Evening star., 1938-10-06
D. c. BUSINESS TAX
REFUND IS DENIED
10 V. Morgan Takes Issue
With Court Decision on
1887 Tax Law.

Taking issue with the decision last
summer Of Justice Bailey in District
Court. that the 1887 business privilege
tax was unconstitutional as applied
to interstate commerce, 10 v. Nor
gan, the Districts one-man Beard
Of Tax Appeals has rejected an ap-
plication for refund filed by an
out-of-toWn business firm.
However, Mr.. Morgan indicated that
he would apply to the case some
formula of apportionment of the
firms business done within the Dis
trict in applying the District fiat rate
tax which prevailed at the time. He
was not prepared today to announce
what formula he would follow.
Since the 1887 act was applied,
Congress has amended the business
privilege levy, to provide for formula
for apportionment of the business
done within the District, so that the
full force of even the 1888 sliding
scale tax would not apply to nom
resident firms doing business here.
$144 Tax Is Protested.
The Morgan decision, the first to
be announced by his Office, dealt with
an appeal by the Consolidated Ex-
panded Metals Co. of Wheeling, w.
Va, on a tax of $l44, paid under
protest on a gross receipts within the
District of $4,000 1t contended that
the tax was unconstitutional and that
Congress could not legislate for the
District in matters affecting inter.
state commerce. To this Mr.. Morgan
replied:
THE board is of the opinion that
Congress, when legislating for the
District has the power to enact legis. :.
lation affecting interstate commerce
including a statute enforcing a tax
the effect Of which is to burden inter-
state commerce If such power j,
lacking in the State Legislatures, II is
because Of a positive and exclusive
delegation of that power TO Congress
by the Constitution"
In another case, Mr.. Morgan ruled
that the District government was cor
rect in levying its intangible personal
property tax against the full value of
securities, bought on margin, and not
merely on the equity held by the
individual taxpayer In this case, Mr..
Morgan upheld an opinion rendered
during the past year by Corporation
Counsel Elwood H. Seal
S1,000,00 Loss Possible.
The decision was rendered in the
case Of an appeal by Frederick G. Hunt,
1853 Lamont street N W., who paid
the Intangible tax on securities valued
at s327,410, although he was said 20
have had an equity of but $4,000 in
these securities. He paid the tax un-
der protest and he has since appealed
the case to the Court OF Appeals
Officials estimated that the District
stood to lose between s500O 900 and
sl,000,000 a year in tax revenues, If
the appeal in the Hunt case was
finally sustained by the courts.
In a third case, the Board Of Tax
Appeals ruled that liquor dealers may
not deduct from their gross receipts
from sales within the District amounts
paid to the Federal and District Gov
ernments in liquor taxes. The case
turned on an appeal by Milton S.
Kronheim & Co, wholesale liquor
dealers, which had gross receipts
amounting to s1,667,l15 and which had
deducted, before paying its District
business privilege tax of 1887, sums
amounting TO S733,026 representing
Federal and District liquor taxes.