§609 Processing tax; methods of computation; rate; what constitutes processing; publicity as to tax to avoid profiteering

Summary

Sets a tax on the first processing of certain farm commodities to raise money for emergency costs. When the Secretary of Agriculture decides government rental or benefit payments will be paid for a commodity, he must announce it and the processing tax starts at the beginning of the next marketing year. For sugar beets and sugarcane the Secretary had to announce by 30 days after May 9, 1934 and the tax applied on and after that 30th day; for rice he must announce before April 1, 1935 and the tax applies on and after April 1, 1935. For sugar beets and sugarcane the marketing year is the calendar year and for 1934 it began January 1, 1934. For rice the marketing year runs August 1 to July 31. The tax applies to the first domestic processing of both domestic and imported commodities, and the processor must pay it. The Secretary sets the tax rate when the tax begins and can change it as needed. The tax ends at the close of the marketing year when the Secretary announces that the payments will stop. If a manufacturers’ sales tax is based on weight and includes processed cotton, that sales tax is figured on the finished product’s weight minus the weight of processed cotton that already paid the processing tax. Normally the rate equals the gap between the current average farm price and the fair exchange value, plus up to 20 percent more to cover estimated refunds and tax-exempt processings. If the tax seems to cause surplus stocks or push farm prices down, the Secretary must investigate, hold hearings, and lower the rate so those problems stop; he may later raise it again but not above the normal calculated rate. Special fixed rules and dates: rules in effect on August 24, 1935 govern several commodities through December 31, 1937; rice is taxed at 1 cent per pound of rough rice from April 1, 1935 through July 31, 1936; rye is 30 cents per 56‑pound bushel from September 1, 1935 through December 31, 1937; if a barley tax becomes effective before December 31, 1937 it is 25 cents per 48‑pound bushel through that date. If a 12‑month average farm price falls into certain ranges above fair exchange value, the rate is adjusted at the next marketing year to 20 percent, 15 percent, or 10 percent of the fair exchange value according to whether the average is up to 10 percent, over 10 but not over 20 percent, or over 20 percent higher; those adjusted rates stay until December 31, 1937 (July 31, 1936 for rice). Fair exchange value means the price that gives farmers the same buying power as in the base period August 1909 to July 1914 and, for prewar-base commodities, also reflects certain interest and tax differences; the Secretary uses Department of Agriculture statistics to compute values. The law defines what "processing" means for wheat, corn, cotton, tobacco, rice, sugar, and other commodities, says manufacturing counts as processing, requires the Secretary to publish price information to prevent pyramiding and profiteering, and bars any processing tax on operations that make newsprint. For wheat, premiums paid for protein are not counted in the current average farm price.