Evening star., 1937-01-28
TINE experts themselves disagree,


on the method of measuring
relative tax burdens. But If
- they agreed among themselves
on a method of comparison warrant-
ing the conclusion that Washington's
tax burden Is below average" 1t
would not necessarily follow that
Washington Is undertaxed.
The so-called MapeS committee Of
the House warned against arbitrarily
hiking Washington's tax burden to
any average level Indeed" said the
report, "a majority Of the commit
tee at least does not want to make
the burden Of taxation in the District
as heavy as 1t is in other cities Of
comparable size and advantages, be-
cause the committee believes that
texeS are too high and burdensome in
practically every locality in the United
States outside Of the District OF Co
lumbia."
Certainly If Congress should choose
the unique method of hitching local
taxes to a level of taxation in other
cities-that level itself being measured
by a method by no means acceptable
as accurate-there must be collateral
considerations, first, of the character
of cities chosen for comparison: Sec
ond, of the special notifications that
apply in any measurement Of Wash
ington'S tax burden.
average Rate" Not Desirable.
An average" rate or level Of taxa
ton does not represent fair, or even
desirable, rate or level Of taxation.
The average may be affected by waste
fulness, inefficiency, extravaganza or
special factors that have no place
in the selection of q model rate or
level of taxation. The comparable
cities should be confined not cnly to
those of the same population class,
but to cities of comparable environ
ment, enjoying the reputation Of we'll
governed, progressive cities living
within their means.
At the same time the comparison
must take note of certain considera-
tionS that apply peculiarly to Wash
ington, which among American cities
occupies a unique status in system
of government, as well as the nature
of population and the nature of the
city itself.
OF the II cities chosen by the
Jacobs Committee for comparison with
Washington, the Jacobs report states
that all of them follow the system
of bonding for outlays; that is, 5or-
rowing the money for Improvements.
| Washington, on the other hand, by
specific direction and intent Of Con-
gress, follows the pay-as-yougo policy.
There are advantages, as well as dis
advantages, in both methods. The
bonding method permits spreading out
| the cost of major Improvements over
many years, but is susceptible OF the
common abuses associated with unwi5e
borrowing. The pay-as-you-go method
may be better in the long run, though
it tends to retard capital outlays-
as they have been retarded here.
Debt Factor Not Comparable.
But because of the very abuses in
herent in easy borrowing, the debt
factor should be eliminated in COM
pairing city tax burdens. The object
of the comparison is determination Of
what constitutes fair and equitable
tax burden. But If interest payments
are included in the comparison. the
objective is distorted. If the citizens
of one city decide to burden them
selves with debt to undertake public
service enterprises, or If they are led
into extravagant or unwise borrowing,
while the citizens Of another city bor-
row moderately and make the money
go a long way the inclusion of the
debt factor injects an irrelevent ele-
ment. Newark, N. j., for instance,
has a total bonded indebtedness Of
Sill 100000. Cincinnati, the city
most nearly approximating it in pop
ulation, has a bonded Indebtedness of
SAG, 9,061 900, which might be reduced
by $10,000,000 by allowing for the
revenues received from the city's own
ership of the G. U. o. & T. P. Rail-
road, which are applied to the sinking
fund. Newark'S per capita indabted-
ness is $240 and Cincinnati's is about
$85. Would the citizens of Cincin-
natl be willing to increase their taxes
to correspond with Newark's debt
swelled tax burden? Would they ad-
nit that they are under-taxed because
of the high taxation in Newark, which
reflects heavy bonded debt?
Particularly in the case Of COM
parsons between Washington and
other cities it is illogical and unfair
to include debt in comparison of tax
burdens. During the war and imme-
diately thereafter, when borrowing
was easy and wealthy investors were
anxious to invest in tax-exempt Sc
curities to avoid income taxes and
surtaxes. many American cities in
dulged in a financial jag and woke
up head over heels in debt. Part of
the money doubtless went into useful
permanent improvements by which
the cities benefited; another part was
represented in the extravaganza
which was one Of the characteristics
of the postwar boom. Congressman
whose home cities may have borrowed
heavily nevertheless refused, as men,
berS of WaShington'S Legislature, to