Evening star., 1942-03-20
Furniture Men
.0f Nation Score
D. {. Profit Tax
House Group Asked
To Clarity or Repeal
Levy on SoIes Here
BY WILL p. KENNEDY.

ny WILL r. hENNEDY,
Demand was made today by more
than IS representatives of furniture
manufacturers and dealers from all
parts OF the country before the Fis-
cal Affairs Subcommittee of the
House District Committee that Con-
gress should clarity by repeal or
amendment provision of the Dis
trict income tax law which REQUIRES
out-of-town business concerns to nav
5 per cent tax on net profits
earned here.
The hearing was held by the
Hunter Subcommittee at the re-
quest Of Representatives Burch,
Democrat, OF Virginia. Barden,
Democrat, Of North Carolina, and
Chairman Doughton of the WAYS
and Means Committee, who con-
tended the District law imposes
dual taxation on manufacturers in
their States.
The stand of the witnesses for the
manufacturers and dealers was SUD-
ported also by Representa- tives
D'Alesandro, Democrat, of Mary
land; Monroney, Democrat, of Okla
homa; Bulwinkle, Democrat, of
North Carolina, and Mcmillan.
Democrat. of South Carolina.
Simmon, Morgan Appear for d. c.
Representing the District were
Glenn Simmon, assistant corpora
ton counsel in charge of tax ques-
tlons. and 10 Morgan, sole member
OF the Board of Tax Appeals. The
question involved the tax on income
OF corporations from District
sources"
This word sources" appeared to
be the moot point of the contro-
versy over Interpretation Of the law
by District authorities. The term
was taken from the Federal income
tax statutes. 1t was explained, and
mas been in the law since 1916. The
controversy concerns solely the sale
OF personal property and the only
question is whether the sale was
actually made in the District.
The argument revolved around
whether, when the sale is made. 1t
was through solicitation of the busi-
ness here or whether the title actu-
ally passed here. If the sale is made
at a furniture market such as is
periodically held in large cities,
through mail order, or through a
buyer visiting the manufacturing
plant or meeting the salesman out
side the District and placing the or
der, then it has been ruled 1t is not
taxable.
Amendment Causes Protest.
This law has been in effect since
1889 and the only corporations the
District tax authorities have had
] any trouble with have been the fur
niture dealers. Mr.. Simmon ssid.
The protest at this time results
from an amendment approved Feb
ruary 2 requiring all corporations
deriving revenue from District
sources to pay $40 license fee and
providing that all representatives
Of corporations must have certifi-
Gates showing the corporations have
a District license
Previous to adoption of this
amendment the tax authorities had
no way Of checking on sales made
here by out-of-town corporations
1t was argued by representatives
OF the furniture industry that no
other State imposes such a tax and
that the result would be that the
corporation would have to raise its
wholesale price, thus penalizing its
consumers throughout the States,
or a special price would have to be
set for purchasers In the District of
Columbia.
Hunter Halts Bulwinkle.
Representative Bulwinkle sug-
gested that one alternative would
be for Congress to reduce its annual
appropriation to the District. He
started to question Mr.. Simmon as
to what effect that would have, but
Chairman Hunter halted the inquiry
by calling that threat" and say
ing was mot fair question to ask
the witness"
Mr.. Morgan said there has been
only one decision and that was in
the Eastman Kodak case against
the District. This applied to re-
lated case involving the S. J. Heinz
Co. In the Eastman case the con-
troversial question of where the sales
were made was eliminated, thus
facilitating a decision by Mr.. Nor
gan. That corporation claimed the
District should tax only sales made
here because manufacturing was
outside of the District. Mr.. Nor
gan's decision was that the net prof.
its were all earned in the District
and taxable. Both the Eastman
and the Heinz cases are now before
the Court OF Appeals.
Others testifying at the hearing
were J. c. Mccarthy, secretary of
the National Association of House.
hold Furniture Manufacturers; S.
M. Barnett, representing the Hub
Furniture Co.; Harry Davidow, rep
resent;ng The Hecht Co.; j. M. Leh-
man, attorney, representing furni-
ture companies in New York, Penn
sylvania and Maryland; Chester D.
Palmer, Virginia Lincoln Furniture
Corp. of Marion. Va; Charles R.
Seal, trafic director of the Balti-
more Association Of Commerce; Will
liam j. Cheney, Frank Louthan,
Virginia Manufacturers Association,
and M. L. Nee, Independent furniture
dealers in Washington.
Replying to a statement by Louis
Rothschild, attorney representing
the National Retail Furniture Asso-
ciation, that up until the present
time the industry had not been dis
turbed because the law was impos-
sible of administration and the tax
could not be collected until after
the license fee provision had been
incorporated, Mr.. Simmon said that
in the two-year period returns from
corporations under this tax law had
been approximately 100000 and
that between $1,000, 900 and $2,000,-
600 of that amount came from cor
porations outside of the District.
Mr.. Morgan argued that there is
nothing wrong with the law itself
and that the only question is that
D.. - e$ NJ ~