Evening star., 1937-07-25
Member Of the AsaOcjafed preSx
Choice of Tax Evils.


Senate conferees lie between the gross
receipts tax approved by the House and
local income tax approved by the
Senate, between an increase in the real
estate and personal property tax rate
approved by the House and the modified
single tax plan, or land tax, approved
by the Senate.
These choices are most likely to be
left in the hands of the men who have
gained familiarity with the local tax
situation through work on the original
bills and whose attitude toward the Dis
tr1ct of Columbia taxpayers is guided
by sympathy and desire to be helpful.
While 1t is difficult to take an optimistic
view of the final selections, because of
this nature of the material from which
they must be made, it is wholly reason
able to hope that final selections will
represent distinct improvement over
either the House or the Senate bill.
Such improvement can and should be
made.
First, as between the gross receipts
tax and the local income tax: AS passed
by the House the gross receipts tax for
the District Of Columbia follows taxing
principle adopted with apparent success
In number of the States, but is unique
in its blanket application of a single
rate to all forms of business. Testimony
has shown clearly enough the damaging
effects that might be anticipated from
such blanket application Of single rate
and the failure of the bills provisions
to take into consideration the varying
margins of profit (as distinct from gross
receipts) prevailing in different classes
OF business.
On the other hand, the proposed local
income tax has been thrice turned down
by the House not only because Of its
taxation of congressional salaries. but
because of the population conditions
peculiar to the District of Columbia
conditions which make the administra-
ton Of such a tax highly complicated
and invite gross inequities. There is the
further consideration that the imposi-
ton Of local tax on incomes would
precede by possibly less than year the
consideration and probable adoption by
Congress OF higher rates and lower ex-
emptlons for Federal income taxes, thus
constituting another and aggravated in
stance Of double taxation. AS every one
familiar with the subject knows, the
desirable trend should be toward separa-
ton of Federal and local sources of
taxation, not the pixng up of a complex
hodge podge In taxation with the local
governments and Federal Government
competing for what the taxpayer may
have left.
The wise compromise here, it would
seem, might lie in the choice of the
gross receipts tax with the proposed
06 per cent rate cut at least in half.
For II lack of time makes a graduated
gross receipts tax impossible, the next
best thing is reduction Of the abnormally
high rate proposed for the District-a
rate which may prove, in some lines of
business, to be conhscatory in effect
As between an increase in the real
estate tax rate and the imposition of
tho modified single tax theory by way
OF land tax, there should be no diff
Guilty. The former is, of course, burden
some and 1t is highly unfortunate that
the original idea of sparing the real
estate taxpayer further increases did
not prevail. But the land tax is doubly
obnoxious in theory and highly unfair
and damaging in its effect on real estate
taxpayers. It's grotesque nequities have
been discussed in these columns before
and 1t should not be necessary to empha-
size them again. Certainly 1t seems
almost incredible that the Congress of
the United States should be seriously
considering applying the discredited
single tax theory in the District of Co.
lumbia.
There is ample room for bargaining
between House and Senate in behalf of
the local taxpayer, for both the House
and Senate bills would raise more reve-
nue. than is justified by the needs.
There has been universal agreement that
new taxes should be kept strictly to the
level Of revenue demands.