Evening star., 1940-02-21
Time to Do 1t Now

There seems to be little if any OBJ
lection to two of the provisions of
the McGehee bill for amendment of
the District Unemployment Com
pensation Act.
1t Is universally agreed, at least
no one has suggested anything else,
that the local pay roll tax should be
reduced Immediately to the maximum
2.7 per cent permitted in the States,
and that the tax on salaries in ex-
cess OF $4,000 also be lifted, as per-
mitted in the States.
There has been no strenuous OBJ
lection from local taxpayers to the
increase of benefits under the pro-
posed amendments. The objection to
the broadened benefits seems to have
come from national rather than local
interests. the former fearing similar
demands in the States. which would
prove more burdensome than in the
District.
Chief discussion in connection with
amendments now is over a proposed
experience or merit rating system.
This system, if found practical,
would remove one of the most objec-
tionable features of the unemploy-
ment tax, which is that the employer
who has contributed most to steady
employment pays the highest tax.
To the employer able to demon
strate steady pay rolls and consistent
employment, there would be, under
a merit system, some reduction in
tax. But such benefits would not
extend to the employer whose opera
tions contributed to unemployment.
Thus the unemployment tax load
would be more equitably distributed.
The principle is sound enough, for
every incentive should be held out
to employers to reduce the hardships
OF seasonal employment and to
maintain steady pay rolls.
1T may be difficult to determine
whether such a principle can find
practical application in the statutes.
But it will not be possible to make
that determination until the expert
ment has been tried. Wisconsin, the
first State to adopt unemployment
insurance, apparently applies the
principle in way satisfactory to
the taxpayers and without injury to
the unemployed beneficiaries. A re-
cent Star article quoted the benefits
OF the merit system from those who
have experienced directly its effects.
Four States are now experimenting
with the principle and most of the
State laws provide that it is to be
studied and adopted later on.
1t would seem that an experiment
IN the District of Columbia would be
highly beneficial to all concerned.
1t would not, necessarily, mean in
creased taxes for those employer
groups contributing most to unem-
ployment. But it would mean some
reduction Of tax to those employ
ers contributing most to steady en-
ployment. If found workable, it
would be of unquestioned benefit and
If unsatisfactory or unavoidable it
could be discontinued.
Certainly it would seem desirable
to perfect a system of taxation
which, in the first place, collects no
more in taxes than is necessary to
meet the purpose of the tax, thus re-
moving the picture of outrageously
excessive taxation existing in the
District today. Secondly, any in
centive, through taxation or other
means, to remove the causes of un-
employment would justify itself. The
experience or merit rating system
should find place in the District law
and now, while there is substantial
reserve fund far exceeding actual
needs, is the time to put it there,