Evening star., 1950-06-25
District and Banks
Continue Long Fight
Over Taxation Rate
By Horriet Gri!fiths

The District is Slugging 1t out
with the banks here. one by one.
over the taxation rate.
The city insists on taxing the
banks at 6 per cent OF gross earn
ingS. The banks maintain they
should be assessed only at per
cent on gross earnings less in
terest paid on savings accounts.
At stake is something over 81
million in taxes already paid. and
an estimated 100000 a year from
now on.
Both sides contend their posi-
tions are backed up by court rul-
ings.
Question Now Before Board.
The issue now is before the Dis
trict Board of Tax Appeals. OF
which Lawrence Koenigsberger II
the sole member, and also in Dis
trict Court.
Mr.. KoenigSberger has COM
pleted hearings on all the cases.
but has not yet entered decisions.
He is awaiting briefs in the cases
of national banks and trust COM
panies. and the decisions on State
chartered banks are being held
up on motion of the District.
The District Board of Personal
Tax Appraisers has made the 8
per cent assessment beginning
with the fiscal year l945. Before
that, since 1904. national banks
and trust companies had been as
sessed at 6 per cent, and State
banks at per cent of gross earn
ings less the amount deducted AZ
interest to depositors.
Hamilton Bank Appeals.
The Hamilton National Bank
appealed against the assessment
in the fiscal year 1945. seeking the
right to deduct from It's gross
earnings the Interest paid It's de-
positors.
The United States Court of APP
pealS found there was discrimi-
nation in the taxing of banks here.
and remanded the case to the as
SCISSORS with instructions to remove
it. The assessors then assessed all
banks at 6 per cent.
The issue then went back to the
Board of Tax Appeals. which held.
as it had before. that the Hamil-
ton Bank was taxable at 6 per
cent, but also held that State
banks should be taxed at 4 per
cent after interest deductions.
Hamilton appealed to the court
on the per cent rate, and the
District appealed on the 4 per cent
rate. The court ruled, on May 81.
1949. that all banks should be
taxed at 4 per cent Of gross earn
ings. less interest paid depositors.
The court said this: so long
as the taxing authorities Of the
District of Columbia classify
as incorporated savings banks
the State-chartered commercial
banking institutions which have
interest-bearing savings deposits.
and impose upon them Cthe
4 per cent rate). the national
banks in the District which have
Understanding savings deposits
must be classified and taxed In
the same manner"
District authorities draw the
assumption from that paragraph
that if they tax all the banks
uniformly. they are removing the
discrimination complained Of.
They have allowed the 4 per cent
rate for fiscal 1945. but assessed
at 6 per cent from 1916 through
1850.
Banks See Long Fight.
The Districts apparent STRAIT
egy Of forcing each bank TO appeal
separately on the basis of each
years tax has the banks worried
over the prospect of having to
fight the issue year after year.
even when they have won previous
cases.
1t is for the years between l946
and 1850 that the banks are
contesting the rates. They are
seeking recovery through the
Board Of Tax Appeals or through
District Court.
While Mr.. Koenigsberger has
not entered his decisions, he has
made findings of fact and con-
clusions of law in the State bank
cases. He has held that they
are entitled to be taxed at a rate
of 4 per cent of gross earnings.
less interest paid on savings ac-
count desposits.
The banks involved include the
Security Savings 81 Commercial
Bank. the Bank Of Commerce &
Savings, the City Bank Of WASH
ington and the McLachlen Bank
ing Corp.
Besides the central issue of the
tax rate. there are several fringe
matters involved in the fight.
Among the principal ones are the
Districts practice Of taxing real
estate rentals at gross. instead
Of net. and the city's contention
that profits on sales of securities
or other capital gains should bs
taxed in full and not offset by
any capital losses suffered.