Evening star., 1934-11-20
SUBSIDIES MAKE
I. A.POWERl0W
.TupeIo (Miss.) Projects Held
Benefited by Taxes Paid
in Other States.
By DAVID LAWRENCE.

President Roosevelts statements
about what the communities are do
ing for themselves in the Tennessee
Valley-he calls it community rug
ged individualism at variance
with the public records on two i'm
portant points: The amount of Fed
eral aid being granted and the extent
to which exemption from taxes is en-
joyed.
Mr.. Roosevelt spoke Of fairy tales"
being circulated about non-payment
of taxes and said it was his under
standing that taxes were being paid
by the town of Tupelo. Miss. just as
was the case with private companies
He added you are not being Federal
lied"
Because the President predicted
that the experience of Tupelo would
be copied in every State of the Union,
it is desirable to get at the facts, and
it would be helpful, indeed, if some
impartial body were to make an in
quiry, because the T. v. A. has been
evading the issue and misstating the
tax question repeatedly SO that it
would not be surprising if the Presi-
dent himself had been misled of mis-
informed.
Had Municipal Power.
First of all, it is important to point
out that Tupelo had a municipal
power system before the T. V. A.
came into the picture. Hence, if its
rates were high it was due either to
its own management or the cost Of
the power which it bought.
The T. W A. now comes in to
supervise the operation, thus provid-
ing a supervision by the Federal
Government which costs Tupelo ex-
actly nothing, though the taxpayers
in other parts of the country pay
not only for this, but for the subsi-
died power delivered to Tupelo. The
T. v. A. refuses to recognize State
commissions as having any authority,
and, while it claims to pay taxes, has
set aside for that purpose small per
cent of what private companies would
have to pay.
Thus the town of Tupelo is asked
to pay taxes by the T. V. A. "at rates
equivalent to the taxes assessed
against other property of similar
nature" This is the exact language
of the contract between the T. V. A.
and the town of Tupelo. But this
means property taxes only and ex-
empts the municipality, of course,
from paying license fees, privilege
taxes, State and local excise taxes. the
3 per cent Federal excise tax, corpo-
ration franchise taxes and other To-
cal, county. State and Federal taxes
such as private companies must in
clude in their operating expenses.
Coal Companies Protest.
The same thing came up in Ala
bama when the T. V. A. claimed to
be paying taxes to the State, giving
the impression that it was doing what
private companies were doing. But
the T. v. A paid in about $4,000.
The equivalent of the T. v. AS opera
tions if taxed as private untility
would have been, it is estimated,
about S366000 a year. The coal
companies, which have been fighting
the competition of the Federal Gov
ernment with its water power. have
not only cited those figures but the
taxes they themselves pay. One coal
company alone paid the State OF Ala
bama $4,000
Whether Tupelo is big success as
q business proposition depends upon
how much Federal aid is added or
substracted. Thus Tupelo until few
months ago was charging from one
and half to twice as much as the
rates charged by privately operated
companies in the same region. It
had no money to develop its customer
list or the uses of electricity; hence
the amount of consumption was rela-
lively low.
When the T. V. A. came onto the
= scene, it served to increase the con-
sumption considerably. number of
private companies have done the same
thing in taking over municipal plants
in different parts of the country.
There need be no dispute about the
fact that many municipal plants
needed the helping hand of larger
units.
But when the statement is made
that Tupelo isn't being "federalized"
1t raises a question as to what fed
eralization really means.
T. v. A. Provides Low Rates.
Without the low cost of T. v. A.
power, the town of Tupelo couldn't
have low rates Without charging
part of the investment to navigation
and only part Of it to electric power,
the T. V. A. couldn't make low rates.
1t has the benefit of the money spent
by the taxpayers of the whole United
States in figuring out the amount its
plant cost and tine interest that must
be earned.
Also, the various communities in
the South aren't taking all Of the
initiative. They are depending on
Federal funds and Federal encourage
ment. The truth is the T. v. A.
has a big investment and has been
challenged to make good its yard
stick" idea. SO it is offering to sell
power to municipalities in competition
with private companies And the only
way it can really make sales of its
surplus power Is to bring about a
subsidy either through its own book
keeping or by the system of virtual
tax exemption described above.
Officials of the T. V. A. go around
making speeches-they are a matter
of public record-which plainly en-
courage municipalities to vote to re-
woke franchises or terminate arrange
ments with private companies. Munic-
ipalities in the Tennessee Valley area
would be foolish to reject the oppor-
tunity to get low power rates sub
sidized by the people of the State
0f New York and other StataS uhich