Evening star., 1948-06-03
Sales Tax Plan
Approvedby7wo
D.C.Conmittees
Senate Group Vote
Is 8 to ! in Favor
Of Combination Bill

Both House and Senate Dis
trict Committees today ap-
proved a combination sales tax
and "high-level' income tax for
the District.
On the Senate side, the vote was
81. The House group acted with
out a record vote, but Chairman
Dirksen said there was at least one
dissent
The bills now go to the calendars
of the House and Senate. They call
for a per cent sales tax and tax
on incomes over $1,000. Estimated
first-year yield to the city is S6,500,-
900. House action may come
Monday.
The program is designed to keep
the District out of the red for the
year beginning July in the event
of Federal pay raise. which would
affect several thousand District gov
ernment employees.
Cain Favors Start July l.
Senator Cain. Republican, Of
Washington told the Senate commit
tee he personally favored making
the measure effective July l as sound
fiscal policy.
He explained, however, that Chair
man Bates of the Fiscal Subcom-
mittee of the House District Com
mittee had agreed to similar meas
ure only as stopgap to be placed
in effect July / If Federal pay
raise is enacted.
The sales tax provision of the
joint revenue bill would levy
per cent tax on retan sales, ex-
empting only food for home con-
sumption. drugs, medicines and
rent.
The so-called "high-level" income
tax would replace the present Dis
trict income tax which has been
criticized as discriminatory because
it Is paid by only about $4,000 our
Of 100000 potential taxpayers here.
Plan Would Widen Base.
| The new income tax would apply
to all persons with net incomes
above $4,000 who maintain a place
Of abode here. This, Senator Cain
explained to the District Commit
tee, is designed to "catch" a large
number who escape payment OF the
levy under the present law because
they can claim legal residence else
where.
Exempted from the tax would be
| elective officers of the Government.
including members of Congress. and
presidential appointees who are sub
ject to Senate confirmation.
The only vote against the bill tp
the Senate committee was registered
by Senator Johnston, Democrat, Of
South Carolina. He contended that
the measure constituted revenue
legislation, which under the rules Of
Congress, must originate In the
House.
Opposing the sales tax as sun
sound" Senator Johnston said he
would raise point of order If 1t Is
called up on the floor. He contended
the Senate could not act until it
received such measure from the
House. He added the Federal Gov
eminent should pay a larger sum
toward the support of the District
than its present S12,000,000 payment.
Limited Borrowing Seen.
The House committee acted after
! hearing Mr.. Bates explain that the
sales tax revenue would be needed
to meet salary increases to District
employees If the Federal pay bill is
approved.
At the same time, Mr.. Bates pre-
dicted that even with the sales tax,
the District may have to go on a
limited borrowing basis"-short-
term loans from the government
by the fiscal year 1851.
Representative Klein, Democrat.
of New York. who dissented, asked
Mr.. Bates if he did not think "a
good income tax system would meet
the Districts needs.
Mr.. Bates replied that even If the
rates were trebled the District still
would not have enough money to
meet its increasing requirements.
Mr. Bates told the committee the
District is in exceptionally good
financial condition" at this time.
Very few cities, he said, have been
able to spend so much money on
capital outlay from current rev.
enues.
But he added:
ut is very obvious that some
added source of revenue besides the
sales tax will be needed in the fiscal
lSee TAXES, Page A-5J