The Washington herald., 1922-03-08
Senator Ball Proposes
Drastic Rate on Ex-
cess Earnings.
MEASURE INCLUDES
ALLIED COMPANIES
Would Prevent w. r. &
E. Co. From Hiding
Behind p. E. p. Co.

A definite proposal for solving
the muddled traction situaIroa in
Washington will be submitted TO
the Senate District Comrtittee to-
Gay by Senator L. HeisIer Ball. Of
Delaware.
1t will be predicated upon a Sys-
TEN Of taxation on excess re1,nle~
at such a drastic rate that il will
make lower fares not only des;r-
able but necessary and a merger
OF various properties sure, accord
ing to Senator Ball
He made public yesterda, q let
ter from the Public Utilities Com
mission upon which he sta I'd he
had based his calculations The
communication contained statistics
OF the earnings of the various
properties operated or controlled
by the companies and his piAn. at
variance with the suggested bill
OF the Commission. would inlhpse
tax on all these properties rather
than upon the traction lines alone.
Would Tax p. Il. r. Co.
For instance. he pointed out. one
Of the big stumbling blocks TO a
trio Power Company. whose earn
iags have taken care of defIclen-
cies in the earnings Of the WASH
ington Railway & Electric COM
pany. A tax upon this would
handicap the w. II. & T. Co, to
such an extent that a merger would
be necessary and at the same time
the Capital Traction Company
would be so restricted in its excess
that il would look 10 union Of
the two lines as conductive OF
greater efficiency and a better re-
turn on the investment.
The letter from the Public CtlH-
ties Commission to Senator Ball
follows:
Text Of ComnissiOn's letter.
The return to the Capital Trsc-
ton Company Cunder the original
plan) would have been s.l3 per cent
per annum, and to the Washington
Railway and Electric Company, SIS
per cent, with a return on the COM
binsd fair value Of their proper
Of 7.eS per cent.
These figures are for the
dar year 1921.
The earnings Of these tN GU
panies can be brought st Gnre
closely together. however, e tHts
tax provision be modified s. a. TO
impose a tax Of so per cent or g.Ut
portion OF the operating inv0rrs m
excess OF 6 per cent and Igs eA-
ceeding per cent. and a tEE rf 5
per cent on that portion OF 1per7sAs-
ing income in excess Of : rrr "sUJ
return. The effect Of tai p-Evi-
sion Of this nature for the .a.ds
year 1921 would have been -a He
Capital Traction Company -. R-r
cent and to the washington sGr.-
way and Electric Company e. D.
cent. a difference Of only : .nEHNl-
mately l per cent in their ... ~ ?
power.
Under the provisions % he hl
already submitted by us 9TH orig
nal proposal the increase Nn the I
amount Of taxes TO be paid / 'Hesa,S
! two companies. on the basis ~ ls<4
erations OF 1921. is sl57.SIl = ~
the above suggested modif, 90 &
are adopted. the amount Of Z . q
would be increased 10 S4ls.Sr I.lTtH
c. T. Co.'S Statement 4F'
The statement foT the - 80
| Traction Company follows:
The gross revenue for q year
is given as S5.5Ol.2OO-35: op attn
/ expenses and taxes. S3.s9. .EefA
less taxes on gross receipts T217
1 546.7s; operating expense less
/ taxes on gross receipts. s C-s--
| 1859: operating income yea 'adt
/ December 81. 1891, sL,s24,SSt.gss
| per cent return on fair vale. %
! lOl.395.53: operating income eN-
cess of per cent return. sS2S r9i.''.
Amount OF tax under pr3pcss,fs
I law; operating ipcome in eNce9s q
per cent and more than per
cent on fair value. Sl57.342...- de-
duct so per cent. $7S.67l: operating
income in excess Of Z per cent re-
turn. sS2S.Os1.13: deduct IS per cent,
or s205.772TS. leaving S6i7.3ls.35.
making a total tax OF Se95,9Ss.i6.
Operating income-year ended
December 81. 1921. sl.s2i.lSG.66.
less amount Of proposed tax. or
| s695.9SS.46. leaves operating income
available for return amounting TO
| s1.22s.4s7.2O, or a return on the fair
valuation OF the road OF 80 per
cent The tax under existing law
on the Capital Traction Company is
| $217.546.7s. and the increase under
the new plan is $47S.4Is.67.
Figures for ". u. 4. Co.
The figures for the W. r. +. co.
are:
Fair value OF the company and
subsidiaries as of December 81. 1891,
using weighted average. Sl7.2S6.-
409.5S. Gross revenue for year end
ing December 81. 1921, $6.095.lS6.55.
Operating expenses and taxes. SS.-
ol0.349.10. less taxes on gross re-
ceipts amounting 20 S2ii,3ii; opcr-
ating expenses less taxes on gross
receipts. t4.769, ,034.56: operating in
come year ended December 81. 1921.
s1.326lOls7: per cent return on
fair value of company. Sl.sOe,54S.eS:
operating income in excess OF per
cent return. Slle.553.3i.
Amount OF tax under proposed
law; operating income in excess OF
per cent and not more than per
cent return on fair value, Sl72,36d-
0s: deduct 50 per cent. SSs.iS:o';
operating income in excess of per
cent return. sIls.553.si. deduct -
per cent. or s2esSS.S2. leaving sS9.-
cease. making a total tax 81 A'".-
sI7.04.
Operating income year ended De
cember 81, 1891, Sl.326.iO'.as. rrss
amount Of proposed tax. ar siis,-
S47.04. leaves operatiuc income
available for return OF Sl.l5o, ,25i.s5.