Evening star., 1939-04-11
New Tax Bills
Adequacy
-
In Dispute
Donovan Doubts
Surplus Estimate
OF DR.. Pond
By LANES E. CHM.

lldQ DeIOTc IL lOI COIlolUcI dtlOll W.
day a new revenue bill designed
to keep the municipal government
out of the red for some years to
come, but there was sharp diff
ference of opinion among tax ex-
perts whether the program will
even meet the entire budget deficit
In the coming fiscal year or build
up surplus.
A modification of the original tax
plan recommended by DR.. Chester
B. Pond, New York tax expert, and
Colin F. STAN of the Joint Congress
sional Committee on Internal Reve-
nue. Taxation, the bill calls for a
unique combination per cent re-
tail sales tax and a tax on earned
income of $4,000 or more. The
original Pond-Stam program pro-
vided for per cent retail sales
tax and a tax on income of $14,-
900 or more.
The change in the dual sales-in-
come tax feature was made pri-
marily as a result Of the recent
Supreme Court decision holding
that States would tax the salaries
OF Federal employees. Lowering OF
the income tax exemption from
$4,000 to $4,000, however, will not
affect the great majority Of Federal
employees in Washington who are
in a lower income bracket. Neither
will the reduction apply to members
of Congress. Although their salaries
are $4,000 a year, proposed 81 900
personal exemption for all single
persons would save them from pay
ing the tax.
Bill introduced Yesterday.
The bill was introduced yesterday
afternoon by Chairman Nichols OF
the Fiscal Affairs Subcommittee OF
the District Committee, which has
been struggling for more than
month with the Pond-Stam tax pro-
gram. Representative Nichols said
the measure would probably raise
$1,0O0,00O or more than needed in
the coming fiscal year beginning
July l, but pointed out the pros
pective surplus would level of" in
about three years, because of the
normal increase Of about $1,000, 900
year in the operating expenses
of the District. II
The tax experts, however, do not
agree with his calculations. Dr.
Pond, co-author of the original tax
program, estimated the taxes pro-
posed in the bill would yield about
S775,OOO more than the District
needs to balance its budget in the
new fiscal year. On the contrary
Mai. Daniel J. Donovan. District
auditor. and budget officer, believes
the municipal government would
fall short about $35 900 of its needed
revenue.
Widens Sales Tax Range.
The only major change made in
the original Pond-Stam program
was revision of the rate for the
sales tax and lowering of the ex-
emption of the income tax to SAL
aries of $4,000 or more. The sales
tax, however. was made applicable
to all articles sold at retail from
/ cent or more. whereas the Pond
Stam plan proposed to exempt sales
of less than Is cents.
AS originally proposed in the
Pond-Stam program, medicine and
food sold for human consumption
of the premise would be exempt
from the sales tax, as would
gasoline and liquor sold by the
package, both of which now bear
eelective local tax Liquor sold by
the drink. however. would be taxed,
as we'll as soft drinks, candy, con-
fections and meals served in public
eating establishments.
Mr.. Nichols wrote into the bill a
special exemption for newspapers
and periodicals.
The bill requires the sales tax to
be collected by the retailer from
the purchaser accurate to the near
est one-tenth of per cent. In order
to make the collection possible, the
Commissioners are directed to issue
tokens in denominations OF one
tenth of q cent and flve-tenths OF
cent. In collection of any tax
fractional part of mill would be
disregarded unless it amounts to
one-half a mill or more, in which
case it would be increased to one
mill.
Provides Income Tax Credit.
The income tax would apply only
to that portion of the income
earned in the District. Non-residents
would be required to pay the tax,
but would be given a credit for any
income tax payment made to a
State which taxes their income.
The bill, however, gives a new
definition to a non-resldent. IL
says that any person whether
domiciled in the District for SIX
months or more is a NONRESIDENT
n he has exercised the right to vote
at public elections in any State or
territory.
The original features of the Pond
6tam program which were left IN
tact in the bill, provide:
Repeal of the present tax on
Intangible personal property.
2. A corporation income tax OF >
per cent on incomes arising from
sources within the District.
3. A 4 per cent gross receipts tax
on all public utility corporations ex-
cept the Capital Transit Co., which
would pay per cent.
4. A 2 per cent tax on gross re-
ceipts of operators Of automobile
parking lots.
Sets $1.75 Realty Tax Limit.
S. A limitation of SITS on the real
estate and personal property tax
rate.
6. Change the taxable status of
automobiles for purpose Of personal
property tax from single date to
a pro rata time basis.
DR.. Pond estimated the new tax
program contained in the Nichols
bill would produce a net Of about
$4,275,OO0 in additional revenue each
year. Maj Donovan figured the in