Evening star., 1937-06-25
*Voluntary" DC. Chain Stores
May Be Hit by Proposed Tax
Bill Is Interpreted as Aiming Also at
Seven Cooperative Establishments.
La,Us in Other States Discussed.
Possibility that the pending chain

Possibility that the pending chain
three great proprietary" food chains
here, but also the seven voluntary"
chain food stores arose today as a
threat to food prices of the city.
This developed out of the language
in the omnibus tax bill pending in
the Senate District Committee, which
provides the tax shall be imposed on
esta blishments. under the same gen.
eral management. supervision. owner
ship or control, whether operated in
the District of Columbia or not"
In several States somewhat similar
language has been interpreted to
mean that It does not cover stores
which are in 4 voluntary or cooper
ative chain.
Wide Interpretation Seen.
But tax experts, in a close study Of
the provision were inclined to believe
today that the provision leaves the
door wide open for liberal interpre-
tation by the tax-assessing authorities
Of the city. They could use the pro-
vision to tax voluntary chains. ac-
cording to some experts One of the
voluntary chains fears definitely that
the blow will strike the stores banded
together voluntarily, and under a CO.
operative agreement.
The three big proprietary chains
here, which without question would
be taxed, include the Great Atlantic
& Pacific Tea Co., the Sanitary Gro
Gerry Co. and the American Stores.
The seven voluntary chains are di-
vided into two different groups. set
up along different lines. In each
group, however, the stores are in
dividually owned. and are banded to-
gether to gain the benefit Of mass
purchasing.
One group includes District Grocery
Stores, Inc; Progressive Grocers' As
sociat ton and United Food Stores, Inc
The other group includes Capital
Food Stores, Inc: District Wholesale
Grocery Co., operating Ideal" stores
Nationwide Stores and Approved
Food Stores.
Increased Costs Predicted.
Prediction has been made freely
already that enactment of the legis-
lation as it passed the House un-
doubtedly would force the proprietary
chains to close up many Of their
present retail outlet in the District
with what the chains call "a cor
responding increase IN cost TO the
consumers who now purchase through
these chain stores"
Closing Of chain stores in Pennsyl-
vania already has followed a new
chain store tax there which is said
to be substantially identical to the
pending measure for the District
Corporate chains were compelled tc
close 1872 stores in the city of Phila-
delphia alone. because a survey had
demonstrated that it would be i'm
possible for them to operate those
stores at a profit after paying the
particular tax levied at the chain
stores.
Chain store legislation, which is
attacked by the chains as purely a
punitive" tax and defended by its
proponents as protection to the in
dividual merchant. has grown rap
idly, with some setbacks, throughout
the United States since the first
chain store tax of 1929 in the State
Of Indiana was sustained by the courts
in 1881. Some kind Of chain store
legislation Is now on the statute books
Of ~ out OF the 48 States.
Tax In Maryland.
Nearby Maryland, whose first at
tempt At . chain store tax In Ale
ghany County was declared uncon-
stitutional in 1928. now has a chain
store tax, enacted in April, 1888, grad
uated on the license plan from IS
on chains numbering from two to
five stores up to $50 for each store
in chains having more than 20 stores.
Nearby Virginia has no chain store
tax as such, although it has a gen.
eral license tax levied against many
different kinds of businesses.
The proposed District of Columbia
chain store tax is based on the Louisi-
ana State precedent, upheld by the
Supreme Court of the United States.
It lays the tax on the basis of the
number of stores in the chain through
out the country, wherever located. The
rates here run on sliding scale from
$40 for each retail store or business in
excess of one but not in excess of five
stores up to $3.50 for each retail store
or business in excess of 50 stores.
This Louisiana form Is now pending
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