Evening star., 1938-01-16

i
repenue to meet the 1889 District
budget, no,o far out of balance.
| BY JAMES E. CHINN.
The rate Of the business privilege
tax on gross receipts may be increased
from two-ffths to three-fifths of l per
cent in the coming fiscal year, it was
learned last night as the Fisca. Affairs
Subcommittee Of the House District
Committee completed plans to perfect
the 1889 revenue bill.
The increase will be necessary, It
was said, because the business privilege
tax failed to produce the estimated
5000 900 this year, and also because
the subcommittee has decided to write
q tax bill yielding s5.oO0,O00 in addi-
tional revenue, the amount the 1889
budget deficit is expected to reach.
There were strong indications, too,
that the proposed income tax would
be scrapped as part of the new tax
bill, but promoted later as separate
legislation for the sole purpose Of pro-
voking test in the courts to deter
mine the constitutionality of an at
tempt by the District to tax salaries
OF Federal employees.
Business Tax to Continue.
The subcommittee, headed by Rep.
resentative Nichols, Democrat, of Ok
lahoma, will meet tomorrow at 10 am.
to adopt the new tax program. It
already has tentatively agreed to con-
tnue for another year the unpopular
business privilege tax, and the SITS
levy on real and personal property.
The question Of an income tax was
left for future settlement.
Subcommittee members said the new
revenue bill is In final form, awaiting
their approval. The measure was
drafted by Corporation Counsel Eli
wood H. Seal, In accordance with in
structions given him last week at an
executive session OF the subcommittee.
Proposals to raise the business priv
ilege tax by one-fifth Of l per cent
were made as result Of the failure of
the levy to yield 100000 in the pres
trict officials are confident it will not
raise more than s2,50o,00 and others
predict its yield will more closely total
about 100000.
Needed to Make Up Losses.
The proposed increase, it was point
ed out, is needed not only to bring at
least 100000 into District Golfers,
but to make up losses that may occur
IN the numerous notifications to be
made in the present business privilege
tax law. The major portions Of these
changes will be designed to correct
so-called inequities. One Of them, for
instance, will bring all common car
| riers within the scope of the law.
Railroads at present are exempt, but
steamboat and interstate bus COM
panies are required to pay the levy.
Plans to leave the proposed income
tax out of the new revenue bill are
the result of fears that it might
jeopardize enactment of this legisla-
ton, particularly in view of the fact
the House last year fatty rejected
the income tax. Originally, the sub
| committee considered tacking the
income tax to the bill to provide only
a small rate of not more than / per
cent as a means of forcing a test case
in the courts. The idea was to sub
stitute an income tax at higher rate
for the business privilege tax in the
1910 fiscal year If the courts upheld
the validity of levy by the District
on the incomes of Federal workers.
Mr.. Seal, it is understood, has
| drafted separate income tax bill.
which the subcommittee may consider
tomorrow when it takes final action
on the 1899 tax program.
Will Guarantee $3,0O0,OO0.
A three-fifths of per cent levy on
gross receipts, it is estimated, will
virtually guarantee the District
100000 in additional revenue.
despite the notifications that may be
made in the business privilege tax.
Continuation of the IS cent increase
in the real estate rate, it was said,
would produce the additional $4,000.
600, making up the $5,000.000 which
Maj. Daniel J. Donovan, auditor and
budget officer, has indicated may be
necessary to keep the District out Of
the red in the coming fiscal year.
Representative Wood, Democrat, OF
Missouri, member of the subcom-
mittee, returned to Washington yes.
terday and disclosed he would sup-
port an income tax plan for the Dis
trict. There are two other members
on the subcommittee who favor an
income tax, Representatives Dirksen
Of Illinois and Cole of New York, both
Republicans. -
On the basis of Mr.. Woods posi-.
ton. the subcommittee now stands
8 to 2 in favor of that levy.
Mr.. Wood said he would approve
an income tax on salaries of $1,000
or more and which exempted non-res-
idAntE