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Mr. King. I think the people of the District of Columbia ought to have a greater say than they now have in choosing the people who
Mr. Bates. I am speaking of the government that you now have. Mr. King. That we now have? Mr. BATEs. Have you any criticism of the administration of the District from an economic standpoint or from the standpoint of efficiency?
Mr. King. No, sir. All I can do is repeat what I have said. There are some men or things that no doubt, I do not altogether approve of what has been done, but compared to other cities that I have observed, I think it is an extremely well-run city.
Senator Cain. Thank you. I wonder if Mrs. Robert Wilson, chairman of the District of Columbia Affairs, District of Columbia League of Women Voters, is here? Mrs. Wilson. Yes, sir. Senator Cain. We are delighted to have you with us. gire the reporter your correct name and whom you represent. STATEMENT OF MRS. ROBERT G. WILSON, CHAIRMAN, DISTRICT OF COLUMBIA AFFAIRS, DISTRICT OF COLUMBIA LEAGUE OF WOMEN VOTERS
Lrs. Wilson. My name is Mrs. Robert G. Wilson, and I am representing the District League of Women Voters.
We certainly have appreciated the thoroughness and thoughfulness with which you have conducted these hearings.
Our league is an organization of over 650 local women whose purpose is to promote political responsibility through informed and active participation of citizens in government. As such, we recognize that we must accept a greater tax burden to effect the improvements which We believe to be necessary.
There are four principles which we consider essential to a revenue program for the District : 1. There must be sufficient revenue to meet an adequate budget. 2. The methods of taxation must be equitable for the whole population to be taxed. 3. The methods of taxation must be readily enforceable. 4. A stable formula for a larger Federal payment is required properly to administer the District Government.
These principles should be applied to our three revenue funds, but our application at this point is only to the general fund since it is in this area that our organization has a background of past experience and present study.
With respect to our first principle, our thinking has been directed particularly to revenue needs for the coming fiscal year. It is of special importance that we have adequate revenue to ease the critical backlog of unmet need for new schools, health centers, and so forth. Also many items for new personnel such as teachers, nurses, welfare workers, and so forth, which were requested by department heads for fiscal year 1948 have been deleted in the budget presented to Congress. Eight million of the $11,000,000, which appears to be the increase
in the 1948 budget, is actually only what is needed to maintain present services for an increased population at increased costs, as you so well know.
To highlight only three of many items not now in the budget, we feel there is insufficient provision for urgently needed new teachers and school buildings (1) to permit the 7,000 children now attending school part-time to return to a full-time basis and, (2) to replace unsafe buildings, some of them scheduled to be abandoned as long ago as 1908.
(3) No funds are provided for housekeeping aides. These women would go to low-income homes and keep the family together when the mother is temporarily ill. The cost of such services is low compared to the alternative costs, either of institution care for the children or juvenile delinquency resulting from an uncared-for family.
The number of case workers provided the Board of Public Welfare is not enough to insure a thorough job of investigation and followup on each relief client, although thorough case work would reduce the total amount of relief money expended.
If, in its study of the local government, this committee has discovered duplication of jobs and waste which must be eliminated, we shall be grateful for your findings.
In spite of certain waste, we believe the revenue program should produce enough for the coming year to meet a budget larger than the $77,000,000 budget for the general fund presented by the President.
As to an equitable and enforceable tax program, we shall address ourselves only to the proposed changes, since it is not necessary to consider all present forms at this time.
The income tax is the most equitable form of taxation, and should be made much more productive. We approve of lowering the exemption for married couples, and of broadening the base of the tax to include those residing in the District 7 months or more out of he year, as proposed in H. R. 2282. Those who live in the District the greater part of the year should share the costs since they receive the services. If they also receive benefits in other States, they should likewise be subject to taxation in those States, with credit provisions as provided in that bill.
Along with these measures, there should be an upward revision of the tax rates. We suggest the following scale for taxable income:
One and one-half percent on the first $2,000; 2 percent on the next $3,000; 212 percent on the next $5,000; and 3 percent over $10,000.
