Evening star., 1938-11-20
7 uxes
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axes
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his own estimate called for an out
lay of between $6,OOO,O00 and ST.
100000 each year for permanent i'm
provements-as against the figure o1
$3,500,000 proposed by the Commits
sioners in their 1910 budget esti-
mates.
The s5O,OOO,OOO 1910 budget pro-
posed by the Commissioners in their
report to the Budget Bureau could
be somewhat more than covered by
continuation of the present tax load
according to Maj. Donovan's latest
estimates, but two major elements
of the present stop-gap tax program
are destined to expire next June 80
unless continued. These are the re-
vised business privilege tax and the
increase in the real estate tax rate
from $150 to S175. This was one
reason the official study of proposed
revision of the tax structure was
ordered by Congress.
Changes offered for Study.
In his call for public considera-
ton of the suggested revision of the
Districts tax structure, Maj. Don
ovan stated: The following sug-
gested major changes in the Dis
trict tax structure are announced
for public consideration.
"A study of the tax system of the
District reveals that the tax burden
is in need of redistribution in con-
formity with the generally accepted
principles of fair and equitable tax
system. Little recognition has been
given heretofore to the theory of
ability to pay, and too much reliance
has been placed upon the general
property tax. The following is sug-
gested as a method of overcoming
the defects in the present tax sys-
tenn of the District:
Il. Taxes suggested for repeal:
"(a) The intangible personal
property tax. This tax has fallen
into general disrepute and its mere
mention is enough to justify its
repeal
"(b) Business privilege tax. This
Is admittedly a stop-gap measure.
It gives no recognition to ability to
pay and works great hardship on
certain forms of enterprise often
the very ones responsible for low
prices to consumers.
New Levies Suggested.
"2. Suggested new taxes:
"(a) Corporation net income tax.
This tax would follow closely the
Federal corporation net income tax
and would include public utilities
(Which would also pay a special
franchise tax on gross receipts. A
minimum filing fee would insure a
contribution from all business en-
joying governmental protection
This filing fee could be credited
against the tax. The rate is tenta-
lively placed at per cent of the
net income.
"(b) Non-salary, non-wage per-
Bonal net income-retail sales tax.
Ordinarily in sufficiently large tax
jurisdiction without special economic
and legal problems, a graduated
personal net income tax would be
proposed. Because of the peculiar
conditions which obtain in the Dis
trict Of Columbia, the above pro-
posal appears to be the most prac-
ticable solution of this problem.
"The reasons for suggesting this
non salary. non-Wage personal net
income-retail sales tax are as fol-
lows:
II. The constitutionality of i'm
posing District income tax on Fed
eral salaries is uncertain.
Sales FAX Hits Big Payer.
y. Customarily, the largest in
dustry in tax jurisdiction is the
largest taxpayer. The only certain
way of reaching this class of income
In the District is by the indirect
method of the sales tax. The sales
tax is also the only way which
reaches the large transient and
tourist trade enjoying the benefits
Of the District.
"(3) Both the personal net in
come and the sales tax have been
advocated independently and both
have failed. There is reason to be-
lieve that this combination might
meet with approval, since it is based
upon the ability-to-pay principle.
80 The non-salary, non-wage
personal net income-retail sales
tax will have net effect not so very
different from a straight personal
net income tax designed to reach
the lower levels of income.
Exemptions.
"(5) Expenditures for food and
medicine could be exempted (an-
other very important item on the
poor mans budget, rent, will also
be exempt, since the tax will be On
tangible personal property sold at
retaiD; also sales below certain
amounts could be exempted.
"(6) 1t will make all tax conscious.
"GD It will bring contribution
from those who live outside the Dis
trict but who do business here and
might otherwise escape taxation.
"(8) Incomes from non-incor-
porated business, intangibles, and
other non-salary and non-Wage
sources will pay tax, graduated
according to the tentative proposal,
from to per cent. An earned
income credit might be allowed
business men so that the graduated
tax may be regarded as in true con-
formity with the ability theory
which calls for heavier taxation Of