Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1935-11-07

Sary to enact leglSlauOn permitting
municipalities the privilege Of declar-
ing themselves virtually bankrupts
and according them the right of COM
promising with their bondholders I'M
der a decree Of a United States court.
So, when we think Of taking away tax
able property in any city and making
it non-taxable by conversion from pri-
vate to federal government owner
ship, we see how it adds further bur-
den Of taxes to the remaining private
ly owned property. That is the reason
why many municipalities are fearful of
government ownership Of railroads,
for example, since the railroads are
heavy taxpayers in every community
they serve. Laying aside the question
Of merit or lack Of merit in the propo-
sition of government ownership Of
railroads, no municipality can afford to
overlook the loss Of tax receipts that
would follow government acquisition
Of those carrier properties. They pay
real estate taxes in the United States
annually of more than three hundred
million dollars. OF course it is dis
tributed in thousands of places but
whatever the amount may be in your
community or any other, it represents
tax source which the local govern
ment can i'll afford to lose.
1t is the same, although to lesser
degree, with respect to the housing
project. In this statement mean only
as to the local tax phase. 1t has,
however, another very important tax
angle. Property, or the income from
property, everywhere is subjected to
three tax assessments. First, the
county or city in which the property is
located takes tax toll; second, the
state gets a share, and thirdly, the
federal government either by income
or some other tax gets its hand into
the pocket of property owner.
In the case of the low cost housing
project, it was necessary to calculate
the rental rate on base so low that
it would be impossible for the total
receipts to pay off the government In
vestment. This had to be done If the
low cost housing was to be supplied
at rate the poorer classes could
pay. 1t is seen, therefore, that there
was a deficit staring the proJe~
in the face. To meet this deficit GER
tain federal funds were to be set aside
regularly which, coupled with the re-
ceipts from the tenants, would serve
to amortize the original cost. From
the standpoint Of liquidating the cost
of the building. this is fine but 1t does
not impress one as being so whole
some when 1t Is shown that the gov
ernments contribution comes out of the
general fund of the Treasury which In
turn comes out of the general taxpay-
ers of the nation.
And so 1t is with a great many 9TH
er of the experiments where such pro-
grams place government-owned agen-
cies or industries In competition with
citizens. Take the Tennessee Valley
hydro-electric project for another ex-
ample. The federal government has
placed more than $131, 100000 In that
venture. The present Tennessee VAL
ley Corporation has taken over these
properties at about one-third of this
amount-a net loss to the government.
But that Is not all. The vast project
that has been developed in the Ten
nessee valley and through the adjoin-
ing counties and cities is not subject
| to state taxation nor do the cities that
are being served by Tennessee river
nIoafrinifu rot IN
source. 1t may be sound in the theory
but I am, fearful that the inbred op-
position to federal government en-
croachment on local affairs sooner or
later will cause a new explosion. It
will come from the original feeling
that states rights ought to be superior
to federal rights except where states
have delegated that authority to the
federal government in the national
Constitution.
Earlier in this discussion I men.
toned the ruling by Comptroller Cen
eral McCarl who act.
Always ed; of course, as the
the Goat head of the general
accounting office.
This agency was created with a very
definite purpose In mind. Congress
wanted some Independent group or
authority to watch all federal expend.
it-res to make certain that they were
made In accordance with law. A good
many years ago when this Job was
done by the comptroller Of the treas
ury. 1t was not infrequent that an ad.
verse ruling by the comptroller put