The above scale would bring the District income tax rates to approximately the same scale as those in the adjoining States of Maryland and Virginia.
We understand that revenue from the income tax could be substantially increased if there were more funds for enforcement.
Since the personal income tax is based on the amount of income a person receives and the number of his dependents, it is a progressive, equitable tax, and we look forward to it assuming an even greater importance in future tax programs.
The property tax deserves most careful study. It is not as equitable as the income tax since it is not based on ability to pay but it is more equitable than the sales tax in that it does not bear most heavily on those least able to pay. We recognize that there could be an effect in this latter direction if owners passed an increased tax on to renters.
It is a tax which is readily enforceable. I think it should be very carefully considered.
In 1914, our property tax was compared with nine other cities with similar population. The basis of comparison was the tax rate adjusted in each case to 100 percent assessment. The range was from $3.99 per hundred to $1.58, the figure for the District. The next lowest was $2.35. We believe, therefore, that in view of the need for revenue, the Commissioners could safely raise the rate from $1.75 to $2 per hundred dollars of assessed value.
A change in the 1942 law granting exemptions to certain scientific institutions should be made so that these are either taxed or the District receive the equivalent of taxes from the Federal Government.
Provision should be made also for receiving the tax or equivalent when Federal property is rented to private persons.
We suggest H. R. 2279, H. R. 2281, and H. R. 2281 for excise taxes on alcoholic beverages, cigarettes, and amusements, as temporary measures. We support them because of the urgent need for funds. However, these taxes bear more heavily on those less able to pay, and should in the future be replaced by the income tax.
A study should be made of the present system of granting liquor licenses. The large sums of money which dealers allegedly receive for the sale of their licenses might be tapped to furnish additional revenue for the District.
The distribution of liquor by the District government is a possible large source of revenue which should be carefully looked into.
Borrowing to meet needed capital improvements should not be supported until the District has control of its own fiscal policy. Further removal of control from the citizens of the District seems unwise at this time.
A sales tax is an undesirable form of taxation because it imposes far too heavy a load on those least able to pay.
The people who contribute the largest percentage of their income to a sales tax are the lowest income groups. Furthermore, if two men have the same inerme, with a sales tax the one who supports children, parents, and so forth, pays the greater tax because his purchases are necessarily larger; whereas with an income tax the man with fewer dependents bears the greater burden. The tax reaches unemployables such as permanent invalids and those retired on Government pensions.
We agree that the sales tax would bring in revenue from nonresidents who use the District facilities, but we believe that these people should be taxed by changing the income tax law to cover them. A tax on hotel bills over $2 would be a method of reaching the transient.
We cannot see how the use tax, designed to tax these outside purchases could be enforced.
Finally, we oppose the sales tax because we believe it would be difticult to administer and to enforce.
Considering the favorable fiscal position of the District with respect to potential sources of revenue, we believe that the money should be raised by the sounder methods proposed in other parts of our statement.
The fiscal problems of the District of Columbia are becoming increasingly serious. Their solution primarily depends on the amount and form of the contribution the Government of the United States makes to the support of its Capital City. We believe that the present
system under which the Federal Government contributes to the support of the District is faulty in principle and inadequate in amount.
As a municipality, the District is unique in almost every way. Its individuality is nowhere more conspicuous than in its tax and revenue status. Unlike most cities, it has no control over its taxation. It cannot borrow money; it cannot, as most cities do, rely on States for help in the care of the mentally ill, aid with education, and so forth. It is dependent on Congress.
Every municipality raises revenue by taxing real property, and Congress has authorized the District to do so. But Congress has recognized that the District cannot live on its own resources. Quite properly, Congress has contributed to the maintenance of the city in the form of a lump-sum contribution, calculated annually.
The lump-sum arrangement of the past has little to recommend itself. In the first place, it seems ridiculous that the Members of Congress, elected by their constituents to administer national affairs, should, each year, have to participate in a lengthy debate over the amount of the payments to the District. Beyond that, results of the annual decision have been increasingly inadequate, measured by any yardstick of efficiency in municipal affairs.
