7 U.S.C. § 609 — Processing tax; methods of computation; rate; what constitutes processing; publicity as to tax to avoid profiteering

(a) The purpose is to raise revenue for extraordinary expenses caused by the national economic emergency. When the Secretary determines that a payment authorized under 7 U.S.C. § 608 will be made for a basic agricultural commodity, the Secretary must proclaim that fact. A processing tax starts with the next marketing year. For sugar beets and sugarcane, the proclamation was due within 30 days after May 9, 1934, and the tax starts 30 days after that date. For rice, the proclamation was due before April 1, 1935, and the tax starts April 1, 1935. The calendar year is the marketing year for sugar beets and sugarcane, with 1934 beginning January 1; rice’s year is August 1 through July 31. The tax is imposed, assessed, and collected on the first domestic processing of domestic or imported commodities and paid by the processor. Its rate must follow (b), is set when the tax first takes effect, and is adjusted as the Secretary finds necessary to carry out the chapter’s “declared policy,” which this section does not define. The tax ends at the end of the current marketing year when the Secretary proclaims that all such payments for the commodity will stop. The Secretary sets marketing years by regulation. If a weight-based manufacturers’ sales tax under the Revenue Act of 1932 applies to a finished article containing cotton on which processing tax was paid, the sales-tax weight is the finished article’s weight minus that cotton. (b)(1) The rate equals the difference between the commodity’s current average farm price and fair exchange value, plus a Secretary-selected percentage of that difference, not above 20 percent, needed so expected tax collections equal estimated credits or refunds under 7 U.S.C. § 615(c) plus tax that would have been collected on processing exempt because it was done by or for a State, subdivision, or institution. If the Secretary believes the rate for general processing or a specified use or product will reduce domestic consumption enough to create surplus stocks or depress the farm price, the Secretary must investigate and give notice and a hearing opportunity. If the Secretary then finds and proclaims that result will occur or is occurring, the rate must be lowered to the rate that prevents it, and stays there until, after notice and hearing, the Secretary finds and proclaims an increase will not cause it. The rate then is the highest rate that will not cause the result, but cannot exceed the first-sentence rate. (2) For wheat, cotton, field corn, hogs, peanuts, paper, and jute, and, except under (8), sugarcane and sugar beets, the rate from August 24, 1935 through December 31, 1937 is the rate in the Secretary’s regulations effective August 24, 1935. (3) For rice from April 1, 1935 through July 31, 1936, the rate is one cent per pound of rough rice. (4) For rye from September 1, 1935 through December 31, 1937, the rate is 30 cents per 56-pound bushel. Rye’s first marketing year is September 1, 1935 through June 30, 1936; later years run July 1 through June 30. 7 U.S.C. § 616 does not apply to rye. (5) If a barley tax took effect before December 31, 1937 under (a), it is 25 cents per 48-pound bushel through that date. Section 616 does not apply to barley. (6)(A) Rates under (2)-(5), or established under this paragraph, may be reduced, including to zero, under (1) to prevent surplus stocks or farm-price depression, and later increased under (1), subject to (B). (B) For the stated 12-month period, if average farm price is equal to or up to 10 percent above fair exchange value, the next marketing year’s rate is 20 percent of fair exchange value; if more than 10 but no more than 20 percent above, it is 15 percent; if more than 20 percent above, it is 10 percent, each subject to (A). (C) An adjusted rate remains until further adjusted or terminated, through December 31, 1937, or for rice through July 31, 1936. (D) Rates may be increased under the chapter’s formulas and requirements. (E) Taxes end by proclamation under (a) or under 7 U.S.C. § 613. A terminated basic-commodity tax may restart at its stated rate, subject to (A) and (B), from the next marketing year’s beginning if that year starts before the applicable deadline, and remains until changed or terminated. (F) After the deadlines, the Secretary sets rates under the chapter’s formulas and requirements outside this paragraph. (G) If a rate set under this paragraph is finally invalid for constitutional reasons or because of the Secretary’s exercise or failure to exercise chapter authority, the rates in (2)-(5) apply instead to liabilities on or after each invalid rate’s effective date, until Congress changes them, unless the tax ends under (a) or § 613. The difference between the invalid and replacement