clearly warrants a pro rata charge to those who benefit from our public schools.

The District department of the American Legion recommends an increased Federal contribution to the District government. Our population here is 0.71 percent of the Nation's population. District taxpayers to the Federal Government paid nearly $600,000,000, or $509,938,000.57 in 1946. This represents 1.25 percent of the total Federal income. This sum is larger than that paid by 28 States and 1 Territory. It is a sum larger than was paid by citizens of 12 States with a population each greater than the District, namely: Alabama, Arkansas, Colorado, Florida, Georgia, Iowa, Louisiana, Nebraska, Oklahoma, Oregon, South Carolina, Tennessee.

Alaska is credited with paying Federal taxes amounting to a little more than $15,000,000-$15,187,544.11-in 1946. This is a decrease of 2312 percent from the previous year. The 1948 budget proposes a Federal contribution to the government of Alaska amounting to more than 152 million dollars, or $15,579,000. This is more than Alaska paid into the Federal Treasury in 1946.

The Federal Government paid for Alaska in the year 1947:

1. Salaries and expenses of the Governor and secretary, more than_ 2. Public schools_

3. Care of insane.

4. Wagon road, bridges..

5. Constructing roads, bridges.

6. Reconstruction of highways7. Railroads..

Total.

1 $54,675.

1 $54, 000

291,000 291, 700 140, 000 2, 600, 000 750,000 7,800,000

11, 737, 375

Congressman Bates, I understand, has released information that 13 cities other than the District have received more than 671⁄2 million dollars, or $67,511,000, from the Federal Government. Los Angeles received more than $14,000,000, or $14,384,000, more than the present problem child, the District of Columbia, the great Federal city.

There was once a formula of Federal financial responsibility of 60-40. The present Federal contribution of $8,000,000 is said to be less in total amount than it was 20 years ago. Yet, today the Federal Government occupies more than 50 percent of the square-mile area of the District, exclusive of streets and parks.

The streets here are maintained by the motorist. The present contribution admittedly is arbitrary, devoid of reason or justification. It represents no measure of Federal responsibility for the Government

here.

The American Legion, District department, yields to no one in advocating a reconsideration of the role and responsibility for the Federal Government here. It is inescapable that the Federal Government must bear its rightful share. There must be set in motion now a new determination of the Federal financial obligation to the District.

The District Department of the American Legion favors and strongly recommends a general broadening of the District income tax system. Everyone who earns an income here, except perhaps elective officials, should pay a tax on the basis of their income. The Dirksen bill, H. R. 2282, is a measure designed to require income-tax payments by those who earn here. It is fair and equitable. Too many people

enjoy the benefits of this District government day in and day out without contributing to the maintenance of a fire department, school system, health and sanitation facilities and police protection here or anywhere else.

They should not be allowed to take such a free ride. All too many people here avoid paying income taxes in their home States because they earn their income in the District of Columbia. These same people avoid paying income taxes in the District of Columbia, for the quaint reason that they are legal (and voting) residents of one of the States.

Thus the free rides multiply and those who pay are saddled with a burden for themselves and the multitudes who avoid their tax obligation. It is rare when a taxpayer is completely and unequivocably 100 percent honest with his Government even when positively mandated by law to make his return and pay his tax.

When the income-tax system is such as to permit the multiplied avoidances now practiced here it is time for a change, time to broaden the income-tax base, so that all those who share in the benefits of our local government must pay their fair contribution toward its main

tenance.

No fairer method of supporting a government has ever been devised than the formula of paying according to income. The income-tax structure should be devised to increase the number of taxpayers and the Federal contribution should be determined according to obligation. Expenditures in the District not otherwise financial should then be held within that limitation.

Some propose an increase in the real-estate tax. Already property owners pay too large a share of local taxes. The $17.50 rate per thousand seems at first blush extremely low to some citizens of other jurisdictions who pay two to three times this rate.

