Evening star., 1939-01-12
Sales Tax Foes
Ready 10 Fight
D. {. Program
$4,000, 900 Revenue
Plan Drafted for
u. S. EmpIoye Test
BY JAMES E. CHINN.

JIle llleNlldUlC Sul NlllS PlCSSoo AZ
faces at the hands of Congress. +
Already preparations are being
made to cut out the very heart OF
the tax plan-a proposed combina-
ton 2 per cent sales tax and tax
on income Cboth earned and un-
earned in excess of SIS 900 year.
Sales tax opponents in the House
and there are many of them-are
awaiting their opportunity. The
sales tax would dip into their own
pocketbooks as we'll as those who
live in Washington throughout the
year. 1t has been estimated also
that their own constituents - the
visitors who come to Washington
would be forced to contribute about
II per cent of the total prospective
$6,5OO0O0 annual yield of the sales
tax
Favor Graduated Income Tax.
Most of the sales tax opposition
will come from those House mem
bers who believe graduated income
. tax should be substituted. But these
members obviously forget that for
the last two years the House fatty
has refused even to consider an
income tax plan for the District.
The scope of the sales tax is far
greater than originally outlined by
those who framed the new tax pro-
gram. For instance it was proposed
originally that all articles selling
above 25 cents should be subject to
the tax. But a last-minute change
would make the tax apply to all
commodities selling at 25 cents or
"above."
The original plan, too, would have
made the tax apply only to meal
checks in excess of IS cents. Now,
however, the tax would have to be
paid on all meal checks of 25 cents
or more--a tax that not only will
catch the supper diner but the aver
age person who does not bring his
lunch to work.
These so-called minor" modifica-
tions in the tax program were made
late yesterday as the tax experts
who framed it scrutinized the de-
tails with the Commissioners Ad-
visory Committee on Taxation.
Covers Wide Range.
AS the program now stands, every
thing sold at a price of 25 cents or
more will be tapped by the sales
tax, with the exception of medicine
and foods not sold in public eating
places, and gasoline and liquor,
which already are bearing select
i've local tax.
The original soak the rich" in
come tax feature was not changed
in any respect. Any one in the
District who has an income in ex-
cess of $4,000 year, whether it
represents a salary or dividends, or
both, would have to pay the tax.
The rate would range from 2 to Z
per cent, but there would be spe-
cial $500 exemption of the first
amount received from "unearned"
Income.
The idea behind the income tax
is not to raise revenue primarily,
but to force test in the courts OF
the oft-raised question as to whether
the District has the authority to
tax the salaries of Federal employees.
Information furnished the experts
who drafted the new tax program
indicate there are six Federal Gov
ernment officials whose income eX-
ceeds $4,000 a year. 1t is their
belief that one of them may carry
the case to the courts. Should the
<constitutionality of such tax be
established the idea in the back of
the minds of the tax experts is that
the income tax could be extended
to Federal workers in the lower
brackets. In other words, the in
come tax feature of the dual tax is
designed chiefly to provoke litiga-
ton and to get final legal ruling
on the question as to the authority
of the District to tax the incomes
of Federal employees for revenue to
. operate the municipal government.
Continues S1.75 Realty Rate.
The subordinate features of the
new tax program provide:
Continuation of the present Sl75
real estate tax.
A fiat per cent net income tax
on corporations.
A gross receipts tax on public
utility corporations.
The real estate tax rate has been
$l.75 on $100 of assessed valuation
for the last two years, because of pro-
visions written into the last two
~'stop gap" tax bills by Congress.
The new program, however, will fix
the rate at SITS for only another
wear, and return to the Commis-
sioners their constituted authority
to determine the rate in the fu-
ture. There is a provision, how
ever. which would definitely fix
the real estate tax ceiling at $1.75
and the floor at $150. This was
done so the Commissioners could re-
duce the real estate tax in the years
Of plenty, and increase it in the
years when the budget would force
the municipal government into the
red.
The tax on public utility corpora
tions is intended to bring existing
rates more into uniformity. The
new plan proposes per cent gross
receipts tax on all utility corpora
tions with the exception of the
Capital Transit Co., which would pay
3 per cent. Now the Capital Tran
sit Co. and the Chesapeake & Po-
tomac Telephone Co. pay per cent
on gross receipts, the Washington
Gas Light Co. 5 per cent on gross
earnings. and the Potomac Electric
Power Co. per cent on gross earn
ings.
The new tax program, in all de-
tails, will be revealed to the public
as soon as it is formally submitted
to Vice President Garner and
Speaker Bankhead, in obedience to
the last Congress, which directed
that it be completed and placed
before Congress by January Is.
The tax experts who drafted it
DR.. Chester B. Fond of New York
and Colin F. Stam, chief counsel of