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Mr. KELLER. I think that there are two things that I could say about that. One, there are specific projects which I do not think the traffic flows would justify.

Secondly, I think there are other methods of going at the problem involved, in changing routes which we have now and concentrating on a few main routes to get traffic out of the city and into the city, and there are many other improvements which very competent traffic engineers have suggested, and I might say that there was very severe criticism of that proposed program by a number of different organizations. That is all a matter of public record, and the chairman may be interested in looking at that.

The National Capital Park and Planning Commisison is at variance with the Highway Department with reference to many features of that program, and there was a public hearing that day, and we even had a lot of traffic engineers who came there and talked about it; and we heard from a number of civic organizations and businesses.

The Capital Transit Co. was very critical of the program which they had planned.

Mr. BATES. That is a program over the period of years or the program in the next, say, 3 or 4 or 5 years?

Mr. KELLER. No, sir; this hearing was based on the program generally from 1950 to 1955. *

Mr. BATES. Yes.

Mr. KELLER. They had a hearing last October on this program, and then

Mr. BATES. What does that program embrace, 3 years?

Mr. KELLER, Yes, sir; 3 years.

Mr. BATES. Was there any specific opposition to that program or any part of it?

Mr. KELLER. The 3-year program?

Mr. BATES. Yes.

Mr. KELLER. Well, a number of people-I was interested only— that was on the gas tax only; that was on the question of the gas tax; they had had on Friday, October 25, a 1-day hearing on the thing, and at that time a number of people appeared in opposition to the tax at that time. The three who appeared in favor of it, the Board of Trade was down there, and they favored it; and the American Automobile Association, Mr. Howett was down there advocating the increase in the tax at that time. He has advocated it all along, and the Capital Transit Co. came down and testified about the mileage tax, which the District Commissioners had proposed, and the mileage tax would have placed a very considerable burden on them because it was based on the number of miles that they travel in the District; and then the District Commissioners withdrew the mileage tax, and then the Capital Transit Co., after that tax was withdrawn, said that they would not oppose the gasoline tax. So that was the way that thing developed that day; and the other witnesses

Mr. HARRISON. Mr. Chairman, can I insert a remark here?
Mr. BATES. Yes, indeed.

Come right up, Mr. Harrison, and we will be glad to hear you. Mr. HARRISON. I merely wanted to refresh Mr. Keller's memory. At the hearing on March 26 the Commissioners did not take any action on any of the proposals. The Capital Transit Co. appeared; they

offered objection to the mileage tax; they did not offer any objection to the gasoline tax and, subsequently, after the adjournment of the meeting, the Commissioners withdrew the mileage-tax proposal. The Capital Transit Co., when they offered no opposition to the gasoline tax did not have knowledge of that fact, of the fact that the other tax would be withdrawn.

Mr. BATES. Fine. Thank you very much, Mr. Harrison.

Mr. HARRISON. Yes, sir.

Mr. BATES. The reporter will insert at this point an extract from official transcript to public hearing before the District of Columbia Commissioners on the proposed increase in the gas tax, inspection fees, and so forth.

(The information referred to above is as follows:)

Mr. NEBERLE. My statement will be relatively brief, Mr. Commissioner.

In the first place we appear here as one of the large users of gasoline; also one of the largest users of the highways.

We have listened to Captain Whitehurst's statement as to this difficult problem. We have no issue whatever with his figures. It has always been a pleasure to work with the captain, and we have worked with him many times.

The first part of the proposal before us is with respect to the increase in the gasoline tax. During the 12 months ended with September we used 8,000,000and-odd gallons of gasoline, slightly more than 8,000,000. Our use is increasing. Our use was at the low ebb in the 12-month period, along about March of this year. During the last 3 months-that is, July, August, and September-this increase has been at the rate of a million gallons per annum.

Now, that increase will not indefinitely continue, but I would like for the use of gasoline to approximate 10,000,000 gallons, as manpower returns, unless our demand for ridings materially decrease.

The first bracket would cause an increase in the tax cost of Capital Transit Co., on the present basis, of $80,000, and we can readily foresee $90,000 per

annum.

We live in the District of Columbia. We are relatively heavy taxpayers. Our taxes to the District of Columbia, of all kinds, amount to about $1,200,000 per annum. An increase of $80,000 is approximately 7 percent.

We have respect for Captain Whitehurst. We know he has a very difficult job. We are not questioning and we offer no opposition to the increase in the gasoline tax, notwithstanding the fact that it does mean a substantial increase in our taxes.