rates is not collected for periods before the invalidity ruling takes effect. (7) For rice, apply the rate to rough-rice weight delivered to a processor, or, if the producer processes it, to the weight delivered to the processing place. (8) For sugar beets and sugarcane, apply the rate to direct-consumption sugar from first domestic processing, converted to pounds of raw value by regulation. If the rate under (2) is changed under (6), use the higher of the two quotients formed by subtracting fair exchange value from current average farm price for a ton of beets or cane and dividing by the average sugar extraction in raw-value pounds. The applicable rate may not exceed the President’s reduction, per pound of raw-value sugar, in the January 1, 1934 duty under the cited tariff provisions, as adjusted by the stated Cuba treaty and title 19 provisions. (9) Wheat’s current average farm price does not include producer premiums for protein content. (c) Fair exchange value is the commodity price giving it the same purchasing power for farmers’ purchases as in the base period in 7 U.S.C. § 602. If the base period is the prewar period, August 1909-July 1914, it also reflects per-acre interest on real-estate-secured farm debt and per-acre farm-real-estate taxes compared with those in that period. The Secretary determines current average farm price and fair exchange value from Agriculture Department statistics. A rate effective August 24, 1935 is not changed merely by this amendment unless the Secretary finds adjustment necessary under (a). (d) Definitions. (1) For wheat, rye, barley, and corn, “processing” means milling or other market processing, except cleaning and drying, including custom toll and commercial milling, but not nonflour grinding or cracking only for feed. (2) For cotton, it means spinning, manufacturing, or other processing except ginning; “cotton” excludes cotton linters. (3) For tobacco, it means manufacturing or other processing except drying or converting into insecticides or fertilizers. (4) Repealed. (5) Repealed. (6) For sugar beets and sugarcane: (A) “first domestic processing” means each domestic processing, including each processing of successive domestic processings, of sugar beets, sugarcane, or raw sugar, that directly produces direct-consumption sugar; (B) “sugar” means all forms derived from beets or cane, including raw or direct-consumption sugar, edible molasses, sirups, and mixtures containing sugar, except blackstrap and beet molasses; (C) “blackstrap molasses” means the cane-sugar industry byproduct commercially so called, not used for human consumption or sugar extraction; (D) “beet molasses” means the comparable beet-sugar byproduct, not so used; (E) “raw sugar” means sugar made, marketed, or brought into the United States to be further refined, improved, or prepared; (F) “direct-consumption sugar” means sugar made, marketed, or brought into the United States for another purpose; and (G) “raw value” means a standard sugar unit testing 96 degrees by polariscope. Taxes and quotas use raw value, and sugar is converted to it by regulation, except United States beet direct-consumption sugar has raw value equal to 1.07 times its weight. (7) For rice: (A) “rough rice” means its usual condition when delivered by a producer to a processor; (B) “processing” includes cleaning, shelling, milling, grinding, rolling, and other processing, including custom toll and commercial milling, except grinding or cracking by or for the producer thereof for feed for his own livestock, cleaning by or directly for a producer for seed purposes, and drying; for rice with a tax-payment warrant issued or pending, it also includes any of those processings or any preparation or handling in connection with its sale or other disposition; (C) “cooperating producer” means a person, including share-tenant or share-cropper, whom the Secretary finds willing to join the 1935 rice production-adjustment program; and (D) “processor” under 7 U.S.C. § 615(b-1) means a person, including a producer cooperative, commercially processing rice, including custom toll and commercial milling. (8) For another commodity, “processing” means manufacturing or other processing that changes the commodity’s form or prepares it for distribution or use, as regulations define; the Secretary must give due weight to industry customs. This section does not define any other quoted term. (e) When a processing tax or rate change takes effect, the Secretary must publish information needed to prevent tax pyramiding and profiteering about: the tax’s relation to producer prices; its effect on consumer prices; prior relations between those prices; and foreign-country producer and consumer price conditions. (f) For this chapter, processing includes manufacturing. (g) Nothing in this chapter authorizes a tax on processing that produces newsprint.