Evening star., 1942-04-13
Changes Forecast
IN City Tox Policy
Writer Says War Will Alter
District Revenue Procedure
After 'Breother' This Yeur
By John w. Thompson. Jr.

By John w. Thompson, Jr.
Perhaps the best news to the District
taxpayer as the House Appropriations
Subcommittee today begins hearings on
the ls43 District budget is the almost
positive assurance from the Commits
sioners that even with the changes in
the $55,000,000 estimates made necessary
by war, they can be met out of revenues
from present taxes at present tax rates.
The concensus of District finance on
cials appears to be that only extra ex-
penses. now unforeseen, would plunge
the city into the red during the coming
fiscal year which begins next July /.
This situation, together with opening
OF hearings on the bill today a month
ahead Of schedule, argues for the shaping
OF city estimates which should meet the
situation created by the war status of
the Capital to the satisfaction of those
who pay the bills.
In the first place, the early hearings
will give the House and Senate COM
mittees plenty Of time to 60 thoroughly
into the reshaping of the budget which
was prepared in most details months be-
fore Pearl Harbor. Additional health,
police, fire. school and other municipal
service funds probably will have to be
added to meet the demands of the SWELL
ing population. The few capital con-
struction projects carried In the measure
may have to be revised In view of short.
age Of building materials.
OF one thing there seems little doubt,
The effect of the war is likely to turn
the 1943 supply bill almost entirely into
personal service" or maintenance
budget with some recognition of the in
creasing cost Of supplies. There should
be little capital outlay.
Existing taxes will give the city what
might be described as "a breather" year
to meet rising national levies and buy
War bonds before its residents are forced
to dig even deeper into their pockets for
local taxes.
But while the picture for the coming
fiscal year Is encouraging. the warning
signal for the following year-fiscal year
1S44-has already been raised with the
disclosure that the Commissioners are
studying additional sources of revenue.
Discussions are under way with the
Budget Bureau on the issue.
This much can be predicted with rela-
tive certainty. Rationing of tires, tubes,
automobiles. gasoline and many other
commodities is bound to reduce the reve-
nue. yield from the gasoline, personal
property and even corporation income
tax. At the Capitol, present efforts,
which probably will be successful, to kill
the income tax amendment recurring
registration Of out-of-town corporations
doing business here and subjecting their
income earned locally to per cent
tax unquestionably will deprive the Dis
trict of more revenue.
At the same time the heavy flow Of
population here for the war-which will
cause added drains on municipal revenue
will mean little In the way Of added
tax receipts. ...
Thus the picture for 1874 Is one Of
rising expenses and declining revenues.
Outside Of raised rates in few minor
taxes which could produce more money,
such as the tax on liquor. the following
are the only major opportunities the city
has for more money:
!. Increase the SITS real estate tax
rate, the tangible personal property levy
and the income tax rates.
2. Scrap the present income tax struc-
t,lre and substitute the so-called Pond
plan Of . combined sales-income levy.
3. Increased Federal contribution.
Almost without exception, District Of
dcials would like to see the Pond plan
substituted for the income tax which is
50 full Of loopholes that half the popu-
lation escapes paying it and further in
roads and exemptions are continuously
being made. The plan devised by DR..
Chester Pond, New York tax expert who
studied the District situation several
years ago, called for a per cent sales
tax, exempting essentials such as food
and medicines, and graduated income
tax starting at $4,000. This ingenious
plan struck at ability to pay as well as
exacted . contribution from every one
who came here to help maintain the
services given them.
DR.. Ponds program has been studied
recently by Commissioner Guy Mason
and 1t Is certain to receive favorable
consideration In the discussions with the
Budget Bureau. The Board Of Trade has
estimated a per cent sales tax exempt
ing food and medicine would bring in
100000. To get the same amount Of
additional money out Of the real estate
levy, the rate would have to be boosted
to about $2.05 per hundred dollars, when
already 1t bears the heaviest part Of the
general fund load. Because Of the high
assessments here, the real estate tax is
far heavier than the understanding alone
would indicate.
District officials are confident that
Congress has been unwilling to sponsor
q sales tax locally because the members
did not want to set precedent for
similar national levy. With increasing
indications that q sales tax now may be
instituted as part of the national tax
program to meet the war budget, they
feel the Pond plan may have chance
should the need arise and the sales tax
be in effect nationally at the time.
1t goes without saying that arrange
ment Of District-Federal financial rela-
tions on some equitable basis such as the
Overton plan instead Of the uncertain,
haphazard lump-sum procedure would
go very far to help meet increasing Dis
trict needs. It is to be hoped that this
fair proposal to base Federal contribu-