Evening star., 1940-03-15
D. 6. Taxes
Continued From First Page.)

ana detailed provisions.
One District official suggested to-
day that the combination tax plan
held the possibilities of flexibility
which was desirable. He suggested
the proposed Nichols plan not only
would bring in additional money
needed for District projects and
services, but also might bring about
q reduction in the Districts real es-
tate tax rate.
Follows Two Developments.
The new tax plan is the direct
outgrowth of two recent develop
ments:
l. Complaints of House members
that their constituents who work in
Washington and pay taxes back
home" might be subjected to three
taxes on income-Federal, State and
the District.
2. The recent decision of the
United States Court of Appeals for
the District which precipitated a
fear that the local income tax could
not be applied to persons working
In Washington who pay taxes in the
States in which they maintain q
voting residence.
The combination income sales tax
plan is modelled after the one pro-
posed in January, 1899, by Dr.
Chester B. Pond, New York tax ex-
. pert, who made an exhaustive study
Of the District tax structure for the
House and Senate District Commit
toes.
The 2 per cent sales tax would ap-
ply to all retail sales except food
stuf1s consumed "on the premises"
and medicines The income tax
would be applicable only to incomes
In excess of $4,000 a year, which
would exempt salaries of members of
Congress. The rate of the income
tax would range from to per cent
Of the taxable income.
Estimates were given the subcom-
mittee that the sales tax alone prob
ably would yield about $5,000,0O0 a
year In revenue. The income tax, it
was estimated, would produce at
least another $500 900.
DR.. Pond in recommending the
combination sales-income tax pro-
posed that the income tax apply
only to that portion of earned in
come In excess Of $4,000.
Collections In 1sl1.
Collection OF the proposed sales
tax, according to the subcommittee
plan, would start January next.
The income tax would apply to
earned income in the 1910 calendar
year and would be collected in two
equal installments, the first collec-
ton being due April next year and
the second June Is.
Mr.. Nichols said it had been de-
cided it is too late to do anything
about the local income tax at this
time and 1t should remain on the
statute books this year and be sue
ceeded next year by the combination
sales-income levy.
I'VE will let the income tax yield
what it will this year irrespective Of
court decisions" be declared.
The subcommittee, it is under
stood, approved the combination
sales Income tax by . 3-to-2 vote.
The three who voted in favor Of the
plan are Chairman Nichols and
Representatives Kennedy of Mary
land and McGehee of Mississippi, all
Democrats. The two negative votes
were registered by Representatives
Oirksen and Bates.
! The combination sales-income tax
DR.. Pond recommended last year
provided:
l. That the sales tax allow the
following exemptions: Food not con-
sumed on the premises, medicines,
sales under IS cents and articles
subject to selective sales taxes by the
District. such as gasoline.
Graduated Scale.
!. That the rates Of the personal
Income tax be: Two per cent on the
taxable net income not in excess OF
$1,000; : per cent on the taxable
net income In excess of $1,000 and
not In excess Of 5000; 4 per cent on
the taxable net income In excess OF
5000 and not in excess Of 5000:
per cent on the taxable net income
In excess Of 5000 and not In exces.
Of $1,000: 8 per cent on the taxable
net income In excess of $1,000 and
not in excess Of $4,000, and 7 per cent
on the taxable net income in excesl
Of 5000.
At the time DR.. Pond recon-
mended the combination tax, he
said In his report:
THE combination personal income
retail sales tax plan appears to b.
. the most practical method Of meet
ing the economic, legal and politica
problems which any attempts tt
raise the same amount Of money b.
q eraduater personal income tax OF
ali incoanes. including those of Fed