Evening star. [volume] (Washington, D.C.) 1854-1972, 1954-02-02
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ried about long-range predic-
lions by District officials which
show that deficits-even with
the works financing plan-may
develop in the city's general fund
during the next 10 years.
Mr.. Martin stressed that
changing conditions may prove
the estimates to be grossly
wrong and that def1cits-if they
do occur-must be adjusted each
year. since the city must present
a balanced budget.
However. Senator Case, Re-
publican, of South Dakota. chair
man of the full Senate District
Committee. said the subcom-
mittee must be in a position to
assure the House and Senate
that the additional finances re-
quested will pay for the $305
million works improvements. He
said it would be in a weak posi-
ton if it had to return in two
or three years and ask for more
revenues.
This discussion led directly to
speculation as to possible new
taxes, with members passing
lightly over the $45 million in
general fund tax boosts Mr..
Martin was defending.
| Representative Smith, Demo-
crat, of Virginia, asked about
raising the sales tax to 3 per
cent and cutting the 15-cent
exemption.
Cities Nearby Areas.
Mr.. Martin replied that he
would not oppose this If nearby
areas had similar rates. But
with a 2 per cent sales tax in
Maryland and none in Virginia.
| he declared 1t would be "a good
way to wreck and bankrupt the
city"
The finance officer, answering
other questions. said sales tax
on groceries would net 81 mil
lion a year, and elimination of
the SIPS exemption on meals
would bring in another $2.5
million.
Most States which have sales
| taxes-excluding Maryland-im-
pose them on groceries and
meals, Mr.. Martin said. But he
predicted that for the District
to do so would mean thousands
Of District residents would do
their grocery shopping in Mary
land and Virginia. Besides sales
taxes. he said, this would eat
into business tax revenues.
Senator Case took issue with
him. doubling that many resi-
dents would seek out of town
grocery stores to save small
amounts of tax money. He said
he also thought that outsiders
who eat here could very we'll pay
toward District expenses"
Mr.. O'Hara commented there
was substantial House opposition
to taxing meals. however, when
the sales tax was passed in 1949.
Similar objections, Mr.. Martin
noted, would arise from any at
tempt to drop the Districts high
exemptions on individual income
taxes. The exemptions $4,000
for taxpayers and $500 for de-
pendents) were set in q compro-
mise deal when the sales tax
was adopted.
Bank Tax Data Asked.
Senator Case, who requested
revenue estimates from the vari-
Gus sales tax possibilities. also
asked for data on increasing
banks gross earnings taxes from
4 to 6 per cent and raising from
2 to S per cent the existing tax
on transient hotel rooms.
He also asked for a study of
possible legislation to force in
surance companies to pay taxes
on interest earned from mort
gage investments. He raised this
point after Mr.. Martin brought
out that insurance companies are
exempt from such taxes, while
banks and other lenders pay
them.
Under the Commissioners pro-
posals, a tax on net premiums
paid to insurance companies
here would be increased from
to 21a per cent. The proposal
has drawn sharp criticism from
committee members. however. or
grounds that District insurance
firms doing business in other
States would have to pay huge
taxes because of high rates
charged in retaliation for the
increases here.
Mr.. Martin noted that insur-
ance companies here aren't taxed
on mortgage investment interest
in order to show that they get
certain advantages over other
lenders.
Possibility Of Retaliation.
He said that ending this ex-
emption, however, might bring
retaliation from other States on
the same basis that they would
increase insurance premium
taxes to companies with home
Offices in Washington.
Asked by Representative Har-
ris, Democrat. Of. Arkansas
about a real estate tax rate boost
from the present $2.15 (per 500
assessment) to 1925, Mr.. Martin
said the city would get an addi-
tional return Of about $1.8
million.
| Mr.. O'Hara said he did not
anticipate. as many complaints
about the real estate rate, how
ever. as he did about differences