Evening star., 1939-03-28
Court Decision
|mpe|s Revision
Of D. +. Tax Bill
House Unit Ends
Hearings and Acts
To Change Measure
BY JAMES E. CHINN.

Steps were taken today by the
Fiscal Affairs Subcommittee of the
House District Committee to re-
write proposed legislation to re-
vamp the District tax structure In
view Of the latest Supreme Court
decision that State can tax the
income Of Federal employe.
Abruptly, the subcommittee ended
public hearings on the tax pro.
gram drafted by DR.. Chester B.
Pond, New York tax expert, and
Colin F. STAN, chief of staff of the
Joint congressional committee on
internal revenue taxation. and pro-
ceeded to make arrangements to
revise it.
Chairman Jack Nichols an
nounced the sudden shift in plans
as the subcommittee met to hold
another hearing on the program Of
the tax experts, the heart of which
provides for a unique combination
2 per cent retail sales tax and a tax
on earned income of $4,000 or
more.
Representative Nichols indicated
the subcommittee may, in the light
OF the Supreme Court ruling, drop
the sales tax feature, and lower
the income tax exemption sufficient.
ly to produce the $5,500,0OO in rev.
enue the sales tax was estimated
to yield. An income tax with an
exemption on salaries under $4,000
was calculated to produce about
81 ,275 900.
May Modify Sales Tax.
Mr.. Nichols stressed, however, II
the subcommittee decides to adhere
to the principle that the tax base
should be broadened, it might be
necessary to write modified sales
tax provision in the new tax bill.
Indications are that only the COM
bination sales-income tax feature Of
the original tax program may be
altered in the revised tax plan.
Chairman Nichols emphasized that
other proposals such as repeal of
the tax on intangible personal prop
erty and the proposed tax on park
ing lot owners probably would be
retained.
No changes are to be made in the
original tax program, however, until
the subcommittee confers with the
experts who wrote it-Dr. Pond and
Mr.. STAN. Dr. Pond, according to
Mr.. Nichols, will be recalled from
New York, to aid the subcommittee
in rewriting the plan. 10 v. Nor
gan, sole member of the District
Board of Tax Appeals, and an ad.
visor to the subcommittee, will assist
DR.. Pond and Mr.. STAN.
Senator Tydings, Democrat, Of
Maryland. a member of the Senate
District Committee. said yesterday he
believed the decision cleared up
| doubts Of the right of Congress, sit
ting as legislature for the District,
to impose tax on Federal salaries.
Tydings Has Doubts.
Senator Tydings said he did not
believe Congress could apply a 10
cal income tax on a citizen Of
Maryland or Virginia for salary re-
ceived in Federal post here.
The Social Legislation Committee
of the District Chapter of the Ma
tional Lawyers Guild said that the
decision removed doubts as to the
constitutionality of an income tax
levy repeatedly voiced by the pro-
ponents of the District sales tax and
the experts assigned to the prepara-
ton of tax program for the Dis
trict of Columbia"
Twice the House has turned down
| an income tax for the District.
Each time the constitutionality Of
such tax was questioned If applied
to salaries of Federal employees.
Some House members also opposed
an income tax for fear it might be
applicable to their own pay. Others
fought it on the ground it might
| not raise sufficient revenue to meet
anticipated District budget deficits
unless the rates were made exces.
sive.
The tax program prepared by the
experts is intended to prevent q
budget shortage for the next seven
years. Maj. Daniel D. Donovan,
District auditor and budget officer,
has estimated that the normal oper-
ating expenses Of the municipal
government are increasing at the
rate of about $1,000000 a year.
Mr.. Nichols opened the final hear
ing on the original tax plan with
this statement:
II have had no opportunity to
talk with the tax experts who
(See D. C. TAXES, Page A-5)