned that higher taxes
would sharply curtail the ability
of thrift institutions to attract
savings to make home loans
a situation which he said would
bring the postwar housing
boom to an end with serious
impact on the Nations economy
and Federal tax revenue.
Tax Advantage Scored
Gaylord A. Freeman, jr.,
president of the First National
Bank of Chicago, yesterday
scored the present tax advan-
tages of the savings and loans
and mutual savings banks.
First there is no valid rea-
son for the present virtual tax
exemption accorded the mu-
tuals and second, this exemp-
ton is unfair to other taxpay-
ers," he declared as a witness
for the Association of Reserve
City Bankers.
THE mutuals are accorded a
tax preference over all other
taxpayers" he declared. They
are not limited to reasonable
deductions, but can deduct any
amount they wish up to their
full net income, year after
year, so long as their total re-
serves plus equity do not ex-
ceed IL per cent of their share
accounts" he emphasized.
This preference permits de-
duction without any relation
ship to the degree of assets at
risk" he said.
Other Witnesses Due
Among other witnesses sched-
uled to appear this afternoon
were George A. Newbury, presi-
dent of the New York State
Bankers Association; Gen.
George L. Bliss, legislative re-
search chairman, Savings Asso-
citation League of New York
State; R. E. Gormley of the
Georgia Savings Bank & Trust
Co.: Howard J. Stoddard of the
Roth Committee for Tax
Equality. and leaders of six
State savings and loan leagues.