Evening star., 1933-06-12
Tax Reduction and the Future.

The reduction in the tax rate on real
estate and tangible personal property
taken in connection with reduced as
easements in some sections Of the city
on certain properties, is highly gratl-
fvine The mounting burden OF taxa
ton in the period of the depression mas
been extraordinarily painful because ol
falling values and decreased earning
power of the taxpayers 1t Is only
nroper that In the next fiscal year
especially, the drastic economies IN gov
ernmental costs should find some COM
,,ensatorv reflection in reduced local
taxes. The only direct benefit OF gov
ernmental economy is the possibility cl
reducing taxes.
There are a few significant points,
however, that will not escape the al
tention of those who read Auoltor
Donovan's interesting summary IN yes
terday's Star of the local financial con-
ditions leading to and resulting from
the reduction in taxes on real estate
and personal property. One OF these
Is that salary reduction is the element
which. more than any other, has ac-
counted for savings in local govern
mental costs enabling the Commls-
sioners to reduce local taxes. Inc
main source of economy has been the
savings of about S4,000,000 resulting
from the fifteen per cent reduction OF
salaries and the denial of longevity
nav increases for local school teachers.
policemen and firemen. This $4,000
600 saving may be compared with the
total savings to taxpayers, from re-
duced assessments and reduced tax
rate, of S3,660,000. In other words,
local salary cuts are more than paying
for tax reduction.
There have been other savings, OF
sourse. The District in the fiscal year 1884
viii be operating on starvation ration
as far as construction is concerned.
Beginning a bridge and two school
buildings covers about all construction
work in 1884. There may be, and there
should be. additional construction work
ON roads and water mains. financed by
otherwise unusable surpluses OF gaso-
line and water taxes. Such conStruc-
tion, however. is contingent on Budget
Bureau approval.
The fiscal year 1884, in other words,
is a year of emergency. The reductions
in the local budget do not represent the
sort of savings that wise men would
like to see made permanent. 1t Is
possible to reduce the salaries OF Gov
ernment workers and reduce taxes. and
when the salaries of Government work
ers are reduced. taxes should be re-
duced. But when salaries are reduced,
the reduction is reflected in decreased
purchasing power and lowered stand
ard of living. No one can contend that
our municipal employes-who are paid
In accordance with the Federal salary
standard-are overpaid. Their pay
has been reduced in some approximate
relation to lowered prices entering the
cost of living. and when these prices
rise again, the pay rolls must rise with
them. And it is unthinkable that the
District can for much longer postpone
essential construction work. AS long as
it is postponed, the savings to taxpay-
ers thus resulting are offset by In
creased unemployment and increased
demands for relief and inadequate mu-
nicipal facilities.
Congress has equitably allowed saw
ings to local taxpayers in connection
with the national savings made from
reducing the Federal contribution. This
should establish the fact that when
normal expenditures are resumed, with
the return of better times, and local
expenses begin to mount again, the
Federal contribution must be increased
in the same proportion that municipal
expenses increase. Unless this IS done
the result is inevitable Either the local
community will be plastered with heavy
and additional taxation made more in
sufferable because of the higher Federal
taxes, or the standards Of municipal
service will deteriorate along with the
standards of maintaining and develop
ing the American Capital.