They fail to examine the assessed value. The assessed value approaches and too often exceeds the actual original cost of a given property. For instance, a home that cost $7,000 originally for land, materials, and labor in 1935, is assessed at $7,171 and required an annual tax payment from then until this very year of $125.50. The same property in Oklahoma, the State of my expatriation, would demand a tax payment in 1946 of $40.41 per thousand but the assessed value would have been $2,498. The real-estate tax on the same property in Oklahoma in 1946 would have been $101. It is generally true throughout the Nation, that where there is a high tax rate there is low assessment and where there is a low rate there is a high assessment. The American Legion, District department—

1. Urges a close examination of appeals and Macedonian cries for greater taxes.

2. Recommends a reconsideration and re-evaluation of the obligation of the Federal Government to the District of Columbia.

3. Suggests a broadening but not an increase in the income-tax system compelling more persons earning here to pay the tax.

4. Recommends that those who enjoy the privilege of our school system pay their proportionate tuition.

5. Opposes the imposition of the proposed sales tax, including all proposed increased excise and nuisance taxes.

A part of this Congress has set the pleasing precedent of a substantial decrease in Federal income taxes. It has been hailed Nationwide for this action.

Amazingly anomalous there is proposed an increase in taxes in the District. Nearly 2 years after the guns of the enemy have ceased firing, the District Commissioners propose not only to continue wartime taxes but to increase those taxes upon the people, including the veteran who stood between us and the enemy.

It is unbelievable that 2 years after war battles are over and the lucky defenders are back home that the collection of wartime taxes must continue. It is incredible that wartime taxes must be increased. How can you vote for wartime taxes in time of peace? How can you justify an increase in wartime in time of peace? The more you appropriate the more you encourage the tax eaters and the tax spenders. There is no holiday for politics in Washington.

Mr. BATES. Thank you, Mr. Payne. Let me ask a question quite pertinent to your discussion: Apparently, from the budgetary requirements submitted to this committee by the District Commissioners, and apparently because we have observed no opposition to the program they have set out for the 1948 budget, and some opposition to the road-construction program, we find in 1948 there is a deficit of about $13,000,000.

If you are going to spend money, you must meet that expenditure by levying taxes. That is inescapable.

Apparently the American Legion is opposed to the gasoline tax. Mr. PAYNE. Yes, sir.

Mr. BATES. The sales tax?

Mr. PAYNE. Yes, sir.

Mr. BATES. And the real-estate tax?

Mr. PAYNE. An increase in the real-estate tax.

Mr. BATES. Well, that is, an increase in the real-estate tax.

Now, if you take those three major sources out-I say "major," because from the standpoint of development of new revenue they are the major sources-the Federal contribution, even on the basis of the O'Mahoney bill, would only yield $4,000,000 more than a year ago, the income tax about $2,000,000.

That makes a total of about $6,000,000. We have a $13,000,000 deficit. What would you suggest? Cut down the budget to meet those requirements?

Mr. PAYNE. Pare down the spending and increase the Federal contribution. If those expenditures are deemed appropriate by the Congress and necessary by the Congress, then it is an obligation on the Federal Government to finance it.

Mr. BATES. Has the representative of the Legion who makes these recommendations to the committee examined the budget and the expenditures for capital outlays they have presented to us?

Mr. PAYNE. The committee which was appointed by the District department of the American Legion did make such a study, Mr. Chair

man.

Mr. BATES. Did they suggest perhaps the elimination of some of those items of expense?

Mr. PAYNE. That was not proposed by the committee. The committee looked at it in a rather general way, that is, that it is the obli

gation of the Congress to determine whether or not the District Commissioners have proved their case in connection with these expenditures or these proposed expenditures.

If the Congress feels they have proved their case and that these expenditures are necessary, and that there are no funds under the present taxing program, and that sufficient funds cannot be raised by a broadening of the income-tax structure here, and by other taxproducing methods, it then becomes an obligation on the Federal Government and the Federal contribution should be increased to the appropriate figure.

Mr. BATES. If you doubled the contribution by the Federal Government, you would still be short about $4,000,000.

Mr. PAYNE. Then I would add four more million dollars to the Federal contribution.

Mr. BATES. That is your suggestion?

Mr. PAYNE. That is the American Legion's suggestion.

Mr. BATES. The American Legion's suggestion?

Mr. PAYNE. The District department of the American Legion. This is strictly a Federal city. It is a responsibility of Congress, and there is no getting away from it. There has been an effort to get away from it.

