Evening star., 1939-04-16
BY JOHN H. CASSADY, Jr,


Close study of the District I'm
employment Compensation Boards S
three years experience in admin
istering the local jobless insurance
act has convinced Representative
McGehee, Democrat, of Mississippi
of two things:
l. That the tax imposed by the
act on Washington employers is
too high.
2. That unless this pay roll tax
is reduced, ultimately it will cripple
local business severely.
Pointing to the more than s11 OOO,-
600 balance now credited to the
local unemployment compensation
system in the United States Treas
ury, Mr.. McGehee declared yester-
day that it has become evident be-
yond the point of controversy that
business In the District lis entitled
to some relief from the excessive
tax now imposed"
Confident that action will be
taken at this session of Congress to
correct the 'injustices" found in
the tax provisions of the act, Mr..
McGehee has introduced a bill
providing for modification of the
unemployment tax liability on the
$4,000 local employers whose work.
ers are covered by the law.
Power to Cut Rate Asked.
The Mississippi legislator, who is
chairman of the Judiciary Subcom-
mittee of the House District Com
mittee, has asked Congress to give
the Compensation Board authority
to lower the rate of contributions to
be paid by employers as long as a
balance of approximately $4,000 900
is maintained in the trust fund to
meet claims.
This provision is coupled with a
proposed amendment to the Social
Security Act to separate the
local Unemployment Compensation
Board from the Social Security
Board-a move that would be neces-
sary to bring any actual relief to
employers, according to Mr.. Nc
Gehee.
The House District Committee
has not acted on the bill as vet.
pending completion of hearings by
the Judiciary Subcommittee. Rep
resentative McGehee hopes to hold
final hearings some time this week.
He is confident the measure will
receive congressional approval "be-
cause don't see how any one can
oppose it."
The extent to which this heavier
than ordinary tax is unnecessary
Representative McGehee said, is
plainly shown in the $11, 900 900 trust
fund balance and the rate at which
the fund is being required to meet
all certified benefit claims.
Would Wreck Business.
If the present 3 per cent tax
rate on employers were to be con-
tinued," he asserted, II predict that
1t would ultimately wreck business
in Washington. Within IA or Is
years, $45, 100000 or $50, ,00O, 900 would
be tied up in the Districts reserve,
and out of circulation.
why, the interest on this money
alone probably would be sufficient
to pay all benefit claims. The
District fund is growing at q rate
of more than three times that of
disbursement. This is an unhealthy
condition"
Mr.. McGehee declared other State
unemployment compensation sys-
TENS will be faced with the same
situation If the high tax rate is
continued.
ultimately, it would have the
erect OF curtailing the purchasing
power OF employees" he warned. TT
would destroy the industries that
give employment. Why not fix a
rate that will give business and
industry a chance to survive? Let
each jobless insurance system raise
only what 1t needs to meet benefit
claims, as long as they maintain an
adequate reserve fund"