Evening star., 1932-06-23
$4,000 UTILITIES
TAX FOR DISTRICT
IS RECOMMENDED
Combination Gross Receipts
and Net Earnings Levy
Is Proposed.
BUREAU OF EFFICIENCY
SUBMITS ITS FINDINGS
Exhaustive Report to Senate Com
mittee Analyses Capper Bill to
Revise Import System.

A combination gross receipts and net
earnings tax on public utility CORPORA
tions in the District which would Yield
an additional s67o,ooo a year was
recommended to the Senate District
Committee late yesterday by the United
States Bureau of Efficiency.
The bureaus recommendation was
contained in an exhaustive 86-page
report analyzing in detail the Capper
bill to revise the system of taxation ON
incorporated banks and trust companies.
bonding, fidelity and surety companies,
title companies. public service co-pora-
tions, automobile bus lines and rail-
roads
Under existing law, the bureau point
ed out, gas companies are required to
pay per cent on gross earnings, elec-
trio light and telephone companies 4
per cent and street railway companies
4 per cent on gross receipts. In lieu
OF this schedule, it proposed a change
from the present bases to a combina-
ton tax Of 4 per cent on gross re-
ceipts and per cent on net earnings,
applying uniformly to the group.
$4,000 Deduction.
"The increase in the annual revenue
as result of the change" the report
declared, sis estimated at S700,0OO,
from which, however, there should be
deducted $4,000 paid by traction
companies to crossing policemen, thus
making the net increase s670,000. This
deduction is made because of the pro-
posal pending before Congress which
would require the District government
to pay the cost of crossing policemen"
The bureau also recommended a
number of other changes in the bill,
all of which, it said, would result in
increasing District revenues $685. 900.
These include higher tax on health,
accident, life insurance, bonding, fidel-
ity, surety and real estate title COM
panieS. At the same time it urged
that the taxes on national banks and
trust companies be reduced by sl2O, 900,
and opposed at this time increased
taxes on steam railroads, interurban
trolley lines, cable and steamboat COM
panies
The bureau further recommended
that the proposed tax on motor bus
Zines be fixed in a bin recently passed
BY the House providing for the taxa
tion Of automobile buses on a mileage
basis, rather than in the measure Spon-
sored by Senator Capper.
$4,000 a Year Relief.
Relief from taxation would come to
the national banks and trust compa-
nies under the bureau plan through a
deduction from gross earnings Of the
interest paid on savings accounts. The
Capper bill also provides for the deduc-
ton but does not indicate, as does the
bureau, that it would save these iasti-
tutions $4,000 a year.
The bureau pointed out that as early
as 1903 the gross earnings tax for saw
ings banks was reduced from to 4 per
cent, while national banks and trust
companies continued to pay the per
cent rate. Figures were cited showing
levies on these institutions nearly
double those in other cities in the fifth
Federal Reserve district.
In view of the fact that the tax
on banks throughout the United States
appears to be comparatively high, and
that paid in the District above the
average, the bureau believes" the re-
port said, that a reduction should be
made in the local taxes for this type
Of business.
"It does not, however, favor lower
rate at this time. but feels that relief
should come through change in the
gross earnings base, so as to allow a
deduction for interest paid on savings
accounts In the manner proposed in the
BILL"
Proposed Rate Increases.
Increases recommended for health,
life and accident insurance companies
were from l to 1l2 per cent. Other
insurance company rates would be
raised from IL to per cent. Bond
ing, fidelity and surety companies, now
subject to l 4 per cent gross receipts
tax, would pay a rate Of 2 per cent on
net premium receipts. Companies in
surfing real estate titles would be taxed
2 per cent instead of IL per cent.
With respect to the insurance COM
panies. the bureau urged that they be
exempt from the proposed Mapes in
come tax law for the District, along
with other corporations taxed on gross
earnings or gross receipts. In propos-
ing the exemption, the bureau said it
believed any adjustment in the bases
and rates paid by the concerns ex-
empted should be set forth by an
amendment to section % of the Mapes
income tax bill, and not in a separate
bill. By following this course, it ex-
planned, the companies exempted from
income tax will be obliged to pay the
substitute taxes found by Congress to
be adequate.
The bureau opposed the plan of.
Senator Capper to apply a general
property tax combined with a gross
earnings tax to District public utility
corporation on three grounds First,
the bureau said it would confuse in
vestment with ownership; second, 1t
would not serve as a satisfactory critic
rion Of ability to pay, and third, it would
raise difficulties in establishing the
value of corporation property.
Real Property Tax Stays.
$50 far as practicable" the report
declared. ito unite features of fairness
and certainty in one system. the bureau
favors tax ior public utilities embody-
ing the elements of both gross receipts
and net earnings, involving two dis
tinct computations.
"The gross receipts-net earnings tax
would be in lieu of the personal property
taxes and the proposed income tax.
The real property tax, however. would
be continued without change and with
out the inclusion of any tax whatever
on personally in the form of poles,
wires and conduits.'
No change was recommended in the
taxes of steam railroads. interurban
trolley lines, cable companies and
steamboat companies at this time, other
than the application of the income tax.
while the bureau believes the rail-
roads are not necessarily entitled to a
perpetual exemption" the report said,
'it feels that the situation in the
United States at this time Is such that
consideration of increased taxes ON the
railroads, to be accomplished by repeal
of the exemption, should be deferred
until business conditions Improve"