Evening star., 1937-09-24
'PALM|SAN0 URGES
REALTY TAX BASED.
ON GROSS RETURNS
Assessor Sees Revolution.
ary Plan to Curb Rentals
as UnWorkabIe.
NUMEROUS PROBLEMS
SEEN IN PROPOSAL
One-Dollar Levy on Each 500
of Income Suggested-Home
Owners Rate in Question.
BY JAMES E. CHINN.

A revolutionary change in the
method of taxing real estate, whereby
the owner would pay on the return
on investment instead Of on the tax
assessors valuation, was suggested
today by Chairman Palmisano of the
House District Committee as one
means of controlling rents in Wash
ington, especially those in apartment
houses and Office buildings.
Palmisano would Ak the rate Of
taxation at 81 on every 500 OF return.
The present rate is SITS on 500 of
assessed value.
Almost Immediately District officials
became aroused over the radical plan.
Tax Assessor Fred D. Allen expressed
belief it would be unworkable and
predicted its adoption would result in
loss to the District Of millions Of
dollars a year in real estate tax
revenues
Difficulties Pointed Out.
Allen pointed out it would be diff
cult to tax vacant land under the
plan, and that the return from
number of homes occupied by friends
of the owners at low rentals would be
far less than these properties now
pay under the present system of
taxation
Il have never heard of plan like
it anywhere in the country" declared
Allen II don't believe it would work
satisfactorily. Even if it did, there
would be numerous complications. and
our income from real estate taxes
would take a big drop"
Allen said real estate now is yield
ing the District about s17,000,000
year in taxation.
Palmisano made no estimate on the
revenue his plan would produce.
Il believe the fairest way to tax
real estate is on the return it yields
the owner" said Palmisano. "A rate
of 81 on sl00 would be fair, and at
the same time have a tendency to
retard excessive rentals. Naturally,
if a property owner boosts rentals un-
necessarily, the District would take
a larger share of his return"
Homeowners Present Problem.
The only complication Palmisano
foresees in his plan is determining the
tax on a person who occupies the
home he owns. He said vacant land
that had never been rented could not
be taxed, but he seriously doubted if
there are any such sites in the Dis
trict. If the land or improved prop
erty is not yielding q return to the
owner at the time the assessment Is
levied, Falmisano explained, the
owner could be taxed on the basis of
the return when it last produced
revenue.
The tax imposed on the occupant
of his own home, PalmiSano said, could
be based on the tax paid by property
owner who rents similar house in a
similar neighborhood.
Forecasts Solutions.
"I don't believe any serious compli-
cations would arise in putting the plan
into effect" said Palmisano. "Of
course, number of problems would
arise at the outset but after they are
settled, operation of the plan would be
comparatively simple"
Existing law provides that real estate
in the District be assessed at full value.
Allen admits the average assessment
is about 80 per cent of full value. The
formula used for determining valua-
ton includes the. selling price of the
land, and the cost of improvements,
less depreciation.
Palmisano said his plan would elm
mate this complicated" procedure,
and enable the tax assessor to procure
all the information he desired for tax
alton purposes by adding few ques-
tions to the personal tax return.