Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-05-28
CAPPER'S UTILITY
BILL D|SAPPROvED
Measure to Change Plan of
Taxation Criticized by
Commission.

The Public Utilities Commission yes
terday reported unfavorably to the SEN
ate District Committee on the Capper
bill to change the method Of taxing
public utilities. The method now in
force is to charge percentage of gross
income. This tax Is charged in lieu of
any personal property tax. The Cap
per bill proposes to substitute 2 per
cent gross earnings tax dnStead Of the
present 4 to 5 per cent? and to tax
the utilities on their personal property
in the same way that individuals and
business corporations are taxed.
In the opinion of the commission ~
the report reads, very great difficulty
I will be experienced in determining the
basiS-that is, the assessed value Of the
real estate and tangible personal prop
erty of these utilities upon which it is
proposed to tax them. For example
this commission has been engaged for
some 20 months in an effort to deter
mine the value of the property of the
street railway companies, used and use
full in the public service. This task is
still incomplete"
"Gross-Net" Tax Suggested.
The commission suggests instead a
'gross-net' earnings tax. No specific
amount of tax is suggested. because, as
the report states, 1t is not considered
TO be the function of this commission
to deal with the specific amount OF
the taxes to be imposed upon the
utilities in the District and therefore
in this letter no reference is made
thereto"
An example Of the workings OF
"gross-net" tax. however, is suggested
This is a tax recommended by special
committee of the New York Legislature
for utilities in that State.
The actual percentage of gross earn
ings to be taken as taxes depends. &C
cordlng to the report, upon the rela-
/ ton between gross and net earnings
For example, where the utility has NJ
net earnings, or the net earnings dc
not exceed per cent of its gross earn
| ingS, the committee recommended that
the rate should be l per cent Of the
| gross. This tax then varied as the net
earnings percentage increased, SO that
when the net earnings exceeded 40 pei
cent Of the gross earnings, the rate rec
commended was per cent of the gross.
The commission stated that without
! indorsing the exact percentages con-
| tanned in the New York Committee re-
port the adoption of some ''gross-net'
plan of taxation would adjust the tax
burden in accordance with the earn
ing ability of the utilities. bear more
heavily upon those which are prosper
Gus and less drastically upon those
which are in difficulties.
Can't Interpret Sentence.
The commission pointed out that II
was unable to interpret a sentence Of
the bill reading: 'All structures erected
by public utility companies upon public
space, either above or below the sur
face of the ground, shall be taxed
as private property to such utility. but
not enhanced in value because SC
erected" 1t points out that all such
difficulties of Interpretation might be
removed by the adoption of the gross
net" taxation method.
The commission also called attention
to the fact that the bill includes within
its provision bus companies, that it is
proposed to tax bus companies under
another bill now pending and ZAP
parently the additional taxation would
be unduly heavy" Attention is also
called to the fact that both street
railway companies now operate bus
lines and that the bus earnings are
reflected in the railway companies
gross earnings.