The Nespelem tribune. [volume] (Nespelem, Wash.) 1934-1936, 1935-10-09
COURTS TO ACT
ON TAX SCRAP
COULEE DAM
Builders Seek To Avoid Paying
State Taxes Totaling Thou
sands Of Dollars
Vital Questions Up
Contractors And Business Firms
Claim Exemption On Grounds
Land Is Federal Area

OLYMPIA, October 8 The
states right to extract thousands OF
dollars in taxes from residents and
corporations in the Grand Coulee
dam area will be challenged in
Thurston county superior court,
October % in one Of the most far
reaching tax cases in recent years.
At that time, arguments will be
heard in suits brought by Mason
Walsh Atkinson-Kier company, gen.
eral contractors on the $63 100000
dam, and the David II. Ryan COM
pany, railroad contractors, against
the state tax commission.
Important Decision
The courts decision may be a
sweeping one, affecting the right OF
the state to collect the sales tax,
occupational tax, compensating tax,
general property taxes and numerous
nuisance taxes, according to
Assistant Attorney General E. P.
Donnelly, who will represent the
tax commission in the hearing.
The companies specifically are
attacking the business tax on their
gross revenues. The state seeks to
levy one-half of one per cent tax
on the total amount of the Grand
Coulee contracts -about $15,000,000
to date.
Questions Involved
Two major questions are involved
in the case: l. Whether the tax Is
a tax on the federal government,
and thus void, since contractors are
hired by the government to COM
struct the dam and; 2. Whether
the Grand Coulee federal area"
being under government jurisdiction
is exempt from any state taxes.
Donnelly said it is within the
province of the court i'm deciding
the case to exempt all residents from
the sales tax, property taxes and
other levies. If it is ruled the
Coulee dam area is entirely under
federal rule, it will mean, in effect.
the setting up of new state
within Washington, over which the
state yields no taxing or police
power.
May Appeal
The contractors have notified
the tax commission they will appeal
the decision Immediately to the
supreme court if they lose. The tax
commission will do likewise.
Should the state win the case, 1t
will in all probability attempt to
collect its two per cent compensat-
ing tax on all generators, steam
shovels and other costly equipment
shipped drto Washington by the con-
tractors for use on the dam. Rail
road equipment, rails and ties.
cement and other materials also
may be taxed.
The 1885 revenue law holds sales
to contractors are retail sales and
subject to the two per cent sales tax.
Thus, the contractors would have to
pay the sales tax, occupational tax
and compromising tax on their big
operations.
Big Sum Involved
Tax commission officials could
not estimate the total amount OF
money involved in the suit, but
predicted 1t would run into high
figures Much depended on how
the court ruled regarding the COM
pleteness of federal jurisdiction
over the area and business activities
of it's residents.
In some federal areas like ma
tional forests and Mt. Rainier ma
tional park, the state did not sur
render it's taxing power. Fort Lewis
and other army posts are exempt
Gasoline and retail sales at their
posts are tax-free, even though the
buyer takes them outside the reser-
walton to use.