Evening star., 1935-04-14
TREASURY REPORT
SEEN INCOMPLETE
Leaves Important Issues
Still Unsettled in Fis-
cal Question.
BY BEN McKELWAY.

BY BEN McKELWAY.
Completed after a study which
began last Fall, the Treasury Depart
ment has sent to the District Com
mittees of House and Senate report
by some of its experts which opens
with the declaration that the recurring
problem of fiscal relations between
the District and National Govern
ments involves two distinct ques-
tionS:
!. Whether residents of washington
are bearing a heavier burden Of tax
alton than residents of cities roughly"
comparable in size and character.
2. In view of the special character
of the District in its relationships
with the Federal Government, what
considerations should govern the
establishment of continuing basis
for Federal contributions?
The report is so admittedly incom-
plete as to fail in furnishing salts
factory answer to the first question,
and it disposes of the second by pro-
posing another and more extensive
investigation. conducted with the as
sistarce of experts within and OUT
Otherwise, it leaves the second ques-
ton practically untouched.
Answers Only One Question.
The report sums up its answer to
the first question with the state
ment:
If consideration of the quality and
quantity of services received by resi-
dents of the District be excluded and
attention be focused solely on the
actual money burden Of taxation, the
clear answer is: The evidence indicates
that Washington taxpayers bear a
smaller total burden of taxation than
the residents of other cities of roughly
comparable size and character"
Confronted with the Treasury's re-
port that the tax burden las exam
ined by the Treasury is lighter here
evidence" immediate interest turns tc
the nature and the source of the
evidence.
Those who have been sufficiently
interested in the drab subject of COM
parative tax statistics to study meth
ods used in such comparisons will be
surprised to discover that the Treas
ury experts have apparently repudiateo
the methods chosen by their fellow
experts in the Department of Com
merce and have gone outside the
Government service to borrow figures
or rather theoretical figures (for they
are not actual, as the evidence upon
which to base the finding that the
Districts burden of taxation is rela-
lively low.
Adjusting Tax Rates Explained.
The method chosen by the Treasury
experts in weighing the property tax
burdens of the cities chosen for the
comparison is to adjust" the actual
or nominal, tax rates of these cities on
the theoretical, reported, ratio of as
sessment value to true, or real, value
For instance: The tax rate of City "a
might be $25 thousand, and the tax
rate of City "B" might be $50 thou
sand. In City "a property may be
assessed at reported 100 per cent OF
real value, while in City "B" property
may be assessed at reported so per
cent of real value. The tax rates are
adjusted" for comparison by applying
to the tax rate the reported ratio of
assessed to true value, and in this
case the adjusted" tax rate for the
two cities would be the same. e., S25.
The whole trouble with this method
lies in getting the real ratio of assessed
to true value The Treasury experts
did not get it themselves. They bor-
rowed the figures of the Detroit Bu-
reau of Governmental Research, an
organization which engages in annual
comparisons of municipal financial
statistics and which obtains the as
sessment ratios from municipal assess
ing officials, other bureaus Of research
and others.
How Accurate Are the Ratios?
When it is recalled that the compar-
ison of tax burdens is largely made on
the basis of reported assessment ra-
tios, then the question turns to the
accuracy of these reports.
And in this case it is interesting to
study one of the tables contained in
the Treasury's report, which contains
the estimated ratio of assessed to true
value used in its comparison.