Evening star., 1936-01-16
BOOSTING PROFITS
ON JOB INSURANCE
TAX IS PROTESTED
D. c. Officials Get Reports
Price Hikes Produce Ex-
cess Revenue.
UNCERTAIN OF POWERS
TO COUNTERFEIT MOVE
Board Will Consider Question.
Law Fails to Prevent Practice,
Authorities Reveal.

Protests that the unemployment
compensation insurance act should
not be used by business firms to
make increased profits were voiced
today by leading District officials fol-
lowing reports that some employers
had raised prices to customers to
produce more revenue than the cost
of the pay roll assessments.
The same officials frankly declared
they did not know what authority
they may have to counteract any
such moves. They explained that.
while the law forbids employers from
passing the pay roll assessments on
to employees, it does not set up a
bar to increase in customer prices.
They did not suggest there should be
any such prohibition.
Commissioner Melvin C. Hazen,
chairman of the board, promptly de-
clared, however:
Employers certainly should not use
this social security measure, adopted
in the interest of the unfortunate
persons who lose their jobs, as a
means of collecting larger profit"
Marshall Supports View.
The same view was expressed by
John A. Marshall, superintendent Of
insurance, who has been designated
director Of the jobless insurance pro-
gram.
Marshall and other officials made
clear the law leaves the door open to
0 6A aCfT NJ Los hal Caid ha
planned to bring the question up for
discussion at the next board meeting.
officials generally had anticipated
employers would pass on to the con-
Stunning public the actual cost of the
pay roll assessments.
Reports that some firms may collect
even more than the actual pay roll
levies attracted new attention of Dis
trict officials. HaZen and Marshall
made the point that if business houses
add 1 per cent to their customer prices
| they will be collecting more than what
would amount to merely per cent Of
their employe pay roll costs.
Some laundries of the District al.
ready have adopted policy of adding
some excess to customers laundry bills
to cover the cost of the pay roll as
sessments, according to Louis Levay,
member of the Board of Governors
of the Merchants and Manufactur-
ers' Association, who is head of the
Frazee- Potomac Laundry.
Collection Begins Next Month.
Collection of pay roll assessments
start next month. They must be paid
by February Is. This year the assess
ments will be l per cent of the pay
rolls of each employer subject to the
act. Next year the levy will be 2 per
cent of pay rolls and the following
year per cent.
Levay declared his firm now is add
ing per cent to customer bills but
that there would be no further in
crease either next year or the year
( following.
/ The act now places an unfair" tax
/ on laundries, he said, because of the
/ fact that the pay rolls of laundries
amounts to so to go per cent of their
total operating costs, whereas in the
case of other types of businesses such
as department stores. the pay rolls
amount to only l6 or II per cent of
| total overheads.
Furthermore, he argued. ''the costs
of running laundries has been rising
in recent years. due to the national
recovery act. and other factors, while
customer prices for laundry work haze
| declined.
d. c. Still Lacks Funds.
Meanwhile, funds for administering
the District unemployment act tax
were still lacking and no forms have
been printed for business firms and
individual employers to make out re-
ports.
I'VE have asked for an initial ap-
preparation of S150,00O to put the act
into effect" Marshall said. but to
date it has not been granted and we
have no forms for employers as yet.
However. the first reports are not
due until February Is on January pay
rolls and We hope to be able to get the
blanks printed and distributed without
too much confusion. Most of the en-
ployers of large groups have been ad-
vised of the records required and have
taken steps to keep them in the pro-
scribed manner"