Evening star., 1947-06-13
S13,5OO,OO0T Tax
Bill Ready for
Senate Action
Report Scraps House
Exemption Plan on
D. c. Income Levy
By John w. Thompson. Jr.

BY John W. Thompson. Jr.
Senate District leaders were mark
ing time today, ready to launch q
rejuvenated sl3,500, 900 city money!
raising program on the floor of the
Senate early next week.
Stricken from the bill was the
Gripping House amendment which
would have exempted from the pro-
posed new income tax all Federal
employees who declare legal resi-
dence in State.
Added was a minor. change from
$1,000 to $1,000 in the authorized
exclusion from gross income of vet
Grams pensions.
The Senate District Committee
reported out the revenue program
unanimously yesterday afternoon.
1t includes 100000 increase in
the $4,000, 600 annual Federal pay
ment toward city expenses, a as
cent increase in the real estate and
personal property tax rate to 50, a
Is per cent increase in water rates,
a 1-cent increase to 4 cents per
gallon in the gasoline tax until
July l, 1852, and a doubling of the
50-cent annual motor vehicle in
spection fee.
Raises Yield S1,50O,000.
BY rejecting the House amend
ment to the income tax, the Senate
committee increased the estimated
yield from the tax $1,500,000.
In addition to the amount in
volved, Corporation Counsel Vernon
E. West told the committee the
amendment raised at least two ques-
tions OF constitutionality.
In the first place, he pointed out,
the amendment would have ex-
empted the Federal employees rather
than their Federal salaries. Thus.
he said, q person could earn $4,000
Federal salary and have an outside
income of $4,000, all of which
would be untaxable here.
Secondly, he continued, the bill
would have exempted the Federal
employe declaring domicile in a
State but would have levied the tax
against a Federal employe domi-
ciled here.
Senator Cain, Republican, of
Washington, chairman of the Fiscal
Subcommittee of the District Com
mittee, told his colleagues he was
strongly opposed to the amendment
as unfair.
He pointed out that he comes from
State which has no income tax
and, therefore, under the bill with
out the amendment, his constituents
here would have to pay the tax.
Nevertheless, he said, he felt the
unamended measure would be the
fair way to deal with the matter.
Would Exempt Congress.
Under provisions of the original
version of the bill approved by Sena-
tor Cain and Representative Bates.
Republican, of Massachusetts,, all
persons living here for seven months
of the year would be liable to the
income tax, except members of
Congress and cabinet members.
Any one paying an income tax or
an Intangible personal property tax
to a State, however, could credit that
tax against any tax due here under
the pending bill. Since the rates
in the local bill are lower than those
in any of the 80 States having an
income tax, the practical effect
would be to exempt from payment
here all who pay State income tax.
1t was estimated this original ver-
sion of the personal income levy
would yield $3,100 900 more than the
present income tax. The present tax
is paid only by those who claim
the District as their legal residence.
Conference in Prospect.
Unless the House version of the
bill is restored on the Senate floor,
a conference on the measure Is vir-
tually assured. Chairman Dirksen
of the House District Committee.
who probably be a conferee, is an
opponent Of the crippling amend
ment.
The amendment was sponsored by
Representative O.Hara, Republican,
Of Minnesota, also likely conferee,
but House District leaders are hop
ing to refine" the amendment in
conference, even If the principle
should stick.
Senator Cain told his colleagues
yesterday that, if he had known the
income levy was going to be passed
in its amended form, he would have
fought from the beginning for in
clusion Of a sales tax in the pro-
gram.
He said, however, he felt with Mr..
Bates that the original program
they agreed upon would raise the
necessary money and that the sales
tax should be laid aside for future
use If needed.
Sales Tax Bill introduced.
Meanwhile, on the House side,
Chairman Horan of the Appropria-
tions subcommittee handling the
District budget, dropped into the
hopper bill calling for 2 per. cent
sales tax and virtually no exemp-
tions.
Mr.. Koran, Republican, OF WASH
ington. sought unsuccessfu1ly to in
clude a sales tax in the program
when it reached the House floor last
Monday.
He succeeded in enlisting the CO.
operation of Senator Dworshak, Re-
publican, of Idaho, who is expected
to introduce sales tax bill in the
Senate today.
Senator Dworshak, chairman Of
the Senate Appropriations Subcom-
mittee which will handle the city
budget, said he would not press for
the tax unless 1t appeared that the
Cain-Bates program would not pro-
'duce enough money to balance the
budget
Realty Boost Questioned.
Senator McGrath, Democrat, Of
Rhode Island questioned Senator
Cain yesterday on reasons for saw
ing $4,50o,000 Of invested city war
savings for the fiscal year 1949.
Senator McGrath suggested that
the money be spent during the next