Evening star., 1939-01-17

law In those cases in which there
the solution of the matter is left
the District Commissioners.
rd of Tax Appeals for the District
motor vehicle fuel taxes paid to
intangible personal property tax and
the business privilege (gross re-
ceipts) tax. These taxes are en-
tirely without justification in a mod
ern fiscal system.
However undesirable a tax may
be, some arguments can always be
adduced to support it. Conversely
even those taxes enjoying the most
prestige as equitable methods OF
compelling contributions to the pub
lie purse are not without their dis
advantages. 1t is only when all the
diverse factors are appraised in the
cold light of reason that conclusions
can be reached whose validity is
likely to find civic Endorsement.
Unanimity of opinion, especially
when the two sets of arguments are
nearly equal in strength, is scarcely
to be expected, but this situation is
not applicable here.
Recognizing these limitations and
proceeding upon the assumption that
general agreement will not be lack
ing in this instance, it is concluded
that the evidence against the in
tangible personal property tax and
the business privilege tax far out
weighs the contentious advanced in
their favor. The immediate re-
moval Of these two taxes is a pre-
requisite to the establishment Of a
well-arranged tax system in the Dis
trict of Columbia.
TAXATION OF PUBLIC
UTILITIES.
The taxation of public utilities In
the District of Columbia has re-
manned virtually unchanged since
1902, except for a clarifioation act
passed in 1904. During this time
great changes have been wrought in
the economic life of the community
and in the relative importance of the
major utilities. In 1902 electricity
was on the verge of the great eX-
pansion which has occurred in the
ensuing SO years. 1t is interesting
to note that in those early days
bonds Of electric companies had to
be guaranteed by the traction COM
pany before they found q ready
market. Street railways enjoyed q
monopoly of the transportation sys-
tenn which has disappeared with the
increased use of the automobile
The gas company has surrendered
its position of pre-eminence and has
suffered from the development o1
electricity as a means of furnishing
heat and light. Today the foul
utilities stand in very different re.
lation to each other, and it appears
to be high time that serious consid-
Grafton be given to the question O!
adjusting the tax burden upon pub
lie utilities in the District in the
light of the great changes which
have occurred.
The major public utilities operat-
ing in the District of Columbia are
controlled by foreign holding oom-
panieS. The North American Co.
through the Washington Railway &
Electric Co., dominates the transit
and electric power utilities. The
Chesapeake & Potomac Telephone
Co. is associated with the Nation
wide Bell system. The Washington
Gas Light Co. is reported to be
owned by the Washington & Subur.
ban Co., a Massachusetts, common.
law trust. which is in turn controlled
by certain large banks.
After presenting detailed history
of each of the ma jor utilities, the
report summed up the conclusions
as follows:
RECOMMENDED PROGRAM FOE
THE TAXATION OF PUBLIC
UTILITIES.
It is proposed to place the ma jol
public utilities under the corporation
net income tax in line with tn,
general theory that they should b,
taxed at least like any other form
Of business. The companies which
are enjoying the greatest profits will
pay in proportion to their ability
1t cannot be denied, however, tina
public utilities operating in the Dis
trict of Columbia enjoy q specia
franchise, Or its equivalent, in thu
form Of monopolistic privilege fo
the furnishing of public utility good
and services. This carries with i
an opportunity for stable earning
not found in ordinary business ant
for which Government may justl,
levy q special tax. In the District
the major utilities will continue tt
be immune from personal propert,
taxes as they have been in the past
an additional consideration in thu
imposition of gross receipt tax. i
has accordingly been decided tina
the best method of taxing the fran
chise privilege Is to employ tn,
gross-receipts tax, gross receipts be-
ing closely related to the value O
the privilege. Under a net incom,
tax, company might enjoy thes,
privileges but fail to pay anything
for them.
The following program Of pubn
utility taxation is recommended:
i l. All corporations In the publi
utility field should be made subjec
to the s per cent corporation ne
income tax.
| 2. Present gross earnings an,
gross receipts taxes on the four ma
jor public utilities should be sup
planted by a gross receipts ta,
based exclusively on the sale of pub
lie utility services or commoditie
within the District of Columbia, nj
lowing no deduction for the cost o
raw materials. Deductions for sale
| ,ooda o,,tcida +ho Dicfr;ct opd fo