Evening star., 1932-06-06
UnfavorabIe Report Is Given
to Senate District CON-
mittee on Bill.
LEVY ON NET AND GROSS
RECEIPTS RECOMMENDED
Present Basis Has No Substantial
Relation to Ability to Pay"
City Heads Declare.

The District Commissioners today
sent to the Senate District Committee
an unfavorable report on the Capper
bill to change the system Of taxing pub
lie utilities In the District. The bill
proposed that instead Of the present
franchise taxes, the utilities be taxed
on their personal property, and 2 per
cent tax on gross earnings. The present
system Is to charge no personal property
tax and and in some cases per cent
on gross earnings for franchise tax.
The Commissioners suggested an al
Tentative method of accomplishing the
desire of the Senate District Committee
to increase public utilities taxation
81 ,0O0 900 by imposition Of 4 per cent
on gross receipts, plus 6 per cent
on net receipts for ali local utilities.
Report Accompanies Draft.
At the same time, the Commissioners
recommended that the street railway
corporation be excused from paying the
salaries Of street crossing policemen, an
item amounting to about $4,000 per
annum The new draft was accom-
panied by comprehensive report made
to the Commissioners by a committee
consisting of District Auditor Daniel j.
Donovan, Assessor William P. Richards
ana Assistant Corporation Counsel VIII
liam A. Roberts.
The committee report finds that "the
present basis Of taxation Of utilities
bears no substantial relation to ability
to pay. The computation OF the tax
on gross earnings and gross income
consumes the same measure of profit
nf nj
sumes a relation between gross income
and the amount Of property required
to conduct business on the same pro-
portion. Obviously these relations are
non-existent, and 1t might further be
added that the present taxes involve a
presumption Of substantially similar
cost to the Government in supervision
and occupation Of public space which
cannot be supported.
The difficulty Of evaluating the
property Of complex utilities annually
for purposes of taxation Is generally
conceded. and this is particularly true
where the taxation is required by
statute to be upon the basis of 100 per
cent OF the value of the property"
The report then points out that there
valorem tax basis for public utilities in
other parts Of the country. It points
out that the measure provides for the
deduction Of the gross income of the
amount received by parent corpora
ton from subsidiary located In the
District of Columbia, which Is itself
taxed under the same measure. It
specifically provides for the exclusion
Of income received from the operation
Of motor vehicles In carrying passen-
gers which Is covered by other pending
legislation.
Theory Of Substitute.
The fundamental theory Of the sub
stitute bill Is said to be tine combina-
tion of per cent tax on the gross
net earnings of a utility, thus insuring
at the same time substantial security
to the District of Columbia, as to a
large portion Of the tax, regardless OF
the economic condition of the compan-
les, and development Of additional
revenue from the more prosperous util-
tiles.
The Capper bill provides also for a
modification Of the methods Of taxing
national banks and other incorporated
banks and trust companies by classify
ing all banks except savings banks
without capital stock and private banks
IN single group, to be taxed per cent
on all their earnings. excepting only
those from tax-exempt securities and
interest paid to depositors on savings
accounts.
The report on this question says: 1T
is recognized at the present time the
business Of national banks, trust COM
panies and incorporated savings banks Is
subtantially similar. Nevertheless, the
present provisions Of the statute include
tax Of 6 per cent on all the income
Of the national banks and trust COM
panies and only per cent on the So
called State banks or savings banks.
Since the original purpose Of Congress
was to discriminate In favor OF those
banks paying interest on savings ac-
counts, an amended section has been
prepared to accomplish this purpose"
Section OF the bill proposed by the
Commissioners puts a tax Of 6 per cent
per annum on gross earnings on each
national bank, incorporated bank and
trust company, and a tax Of per cent
on each incorporated savings bank pay
ing interest to its depositors.
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