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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

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.

away from it.




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. Scort. 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 listributors 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. SCOTT. 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.


RANDALL COMMUNITY ASSOCIATION Mr. MERZEREAU. We in open meeting oppose the 2-percent sales tax. We feel that although it is the easiest way to extract taxes from the public, we also feel that it would hit those in the lower income brackets, those with large families, a great deal more than it would those who are able to pay that tax.

We say that from this consideration : You take a family with three or four children, and in my particular neighborhood, we have mostly families of that type, those people are exempt, as a general thing, from most income tax on account of the size of the family and although on account of this 2-percent sales tax, food and drugs would probably be exempt.

Every time the families would go out to buy something for the children, they would be hit by that sales tax and eventually they would be hit harder by that sales tax. Those are the ones we are trying to protect.

We feel, again, that the businessman would have to collect that tax, keep a record of that tax, in order to make his returns to the District government, and in doing so he would have to add a great deal of help for bookkeeping and various other things in connection with that tax, and in adding them to that pay roll, he would have to add a little bit to his prices and as a result it would come right back on the public who are paying that sales tax and would have to pay a heavier tax because he must do so much more bookkeeping and employ extra help.

În reference to the 1-percent gasoline tax, we feel that, after an investigation with the petroleum industry, the figures that they quote, and we have no reasons to believe that those figures are wrong, we feel that with the work laid out, which would be paid for by money taken in by the gasoline tax, that we have enough taxes coming in for the next 3 years to take care of that without any additional raise in the gasoline tax.

We feel that gasoline is not a luxury. Gasoline at the present time is an absolute necessity. Most people have to have an automobile and if they do not have gasoline they cannot drive the automobile so we cannot consider that as a luxury. It is something we must have. and we feel that charging people more for a thing they have to have is not proper at this time.

We understand, and I believe from my own experience, that we do have a District income tax. A lot of people that I have talked to either do not know or do not want to know that we have to have a tax. There are many of the residents in the District of Columbiaand I mean residents, not people who live in Virginia and Maryland—who do not and have not paid income tax. There is no way, as I understand, to check up on how much income tax they would owe the District government, and we suggest that some sort of a law be put into effect that the employer would have to turn over to the District government a report of what each and every employee made during the year so that in that way they would be able to get the taxes which are due them, and I think that would raise many, many thousands of dollars of revenue.

I have talked to a number of people in the last month, and this one paid no tax, and this one paid not any tax.

I happen to know a number of these people should. It was none of my business whether they do or not. It should be enforced, and I do not think it is being enforced at the present time. I think if the employer was empowered to withhold from the envelope or salary of the employee, a certain sum, say one-half of 1 percent of the salary, he would not feel the effect of paying that tax, althongh he would necessarily have to pay it, because his report would be in by the employer, and that money would be paid by the employer, and yet he would not feel the effect of that, and the amount paid by each individual would be so small that it would not affect them, but the amount paid by the entire population in the District of Columbia would raise so many thousands of dollars that some of these other taxes, I think we could get away with.

We recommend the income tax structure be changed, a graduated addition to the income tax structure, and, of course, we have no idea of telling Congress how to do this; we just suggest that one-half of 1 percent up to $1,500, 1 percent up to $2,000, and 112 percent up to $2,500, and 2 percent up to $3,000, all over $3,000, 3 percent.

I think that would be fair and equitable, and people in low-income brackets would not have to pay so much, and the people making plenty would be able to share in their portion of the burden.

Another thing we have discussed here, I believe the other day, and it seems to me a very good idea to raise taxes. People laugh at it, but we have discussed for many years a lottery in the District of Columbia.

I was just checking some figures of money that has been taken out of the District in the last few days: On Friday, our race track at Bowie, the take was $700,000; on Monday it was $921,000; and on Tuesday, which was yesterday, it was $800,000.

Those are just round figures. I would say about 40 percent of that money was taken out of the District of Columbia. Now, the State of Maryland is going to get taxes and tremendous taxes on that money. Yet we are allowed to take our money over there and bet it—and I think most of us like to bet occasionally—but we cannot do that legally in the District of Columbia.

Yet we know, and I do not think anybody would deny it that there are not thousands, but hundreds of thousands of dollars bet right in the District every day on horses and numbers and various other things.

The District of Columbia is getting absolutely no revenue from that money and it seems a very fine thing would be to change this law so the District could get the tremendous amount of money they lose by not having recognized betting in the District of Columbia.

The four tracks, basing my figures on what I just stated, the four tracks in Maryland, on a 30-day basis, which they usually run, will take in $96,000,000 in a year's time. That is a tremendous sum of money. You can figure yourself that the amount of money that Maryland is getting from that legalized betting that the District of Colum

Another thing that strikes me is, we have a zoo in Washington ihat is called the National Zoological Garden for the benefit of everyone. I think everybody that comes here goes to the Zoo. It is a wonderful

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place to go to. It is educational and fine for the children, but who keeps up the National Zoological Garden? The District Government. The Federal Government pays nothing for the upkeep of the National Zoological Garden. The District of Columbia has to pay every cent and the tremendous amount of money takes quite a large slice out of our budget, and it could be used for other things if the Federal Gov. ernment would pay their share of keeping up the National Zoological Garden.

We think that the Federal Government should contribute more to the funds of the District of Columbia.

I believe the figures show we have 51 percent of the Government which is controlled tax-free in the District of Columbia, and 49 percent is taxable.

Now the Government at the present time, I understand, is in the act of buying up considerable property on East Capitol Street down toward the river. A number of residents in that area whom I know have been accosted on that particular subject and that land is going to be tax-free.

Now if the Government is going to control so much of that land, tax free, it seems to me that a larger Federal contribution to the District to help out on account of taking so much of that land would be the thing to do.

We recommend, instead of the $8,000,000, which we are getting at the present time-I think this is the first year, if I recall right-we suggest between twelve and fourteen million dollars. We do not think that would be too much.

I can cite an instance in my own area, and it sounds to me ridiculous, where the National Capital Park and Planning owned a piece of ground which they donated for the use of barracks for ex-GI's. It is a mighty fine thing to do and we approve it very much, but on the other hand, two blocks away, they demanded that a plot of ground which is connected with the park in that area, be taken over by the National Capital Park and Planning organization, and those houses be torn down and that land be turned over for the use of the park.

Now, this particular park is not being used at the present time, and I have been out there 10 years. It never has been used. The portion they bought still has two cellars where they had torn down two homes i0 vears ago; those cellars are still there.

They have done nothing to improve that piece of park. Yet they took this land that these people were paying taxes on, and make it tax-free and yet they were giving land which was already tax-free, over to build barracks for the boys.

That does not seem right.

Under the conditions, I think the Federal Government should pay a larger portion of the money to the District of Columbia so that we would have a little relief from the heavy tax burden which we are undergoing at the present time.

I believe that is all, Mr. Bates.
Mr. Bates. Thank you, Mr. Merzereau.
Mr. MERZEREAU. Thank you, Mr. Chairman.
Mr. BATEs. We will next hear from Mrs. R. B. Rands.

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