Evening star., 1939-01-08
BY JAMES E. CHM.

Liquor ana gasoline, two COM
modlties already subjected to a Sc
lect1ve local tax, would be exempt
from further taxation under the
proposed retail sales tax, it was
learned authoritatively last night
as printed copies of the report of
the experts who developed a new
revenue-producing program for the
District rolled of the presses at
the Government Printing Office.
simultaneously, it was disclosed,
the report recommends a so-called
use tax" as weapon against Dis
trict residents who might attempt
to evade the sales tax by making
purchases in nearby Maryland or
Virginia.
Altogether. the new program is
estimated to yield about $4,000 900
a year in revenue. but the net gain
would amount to 100000, since
its adoption would be coupled with
repeal of the present tax on in
tangible personal property and
death of the unpopular emergency"
tax on gross receipts, which expires
automatically June 30. These two
levies are now producing about
SIS 100000 year.
Features of Program.
Features of the new tax structure,
and the estimated revenue yield,
follow:
l. General per cent sales tax,
$6,500,0 900.
2. Individual tax on income in ex-
cess of SIS, 900, the rate ranging from
to Z per cent, $1,250,0O0.
3. Corporation net income tax
with fat S per cent rate, 81, $50 900.
4. Continuation of the SITS real
estate tax rate (Which is Is cents
in excess of the basic $1.5O rate) i,
| 5000 600.
The estimated $1,000, 900 net gain
from the new program is far in ex-
cess Of the amount needed to balance
the 1910 budget # $47, 900 900. The
Budget Bureau has placed the an
ticipated deficit at 100000. Mai.
Daniel j. Donovan, District auditor
and budget officer, who disagrees
with the Budget Bureaus calcula-
tion, figured the shortage at about
| $4,000 900.
Realty Levy Flexible.
Anyhow, the tax experts point out,
the program was developed for the
future and is designed to be per-
manent, and contains a provision
for flexible real estate tax rate
which the Commissioners can lower
to absorb surplus revenues and in
crease when additional revenue is
needed. The floor would be $1.5O
and the ceiling SITS.
So. If the new tax program should
yield an added $4,000 next fiscal
year, and thus leave a surplus of
either $1,000, 900 or $4,000 900, it was
pointed out, the Commissioners will
be IN a position to lower the real
estate tax in the 1941 fiscal year to
Its $1.50 base of two years ago.
The new tax program, a product
OF DR.. Chester B. Pond, New York
tax authority. and Colin F. STAN,
counsel for the Joint Congressional
Committee on Internal Revenue
Taxation, will be submitted to the
Commissioners Tax Advisory Com
mittee this week for review. Later it
will be passed on by the joint con-
gressional committee, which was
charged with supervising the tax
study, before being turned over to
the Senate and House District Com
mittees.
Food, Medicine Exempt.
Food and medicine are to be the
only articles exempt from the 2 per
cent sales tax, with the exception
OF such commodities as already are
bearing special tax, such as gaso-
line and liquor. The report recon-
mends that in the future. if any
Selective sales tax such as the 2-cent
local tax on gasoline or the local tax
on alcoholic beverages is placed on
any other particular commodity it
likewise be excluded from the gen.
eral sales tax.
The "use tax" is a plan copied
from States which have a general
sales tax to prevent persons from
going outside the State to make
purchases IN order to escape the
levy. The proposal of the tax ex-
perts is that any article subject to
the District tax which is purchased
elsewhere be subjected to a per
cent "use tax" unless the State in
which 1t was bought also has a sales
tax.
With such a plan in operation,
1t was explained, it would be use
less, for instance, for a person
attempting to escape the District
sales tax, to 60 into Maryland or
Virginia to buy an automobile.
Maryland has an automobile titling