The second item, the increase in the inspection fees, seems to be well justified, and its effect is very small. We have no objection to it.

With respect to the third proposal, as the captain has indicated earlier, we have had an informal conference with him, where I hope we ironed out the minor differences that existed in respect to the taxes per bus that we are now paying.

Mr. BATES. Mr. Harrison, you get me the program that I requested

as soon as you can.

Mr. HARRISON. Yes, sir.

Mr. BATES. Because we will in all probability close these hearings tomorrow.

Now the hearing will adjourn to 2 o'clock this afternoon, when we will hear other witnesses who may wish to be present in favor or in opposition to these various types of taxes.

(Whereupon, at 12:15 p. m., the committee adjourned to meet at 2 p. m. the same afternoon.)

AFTERNOON SESSION

(The committee reconvened at 2 p. m., at the expiration of the recess.)

Mr. BATES. The committee will come to order and we will proceed with witnesses with respect to views on the pending tax bills, for the purpose of raising additional revenue for the District.

I have here, Mr. William Howard Payne, representing the District American Legion. Will you step forward, Mr. Payne? We will be very glad to hear

your

views.

(

STATEMENT OF WILLIAM HOWARD PAYNE, VICE CHAIRMAN, LEGISLATIVE COMMITTEE, AMERICAN LEGION, DISTRICT OF COLUMBIA DEPARTMENT

Mr. PAYNE. Mr. Chairman, I come here as vice chairman of the legislative committee of the District of Columbia Department of the American Legion.

There are today 57 posts of the American Legion in the District of Columbia with 25,000 members and 30 units of the American Legion Auxiliary with 3,000 members. I am advised that the American Legion is the largest fraternal organization in the District of Columbia and the largest veterans' organization.

The District Department of the American Legion, at its annual convention in August of 1946, unanimously adopted a resolution voicing opposition to the proposed imposition of a general sales tax. If the committee please, I would like to offer a copy of that resolution for the record at this point.

Mr. BATES. It will be included in the record at this point. (The copy of the resolution referred to is as follows:)

RESOLUTION OF THE AMERICAN LEGION, DEPARTMENT OF THE DISTRICT OF COLUMBIA, IN RE PROPOSED DISTRICT OF COLUMBIA SALES TAX

Whereas prominent citizens and public officials, including Members of the Congress and of the administration, have publicly advocated the imposition of a sales tax within the District of Columbia to alleviate the revenue difficulties of the District government; and

Whereas said proposals do not exclude the purchase of cost-of-living items and will have the effect of taxing corporations and individuals with large incomes at a rate no greater than people with fixed and limited incomes, including members of the armed services and veterans who are for the most part living upon the limited incomes earned by day-to-day labor, clerical positions, or veterans' educational allowances; and

Whereas the present revenue difficulties of the District government are primarily attributable to the ever-increasing amount of tax-exempt Federal-Government property holdings in the District and the steadily diminishing percentage of District government revenue which is supplied by the Federal Government;

and

Whereas said proposals would cause a portion of the normal revenue of District businesses and individuals, including veterans who have commenced small businesses, to be diverted to surrounding States: Now therefore be it

Resolved, (a) That the District of Columbia Department of the American Legion publicly announce its opposition to, and take necessary and proper steps to avoid, the imposition of a general sales tax within the District of Columbia; and

(b) That the District of Columbia Department of the American Legion advocate that Congress alleviate the present revenue difficulties of the District government by either an increase in the portion of the District government revenue which is contributed by the Federal Government or by an increase in the District of Columbia income-tax rates.

(NOTE.-Adopted unanimously by 1946 convention of the District of Columbia Department of the American Legion.)

Mr. PAYNE. On March 15, 1947, the public relations committee of the District Department unanimously adopted a motion, the gist of which opposed the imposition of all proposed sales taxes by the District government and recommended a general broadening of the present income tax and an increased contribution by the Federal Gov

ernment.

In addition, on March 27, 1947, the department executive committee, composed of commanders of all District of Columbia posts, unanimously adopted a resolution opposing an increase in gasoline tax.

If there is no objection, Mr. Chairman, I would like to offer a copy of that resolution for the record.

