Evening star., 1932-05-24
LOCAL INCOME TAX
URGED BY BUREAU
Rate Recommended to Sen
ate Lower Than That Fixed
by Mapes Bill.
Continued From First Page. }

in Government departments in Wash
ington would be taxed on the Federal
salary, less personal exemption, because
while Virginia has an income tax law, 1t
does not tax Federal salaries.
Modified Rate Schedule.
The modified rate schedule proposed
by the efficiency experts follows: l per
cent on the first $4,000 of net income
above the exemption; per cent on the
net income between $4,000 and $25 600;
3 per cent on the net income between
S25,000 and S50,000. and 4 per cent on
the net income over $50,000.
The schedule in the MapeS bill goes
UP in sharper steps, as follows:
One per cent of net income not ex-
ceeding $4,000; Ia per cent Of the
amount of net income in excess OF
$4,000, but not In excess of $4,000; 2
per cent in excess of $4,000, but not in
excess Of $4,000; 212 per cent in excess
of $4,000, but not exceeding $4,000; 3
per cent in excess of $4,000, but not
exceeding $4,000; 31a per cent in ex-
cess of $4,000, but not exceeding
S30,00O; 4 per cent of the amount in
excess of $4,000, but not exceeding
$4,000, and per cent OF the amount In
excess of $4,000.
hllOIlltE lllSll likllt VI lllc iCPoAl 10
the bureaus conclusion that public
utilities in the District are in favored
position as compared with representa-
tive utilities elsewhere from the stand
point Of taxation. The bureau recon-
mends that these local utility taxes be
made more commensurate with similar
taxes elsewhere, but will submit sep
arate report later on this subject. The
subsequent report also will deal with
taxation of bonding, title and insurance
companies.
Bank Taxes Higher Here.
The bureau found that banks have
been taxed higher in the District than
the average for the country as whole.
1t presented figures showing that for 10
years ending in 1880 the total taxes
paid by all banks in Washington were
887 per cent of their gross earnings
against $50 per cent for the entire
United States.
The report concludes that the various
financial institutions, now taxed on the
basis of gross earnings or receipts,
might properly be exempted from the
operation of the proposed income tax
law, and their fair tax burden fixed by
other forms of taxes"
Although pointing out in the begin
ming that its modified income tax meas
ure would raise no more next year than
would result from retaining the in
tangible tax the bureau argues that
an income tax would bring about
more equitable distribution of the tax
burden as between property owners and
non-property owners. 1t further argues
that at present IS per cent Of District
revenues are obtained from property
urhi &c rh1rQntnriZod a
proportionate share for property to
bear.
Third Report to Capper.
This is the third of a series of reports
Chairman Capper of the Senate Com
mittee asked the Efficiency Bureau to
prepare on the MapeS Committee pro-
gram The first dealt with the pro-
posed tax on estates of decedents and
the second was combined analysis OF
the doubling of the gasoline tax and
the proposed registration fee on auto
mobiles by weight. In this third report
the bureau points out that, as passed
by the House, the estate, gasoline and
automobile weight taxes would result
in a net increase in District taxation
OF S4,734 900, while the bureaus changes
In those three bills would cut down the
estimated increase to S2.741 900, or a
reduction from the House bills OF
S1,993,00o.
Whatever plan be adopted" the re-
port continues, these measures contem-
plate a substantial increase In taxes
in the District of Columbia, and their
consideration requires care to see that
the burden is distributed equitably
among the several classes"
The bureau then points out that while
its income tax plan will not increase
local revenues. but merely produce at
the outset the same reduced amount
expected to be obtained if the intangible
property tax is retained during the COM
ing year, in normal times the income
tax will raise more than the present
Intangible law.
Recommends FL Changes.
The bureau made the added argu-
ment that public utilities. not to be
taxed under the bill, though now pay
ing less than other classes Of taxpayers
in the District, might well be called
upon to make additional contributions
the resultant amount being more than
sufficient to offset the effect OF reduc-
ing the rates in the pending bill"
Besides scaling down the rate sched-
ule, the bureau recommends 81 changes
in the rules laid down in the House
bill in order to make the proposed law
more equitable.
The most important changes urged
by the bureau are that taxpayers be
allowed to deduct from gross income
the interest paid on Indebtedness in
CURED in financing a home, and that
a single person who is the head OF q
family be allowed the same personal
exemption accorded married person,
namely, $4,000.
Changes Analyzed.
The various changes 1t recommends
in the House bill are analyzed by the
bureau as follows:
/. The inclusion of two new para
graphs in the list of definitions of
terms used in the bill One provides
that the terms paid" shall mean paid
or incurred" and paid or accrued, y
and the term received" shall mean
received or accrued" according to the
method of accounting used by the tax
payer. The other paragraph would
more clearly definite the term resident,
to mean: The term resident IN its
application to individuals shall mean
any natural person domiciled in the
District of Columbia and any other
natural person who maintains per-
manent place of abode therein in which
he OF Sne SpeHQS III tIle dSsItSdtc uiOie
than seven months of the taxable year
provided, that cabinet officers and per-
sons in the service of the United States
Government elected for definite term
of Cfhce shall not be considered as
residents of the District of Columbia
for the purposes of this secticn.'
2. This is the recommendation for de-
duction of interest paid on the financ-
ing of homes, the bureau pointing cut
that most States and the Federal Gov
ernment recognize the salutary ef-
fects of encouraging home ownership"
The bureau declares that failure to al
low this expense in the District would
be an anomaly when the expense in
Cured to carry tax-exempt securities
would be deductible as the section now
stands. In the case of this latter type
of transaction" the report adds, 'it is
felt that the interest so paid out should