For 1946 approximately 90 percent of all District revenues was derived from local taxes. General fund revenues represent about 80 percent of total District income. Taxes on real property provide about 50 percent of general fund revenues. Yet the District can tax less than 50 percent of its land. Of the total area subject to taxation, 19 percent is exempt because it is owned by the Federal Government, and this ratio will increase as the Government expands, removing more and móre of the most valuable property from our tax rolls.
The seriousness of the revenue problem created by this situation is obvious. It is aggravated by the fact that the District provided numerous, expensive services free to the Federal Government. To mention only some examples, we give police and fire protection to federally owned property; we bear 90 percent of the costs of the parks and of the Zoo which are more expensive than they would be were this not the Capital City. The District pays for curbing, gutters, and so forth, around Government property. Additional land is removed from taxation by being owned by foreign governments. For all of these items the Federal Government should reimburse the District.
In the face of this increase of federally owned and tax-exempt land and the accompanying services, the Federal payment has dropped from 26.1 percent of the total general fund revenue in 1925 to only 11.5 percent in 1947.
Although S. 215, a formula for Federal payment, could not provide the equivalent of the taxes due on Federal property this year, to say nothing of the other services performed by the District for the Federal Government, it offers, in part, an effective answer to the problem. In the first place, it relieves Congress of the annual necessity of attending to this matter. But, more important, it puts the Federal payment on a basis which takes cognizance of changing conditions.
We need a plan for Federal participation in District expenditures which will be better related to the tax program and which will encourage development of an adequate and fair local tax system. Above all, we need increased and predictable Federal support of a local budget which should provide public services appropriate to and demanded by the District's position as the National Capital.
We have, however, one major reservation about S. 215. We believe it would not produce for the 48 budget all the funds which the Federal Government should contribute.
Under the S. 215 formula, we understand that the ratio of federallyowned land, with exceptions provided, to the total land area would be approximately 19 percent. This would be applied to the revenue, exclusive of trust funds and Federal payment, for fiscal year ’46, this being the last complete fiscal year. Thus, for the general fund we would have 19 percent of $52,481,000, or $9,971,000. If the Federal Government paid the equivalent of the property tax on federally owned property, it would be $12,458,000, an increase of $2,000,000. The equivalent of taxes on property owned by foreign governments would be an additional $191,000. The other services which the District gives the Federal Government would be another substantial figure.
We realize that as the revenue for the general fund increases the payment, as provided in S. 215, would likewise increase, but we believe, in view of the present acute need for new services and, particularly, capital outlay, that special consideration should be given to the Federal payment for the general fund for the coming year.
In conclusion, the revenue which the above program could produce would depend on many factors. For the first year, the full yield could not be expected from any new method of taxation. The following table is the minimum increase over the present revenue plan which we believe our program would produce for the next year for the general fund:
Increased Federal payment of $2,000,000; from broadening the base of income tax, 2,000,000; from increased rates, 3,000,000; from better enforcement, 1,000,000, a total of 6,000,000 new dollars; this would be from the income tax.
From a change in the property tax rates, an increase of 4,000,000; from the excise taxes 2,500,000, a total of $14,500,000.
Since only $11,000,000 additional revenue would be needed to meet the President's budget for the general fund, the additional $3,500,000 should go first to providing $900,000 to implement the proposed new teachers' pay scale; then the rest should be applied to restoring cuts in the Department requests for education, health, welfare, and recreation.
In conclusion, we believe that (1) the income-tax rate should be increased, the base broadened, and enforcement strengthened; (2) the property-tax rate should be slightly increased; (3) the Federal payment should be increased and determined on a permanent percentage basis with special consideration for the needs of fiscal year 48; (4) the bills on excise taxes should be supported; (5) other new methods of raising revenue, such as government distribution of liquor, should be studied. If the above program is enacted, we believe the proposed 2-percent sales tax is unnecessary, and should not be supported.
Senator Cain. Thank you very much for your statement, Mrs.
It seems to me that you want improvements