Mr. BATES. It will be included in the record at this point. (Copy of the resolution referred to is as follows:)

RESOLUTION

Whereas the District of Columbia will collect more than $21,442,000 from gasoline and other motor-vehicle taxes at existing rates during the period 1947-49; and

Whereas the District government can also receive $8,922,000 from the Federal Government for highway-construction purposes during the same period; and

Whereas these tax revenues at existing levels, plus unused balances and Federal allocations, will provide $34,000,000 for maintenance and new construetion; and

Whereas there is a serious question that $24,600,000 available for new construction can be spent wisely because of the known shortages of labor, materials, and equipment; and

Whereas since there is no proven need for more taxes, an increase in the gasoline tax rate would be taxation without justification; and

Whereas an increase in the gasoline tax would place an unnecessary extra burden on wage earners and small businessmen: Therefore be it

Resolved, That the American Legion, District of Columbia Department, go on record as strongly opposed to any increase in the present tax rate in gasoline, and further that copies of this resolution be forwarded to the President of the United States and Members of Congress.

(NOTE.-Unanimously adopted by executive committee, District Department, American Legion, March 27, 1947.)

Mr. PAYNE. Unmistakably the voice of the veterans of the American Legion here is raised in opposition to the proposed sales tax. The Legion appreciates the opportunity to be heard by your committee.

Taxes, like oil, like gold, are where you find them. Taxing is easy. Spending tax money is easier. Taxeaters and tax-spenders can always contrive new taxes and their imposition often know no bounds other than the patience or impatience of the people who bear them.

A sales tax is one of last resort. It is usually proposed when revenues are critical or when ambitious officeholders feel the people are not organized to oppose its imposition. A sales tax affects the people generally. It impinges against the people of low income to a greater extent than the middle class and above.

The question of a sales tax then becomes largely a matter of concern for the so-called "little people" of this country. What then becomes generally their business is actually nobody's business. No powerful organization represents their interest in legislative forums and a general sales tax thus becomes law rather painlessly.

The persons with substantial income do not oppose a sales tax. They know that the aggregate burden will fall on income brackets below them. They know that the "little people" will pay approxi

mately 1 percent of their income on a 2 percent retail sales tax even where food and medicine are exempt. Findings of our committee disclose that persons of the highest income will pay one-third of 1 percent on their income.

If a sales tax were sound in principle anywhere else it would be unsound in the District of Columbia because of its small area. It will drive business to sales-tax-free communities. It will discourage Maryland citizens from buying here. Maryland knows this as witnessed by the pressure currently being exerted from that quarter to impose a sales tax here.

Honest retail business firms here would become unwilling and unpaid servants and agents of the District government in the collection of the sales tax. It becomes a great burden on retail business, adding to the ultimate costs of business operation. Increased business expense must be borne by the consumer. Thus the sales tax brings into play in retail business the following elements:

1. Decreased sales volume.

2. Increased operating costs.

Superimposed upon these is the 2 percent levy. All reflect higher commodity prices. The purchaser pays these increased costs. If the merchant paid them he would go out of business because he survives only if he makes a profit. The "little people," including many veterans, who are trying to regain, or make their position substantial in our society cannot do so by such pyramiding, superimposition of

taxes.

The proposed sales tax levy would open the door to great fraud. Present levies of Federal excise taxes on certain commodities are being ignored in many quarters in the District.

Prices are quoted, "including tax." Sales are not reported in other instances and the tax collected is easily pocketed.

Imagine, for instance, what would happen in retail quarters in certain hot, competitive markets of Seventh Street and elsewhere, where there is no misrepresentation to the public except when absolutely convenient. A certain business on G Street has been sued 30 or 40 times in the last 2 or 3 years for refund of customer deposits.

The same business had to be warned by the District Attorney's office for engaging in questionable practices. The same business was defendant in an injunctive proceeding to restrain violations of the Second War Powers Act of 1942. When these circumstances are understood is there any doubt that the sales tax can become a windfall to some of its original collectors?

The tax imposed and collected could easily become a windfall to the "uncompensated" retail collector. The sales tax and excise taxes when levied are at best furtive and dishonest. The average taxpayer cannot tell how much tax he is paying. He has no way of assuring himself that what he has paid finds its way to the Government Treasury. A sales tax becomes an evil. It beguiles the taxpayer into a false appraisal of his tax bill. It lurks in hidden places. It has been aptly called a liar and a cheat.

The proposed increase of 1 cent per gallon on gasoline is a sales tax. We now pay 42 cents per gallon Federal and District tax. At 20 cents per gallon retail sales price and at 52 cents tax, the additional 1-cent tax proposed represents an increase of 272 percent in

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