Evening star., 1938-04-19
District Surpluses.

oAA ~ Jul pllSCSs
The burnt child fears the fire. And
local taxpayers fear local tax SURPRISES
When the Senate District Committee
gave consideration last week to a re-
vision of the 1888 local tax bill that
might have raised as much as 81 00O, 900
in excess of known revenue requirements
for the coming fiscal year, it was only
natural that local trade and civic leaders
appealed to the committee to scale the
proposed surplus cushion down to a more
reasonable estimate of potential later
appropriations.
Those who recall the history of prior
surpluses, and their effect on fiscal equity
between the Federal and District Gov
ernments, will be grateful to the COM
mittee for having needed the appeal by
cutting the cushion to little less than
Sl,OOO0O0. At the same time the COM
mittee acted fairly in the method 1t
selected to make the reduction, by allow
ing tangible personal property tax pay
ments as a deduction in figuring the
gross receipts business privilege levy.
This deduction has been allowed this
year during Washington's first expert
ence with the gross receipts tax.
The Senate group has taken one other
step that deserves commendation, by
dropping the fiat rate of two-f fifths of
per cent on gross receipts and substi-
tuting sliding scale, which recognizes
that the margin between cost and sale
price of goods varies in different lines
of business.
The tax would still be applied to gross
receipts. but the rate would range from
one-tenth to four-tenths Of per cent,
depending on the margin in each par
ticular case. This principle seeks to
correct one Of the chief inequalities of
the present law, which was fiat rate
OF tax applied without reference to
margin OF profit. As for accumulation
Of surplus local revenues the local tax
payer should be on the alert to prevent
1t. 1t will be recalled that during the
World War District surplus accumu-
lated in the Treasury through failure
OF Congress to appropriate all Of the pro-
ceeds from local taxes, together with the
proportional Federal payment then re-
quired by the $3.50 ratio. 1t took a long
fight, eliminating in an investigation
by joint congressional committee in
1922 before the existence Of that District
surplus of approximately IS, 900 900 was
recognized.
Within a decade another surplus was
allowed to accumulate, and this time
Congress decreed that the District Gov
eminent should buy four squares Of
property for proposed municipal center,
although local officials had recommended
two squares as being ample for the citys
needs. The municipal center program
became necessary largely because of the
Federal Governments development of
the Pennsylvania avenue Mall public
building triangle, an area from which
the District Building some day will have
to be removed. But, having been required
to acquire the large municipal center
area between Third and Sixth streets,
north of Pennsylvania avenue, the city
has not since been able to develop it,
1t may be that Washington will need
some unexpended balance before the
next fiscal year ends, particularly if
Congress increases the relief appropria-
ton In January, and 1t is estimated that
the revenue bill still contains a cushion
Of about 100000, over and above the
known deficit Of $4,5O0,0oo. The pend
Ing tax bill should not be considered as
any more permanent than last years
measure, however, and when Congress
returns next January it should look at
the entire fiscal relations problem-Fed-
eral as we'll as local obligation-before
again revising the District tax structure.