Evening star., 1938-02-25
DOOM FOR DC, TAX
ION RECEIPTS SEEN
i'm SUBCOMMITTEE
lnequjties Impress Mem.
bers-Chance of Levy
on Incomes Gains.
CONGRESS EXEMPTION
IN BILL FORECAST
Measure Drawn Up by Federal
Employe Unit Awaited Be.
fore Final Action.
BY JAMES E. CHINN.

BY JAMES E. CHINN.
Strong sentiment developed among
members Of the Fiscal Affairs Sub
committee Of the House District Com
mittee today in favor of elimination
from the 1889 revenue bill of the sec
ton providing for continuation of the
existing business privilege tax on gross
receipts.
The unpopularity Of this tax was
deeply impressed on the subcommittee
during its protracted series of public
hearings on the measure. Only one of
the so or more witnesses who testified
indorsed the levy, but with q reserva-
tion that even though bad" It Is bet
ter than the proposed income tax.
Chairman Nichols is the only mem
Der Of the subcommittee still holding
out for continuation of the business
privilege tax. Several others who
favored 1t when the bill was first
drafted are known to have cooled
perceptibly, after hearing the business
men describe its inequities and the
burden it mad placed on them this
year.
Convinced Law Is Irksome.
In fact, one Of the former businesi
privilege tax proponents on the sub
committee said:
Il am now convinced the business
privilege tax is big headache, which
will become worse as time goes on
think it should be thrown in the ash
can"
Scrapping of the business privilege
tax, however, would automaticall
serve to increase the chance Of the
income tax being left in the final
draft Of the bill on which the sub
committee Is now working. Three of
the five NEUTRALITY-SUSPICIOUS.
Wood, Democrat, Of Missouri, and
Dirksen Of Illinois, and Cole Of New
York, both Republicans-are ardent
income tax supporters Mr.. Wood, how
ever, does not believe the House would
approve such levy in view of its re-
bellion against it last year.
Since the House refused to consider
the income tax last year because the
levy would have been placed on the
salaries Of members of Congress, a
proposal has been made to the sub
committee that the new bill exempt
them as well as their employees, in
order to assure its consideration this
year. Even then, it was pointed out
the members would be placed In an
embarrassing position If they voted for
bill this year which exempted their
salaries after turning down the plan
last year because it would have af-
fected them personally.
Graduated Scale ForecaH.
Nevertheless, income tax supporters
on the subcommittee predicted If the
plan is retained in the present bill, it
would exempt members of Congress.
Prediction also was made that the
fiat l per cent tax rate as provided in
the present bill probably would be
changed to a graduated scale ranging
up to 2 per cent on incomes In the
higher brackets.
Supporters Of the income tax plan
said graduated scale would recog-
nize the principle Of progressive tax
alton, and pave the way for the Com
missioners to raise or aower the rate
as the financial needs Of the District
required.
The subcommittee. however, does
not intend to take final action on an
income tax plan until 1t receives the
draft Of an income tax bill from the
| United Federal Workers Of America.
This organization was one Of the
strongest advocates Of an income tax,
| and largely because of the impression
its representatives made on the sub
committee during the hearings, Chair
man Nichols suggested it draw up an
income tax bill patterned after its
| own ideas.
The organization urged graduated
rates on the theory that . person with
a $50,000 income is better able to pay
larger tax per dollar than q person
with a net income OF $1,000.
Favored BY Another Group.
Another organization Of Govern
ment employees which indorsed the
| income tax Is the National Labor Re-
lations Board Union, q local Of the
American Federation Of Government
Employees. Samuel Lipkowitz, repre-
senting this organization, also recon-
| mended a graduated rate, and
stressed the soundness Of direct, vis-
ible and progressive taxation.
The most confident member Of the
subcommittee that an income tax plan
will be embodied in the final bill is
Mr.. Dirksen, its original champion.
opponents Of the business privilege
tax" he said, made out q perfect
case for the income tax"
Despite the preponderance Of tes-
tlmony during the hearings in favor
OF general sales tax, the subcom-
mittee. 1t was indicated, does not even
propose to consider this form of tax-
alton in revising the revenue bill.
Chairman Nichols sometime ago
warned sales tax advocates they were
wasting their time" in testifyinp.
thus revealing the attitude, Of his
group. There is only one member Of
the subcommittee in favor of q sales
tax-Representative Arnold, Demo.
crat, Of Illinois.
Ready 70 Draft Bill.
The subcommittee closed . pro-
tracted series Of public hearings on
the revenue bill late yesterday, and
immediately made preparations to
write the final draft In executive ses-
sions. Chairman Nichols believes the
final bill Will be ready for consider.
alton Of the full District Committee
at its meeting next Wednesday. Even
If approved by the full committee at
that time, 1t cannot be considered by
the House until March II, the first
District Day" Of the month.
Mr.. Nichols declined to make any
predictions a. to the changes the sub
| committee NIGH make In the hdn