Evening star. [volume] (Washington, D.C.) 1854-1972, 1959-10-09
Continued From First Page

Continued From First Page
tions-the bar association, the
medical society and the certi-
fled public accountants group
argued that the proposal would
levy an out-of-line and dis
criminatory tax burden be-
cause:
/. The effect of the proposal
would be sleeper income taxes
on a selected group.
2. The tax would be dis
criminatory within the personal
services category itself in two
.ways-on the question of resi-
dence and on private practice
in contrast to salaried work.
3. The business levy was
adopted to hit those who were
escaping the corporation tax by
choice. The proposed widening
of the business tax would apply
to those who cannot enjoy the
tax privileges under incorpora-
ton.
In general, the answer from
the District Finance Office on
these arguments is simply this:
The tax is imposed for the
privilege of engaging in a trade
or business in Washington. Ex-
tension of the tax would cover
those who are not now being
taxed for this privilege.
The tax takes S per cent of
all net income over $4,000. Net
income is calculated by sub
tracing business expenses from
total income and then deduct
ing 20 per cent of that figure
for the SALARY" of the bust
ness owner.
AS an example of the heavier
tax bills under the proposal:
A doctor, living in Washing
ton, who is married and has
two children, has a $25, 900 in
come. With $4,000 itemized de-
auctions and his family exemp-
tions, his tax bill for personal
income now is $500. Under a
proposal to increase this tax,
by lowering the taxable income
brackets from $4,000 to $4,000,
his tax would be SITS.
If he comes under the busi-
ness tax, his bill for this levy
would be $3.50, assuming busl-
ness expense deductions Of
$4,000 along with the 20 per
cent salary" allowance and
the business tax's $1,000 de-
duction.
The doctors personal income
would now be calculated on the
$1,000 salary figure plus the
$4,000 deduction allowed under
the business tax, or $4,000
minus personal exemptions.
Under the present income tax
schedule, his tax would be $113
and under the proposed in
crease, $128.
Therefore, under the present
income tax schedule, the doc
tor would owe $500 for the in
come tax plus $113 for the
business tax, a total of $703.
If the income tax is raised,
he would pay SITS on personal
income plus $128 for the busi-
ness tax, or a total of 1908.
The business tax proposal
would hit the suburban resident
even harder.
Maryland and Virginia only
allow their residents to count
in the District business fran
chise tax as a deductible
expense on their personal in
come tax. The out-of-city resi-
dent cannot substract the buSi-
ness tax payment to the city
from his State personal income
payment.
This, the professional organi-
cations argue, means double
taxation on almost all of the
taxable income.
To illustrate this point, the
District Medical Society gave
this example at the budget
hearing: Maryland physician
married and with two children
with taxable income of $4,000
who practices in the District
would pay the city $3.50 for the
business tax in addition to SAC
for State income.
Elimination Of the business
tax exemptions also would be
unfair because it would not ap.
ply to those in the persona
services category who are EN-.
ployed, such as a lawyer for the
Government.
Finally, the opponents argue
that the unincorporated buSl
ness tax was drawn up to apply
to income from capital, and no
from personal services.