Evening star., 1947-02-26
ID. {. Tax Plan
For 10 Million
Goes toCapito|
Only One Surprise;
Complete New Levy
On Incomes Asked
By John W. Thompson, Jr.

The long-aWaited District tax
program designed to raise $19,-
250,000 to head off a local gov
ernment deficit was sent to the
Capitol today by the Commits
SionerS.
1t consisted of eight separate bills
and generally followed the recon-
mendations of the Commissioners
Special Tax Committee last summer.
The only surprise was the request
of the city heads for complete re-
peal of the 1889 income tax and SUBJ
stitution of an entire new law. Pre-
vious speculation had been that
an effort would be made to amend
the existing legislation.
The Bills and Yields.
The eight bills and the amounts
they are expected to yield are:
- A 2 per cent retail sales and use"
tax, $9,000,000.
A personal, corporate and unin-
corporated business income tax,
$3,150,O00.
A 10 per cent amusements admis-
sion tax, $1,0Oo,oOo.
Doubling of the liquor taxes,
$2,800,000.
A 1-cent tax on each package Of
20 cigarettes, 100000.
A 2 per cent levy on utility bills,
s1,000,OO0.
A 1-cent increase in the present
3-cents-a-gallon tax on gasoline,
81 100000.
Doubling of the present 50-cent
.annual automobile inspection fee
and extension Of the fee to trailers.
no estimate.
Most for General Revenue.
All the taxes, except gasoline and
inspection, would go to the District
so-called general revenue fund,
which finances all city projects ex-
cept water, highway, traffic items
and a portion of the police salaries.
Receipts from the gasoline levy and
inspection of vehicles go to the
highway fund.
The increase in inspection fees Is
not expected to yield additional rev.
enue for the city. 1t is designed, ac-
cording to District officials, to make
the system more nearly self-support-
ing.
The new taxes for the general
fund are expected to yield only
$l1 100000 in the fiscal year 1948
because of difficulties of putting the
levies into effect in the first year.
The 1948 District budget now be-
fore Congress carries general fund
expenditures $12,600,000 above ex-
pected income. The Commissioners
propose to balance this with the new
tax program and the sale of 81 ,300,-
900 worth of invested war savings.
Tax on Entire Net Income.
The new income tax law proposes
to tax the entire net income of Dis
trict residents and the income
earned here by nonresidents. Credits
are provided. however, for tax pay
ments in their own Jurisdictions by
|nonresidents on income earned here.
A resident is defined as any per-
son doniciled here on the last day
of taxable year or any one living
here more than seven months of the
year, whether or not domiciled here.
Elective officers of Government,
such as members of Congress and
Federal executive officers appointed
by the President and confirmed by
the Senate, would be considered
nonresidents unless they are doml-
ciled here.
In addition the bill contains lam
guage that the Federal salaries paid
these Federal officers is not to be
considered as income earned within
the District.
Average U. S. Worker Hit.
This would exempt such officers
from payment of the tax, while the
average Government employe who
meets other requirements would
have to pay on his Federal salary.
The bill contains the same rates
of / to per cent for the personal
tax but includes some additional ex-
emptions such as some medical ex-
penditures, alimony and contribu-
tions of employers to employe trust
funds.
1t also would permit standard
$500 maximum optional deduction
for gross incomes of $4,000 or more
after deductions for dependents
have been taken. For gross incomes
of less than $4,000 after credit for
dependents has been taken. an op-
tional tax table is provided in which
10 per cent deduction is computed.
District officials said the portion
of the bill providing for reciprocal
credits between the District and
other States is modelled after cur
rent statutes now in effect in Mary
land and Virginia.
Assumed Example.
AS an example of the effect Of the
proposed bill on persons who live in
Maryland and Virginia, but earn
portions of their income in the Dis
trict, assume that the three States
had a l per cent levy on total net
incomes. Assume, also, a resident
of Maryland with $4,000 net in