Mr. BATES. Do you say that in a sense the Congress ought to assume all the expenditures of the District?

Mr. PAYNE. It would probably be a more simple way to handle the situation in the District of Columbia.

Mr. BATES. All right, thank you very much, Mr. Payne.

Mr. PAYNE. Thank you very much.

Mr. BATES. Mr. Scott, we will be very glad to hear from you. You may proceed, Mr. Scott, in any way you desire.

STATEMENT OF LESTER SCOTT, REPRESENTING THE OIL-HEATING DIVISION AND THE COAL DIVISION OF THE MERCHANTS AND MANUFACTURERS ASSOCIATION, WASHINGTON, D. C.

Mr. SCOTT. My name is Lester Scott. I represent Merchants and Manufacturers Association as director of the oil-heating division and the coal division.

I would like to make a statement.

Mr. BATES. You may proceed.

Mr. Scorr. In connection with your consideration of the bill to provide additional revenue for the District of Columbia through a sales tax, I wish to submit the following data and expression of opinion and thinking on behalf of the oil-heating division and the coal division of the Merchants and Manufacturers Association of Washington.

The oil-heating division of this association is composed of 42 of the principal fuel-oil dealers and distributors doing business in the Washington metropolitan area.

These 42 dealers and distributors sell and deliver more than 85 percent of the more than 90,000,000 gallons of fuel oil and kerosene consumed in the metropolitan area. The coal division of this association is composed of 32 of the principal coal and solid-fuel dealers and distributors doing business in the Washington metropolitan area and these 32 dealers and distributors sell and deliver approximately

88 percent of the total current consumption of coal and solid fuel in the metropolitan area.

These two industry groups are particularly concerned with the proposed retail sales tax as it may apply to both liquid and solid fuels sold within the District of Columbia. It is the very definite opinion of these two industry groups that such a tax would be unsound in principle and extremely difficult to administer and collect for the following reasons:

1. We believe that a retail sales tax on fuels is manifestly unsound and highly undesirable. Fuel, along with food, medicine, and shelter constitute the basic and bare necessities to sustain the life, health, and well-being of the people and should not be subject to a direct sales tax or excise tax.

2. If a sales tax is applied to liquid and solid fuels, then it would be necessary and imperative that the same tax be applied to electric energy and to manufactured and natural gas which is used largely for heating, cooking, lighting, and energy, the same as liquid and solid fuels.

To do otherwise would be manifestly unfair. According to recent news stories in the press, the District Commissioners have indicated that they will not insist that a sales tax be applied to utilities and particularly on electric energy and manufactured and natural gas. Since liquid and solid fuels are in direct competition with electric energy and manufactured and natural gas, it would be manifestly discriminatory to apply the sales tax on liquid and solid fuels and not apply the same tax on electric energy and manufactured and natural gas.

3. It is estimated that of the total consumption of fuel oil, kerosene, coal, and other liquid and solid fuels in the Washington metropolitan area, approximately 60 percent is consumed in the District of Columbia, and approximately 40 percent is consumed in nearby metropolitan areas of Maryland and Virginia.

However, it is estimated that well over 80 percent of the liquid and solid fuels consumed in the Washington metropolitan area is sold and delivered in interstate commerce, which makes the application of a retail sales tax extremely difficult to administer and collect.

A large number of the liquid and solid fuel dealers and distributors are located in the nearby metropolitan areas of Maryland and Virginia and they sell and deliver a very substantial volume of both liquid and solid fuels to consumers located in the District of Columbia.

Likewise, a large number of liquid and solid fuel dealers and distributors are located in the District of Columbia and they sell and deliver a very substantial volume of both liquid and solid fuels as between the District of Columbia and the nearby metropolitan areas of Maryland and Virginia, make it extremely difficult to apply a retail sales tax on such sales and deliveries in an equitable manner and without prohibitive administrative and collection costs.

Mr. BATES. Is there anything further you have to offer, Mr. Scott? Mr. Scort. No; that is all.

Mr. BATES. Thank you very much.

Mr. SCOTT. Thank you, Mr. Chairman.

Mr. BATES. We will next hear from Mr. Merzereau.