Evening star., 1932-05-24
Weighing the Local Tax Burden
Various Modifying Factors in Consideration of Wash
ington's Tax Burden, in Relation to These of
Other Cities, Are Discussed.

las OF 1879 at $6O4, 4Z6l5-mOre than
half the assessed valuation Of taxable
real property washington has a higher
ratio of exempt to real property than
any other city in the list 1t said. re-
ferring to the cities with which Wash
ington was compared. A part OF its
determination of the Federal obligation
to Washington was based On this higher
ratio of exempt to real property.
Districts Non -Extensible Area,
The condition here is complicated by
the fact that every time a piece of
property is transferred to the tax
exempt list the Districts taxable re-
sources are by that amount decreased.
The District cannot expand its bound
aries into Maryland and Virginia The
Federal Government may continue to
decrease the area of taxable property
here, and the immediate effect of some
of the purchases may be to increase the
value of some remaining property.
But until It can be shown that the part
is greater than the whole, 1t Is idle to
contend that the people Of the District
gain any advantage from cutting down
what remains of their limited tax re-
sources.
The private property owner, the home
owner on a small salary, who forms
the backbone of the city's realty rev.
enue, will be inclined to move beyond
the limits OF the District. where there
is more land and cheaper land. Be-
tween 1920 and 1890 the last census
showed th2t the Districts population
increased only II per cent. whereas the
population of adjacent Arlington County
increased 62.5 per cent: of Montgomery
County. 40 per cent; Of Prince Georges
County, 336 per cent; of Alexandria
City, 33.9 per cent; of Fairfax County
l6.5 per cent, and the metropolitan
area as whole, II per cent. This
growth represented the movement of
the city population toward the sub
urbs, a trend that is National rather
than local The difference between the
situation in Washington and in other
cities is that the District cannot extend
its boundaries to take in those growing
suburbs. thus benefiting in revenues
from new development of property.
Eliminating Interest Payments
From Comparisons.
The fact that the citizens of one
city decide to burden themselves with
debt in order to undertake public serv-
ice enterprises expected to yield them
return in the future, or to launch
program of public improvements, or
because their city officials and poll
ticians have persuaded them that 1t Is
right to borrow money. while another
city decides to live on its income from
year to year, eliminates the debt ele-
ment as a comparable factor in COM
parsons of city tax burdens when the
object of such comparison is to attempt
to decide what constitutes an equi-
table tax burden. The comparisons
should be limited to the money that
the citizens must raise and spend for
annual maintenance and normal i'm
provement, and the matter of indebted
ness should be left out OF such COM
parsons.
Particularly in the case Of conpari-
sons between Washington and other
cities is 1t illogical and unfair to in
clude debt payments in comparisons OF
tax burdens. For during the World
War and Immediately thereafter very
many American cities indulged in a
financial jag. borrowing easily and
heavily from our overrich investors in
tax-exempt municipal securities in
avoidance of income taxes and surtaxes.
Part of this borrowed money went into
useful, permanent improvements by
which the cities benefited; another part
was wasted in extravagance or graft.
Congressman. whose home cities thus
heavily, and in many instances unwisely,
borrowed, refused as Washington's Leg
islature to let 1t borrow at all.
1t results that the taxpayers Of these
cities, having enjoyed the benefit of
these loans, are now compelled to tax
themselves to pay interest and sinking
fund on the loans, and these items in
crease the amount Of their property tax
levy and of their tax rates. which in a
way set the pace for Washington. But
why should washington taxpayers, who
have enjoyed the benefit of no loans, be
required to pay on q basis which CO.
Ordinates them in per capita and total
payments and in tax rate with cities
which are compelled to raise millions in
taxes to pay interest?
Washington, which has enjoyed the
benefit of no loans, should not be re-
quired in order to put itself in a SUI
perficial taxpaying equality with other
cities to tax itself in the amounts rep
resented by these interest payments,
and they should be deducted from the
property tax levies of these other cities
and from the corresponding tax rates
in a comparison with Washington.
The tables presented to the Senate
Subcommittee on District Appropria-
tions by the Citizens Joint Committee
on Fiscal Relations contained numer-
GUS comparisons between the annual
interest payments by the cities-and
this showing of the variation in amount
OF interest is sufficient in itself to indl-
cate the confusion resulting when such
interest payments are counted in COM
parsons of the tax burden: comparisons
that have for their chief aim the show
ing of what different cities pay for
current city maintenance and normal
improvement. This Is illustrated by
the following example: st. Louis, COM
parable in population with Cleveland,
pays s2.293,000 a year in interest on
Indebtedness, while Cleveland pays
$8,916,000 year. Is st. Louis under
taxed because its debt is small, or is
Cleveland overtaxed because its debt is
large? Atlanta, Ga. and Akron. Ohio,
are comparable in population. Atlantas
annual interest payment is s846,00O,
while Akron's is $2.569,00O. Is Atlanta
undertaxed or is Akron overtaxed?
A city borrows money for investment
in public service enterprises, expected
to yield return, or to expedite con-
Struction Immediately of public works
OF one sort or another, that the benefits
may be enjoyed while the debt is being
paid off. Or, the city may have bor-
rowed money because everybody else
was doing it. The interest paid an
nually has no proper place in a COM
parison OF tax burdens for annual city
maintenance, and that is the factor to
be considered when Washingtons tax
burden Is concerned.
(The discussion of State taxes will
be made in a later articles of this
series.)
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