We therefore express the hope that you will see fit to delete from these bills the phrases referred to above, "other than candy and confectionery," and give these products equality with their competitive items.

Mr. BATES. Thank you, Mr. McMillan.

Now, we have one more witness here this afternoon, Mr. William Shelton.

These are all who are here to express themselves on candy.

Is there anyone else?

STATEMENT OF WILLIAM SHELTON, WASHINGTON, D. C.

Mr. BATES. Mr. Shelton, you are opposed to the sales tax, I understand.

This is your second appearance before the committee?

Mr. SHELTON. Not on taxation.

Mr. BATES. What was the other?
Mr. SHELTON. On the highways.

Mr. BATES. I mean before this committee.

We will be glad to hear you again.

Mr. SHELTON. This afternoon, for example, you can see it may run to inequalities between different groups.

The sales tax has no intellectual basis, it has no equitable basis on which you can levy it.

I want to mention the technical points.

Point No. 1 is among families. I have a neighbor who has 10 children. I have two. He has to buy five pairs of shoes, five suits of clothes, and five of everything, whereas I buy one.

He has more responsibility with his 10 children than I have. He is less able to pay for it than I. He has to pay five times as much in any

case.

It is a basic inequality for any tax.

In the second place, any city that puts a tax on itself is discriminat ing against itself all the localities, States, or cities that do not have

that tax.

People from Los Angeles to Maine travel through Washington and they buy or do not buy, depending on whether they have a 2 percent sales tax very often.

Because Virginia and Maryland will have a tax is no excuse for us to put a tax unfairly against ourselves for all the other 46 States in the Union.

There is no fundamental, logical basis for a sales tax being just in any way I know of.

In the third place, it is very expensive to collect.

There was testimony here that in New Orleans they had allowed only 5 percent for that expense, but the people there simply had to bear the rest of it. They allowed 5 percent but they probably allowed 25 percent to collect.

Then they decided they never could collect equitable. The thief, the crook in the District that is not well supervised gets by without paying a good portion of the tax. The honest people pay it.

Senator CAIN. May I ask you from what source you get such information?

Mr. SHELTON. From a long study of economics and taxation.

Senator CAIN. Have you ever lived in a State or city which imposed a sales tax?

Mr. SHELTON. No.

Senator CAIN. You have had no personal experience?

Mr. SHELTON. No; I have never lived in a local jurisdiction that them but I have had to pay them in traveling where it was

paid

levied.

As I say, it is very expensive and it is inequitable. It is impossible of close supervision so that everybody pays equally.

In the fourth place, if it is passed at all, it will contain a great many in proportion to necessity to purchase and not in proportion to ability to pay or duty to pay, which is the basis for taxation.

These are fundamental things in taxation. It is just erroneous, it is not subject to any of these principles of taxation.

Why should Washington as a national example set up such an atrocious example for taxation, and, besides, can we not levy a 2-percent additional tax on income? We have the same amount and we can get it justly levied and we will exclude those that are not able to pay it and put it on groups that are able to pay it.

Încome and sales are roughly the same. A good deal of the sales go to outside people but that is no great difference.

You can levy a little more if it does not fit, but you can make it one tax instead of two and get a fair tax.

Senator CAIN. You would oppose the sales tax as taking moneys away from tourists of which this grand city has millions every year? Mr. SHELTON. Well, I do not know why the tourists should pay our local taxes. These are primarily for local purchases.

If they trade here or room here or live here for a day or two, they may pay gasoline taxes, they may pay for their goods and the merchant makes enough profit to pay a little more taxes.

Senator CAIN. It is a national city, and from that point of logic, it might be reasonable to think that those who visit their own city, being different from any other community in America, could well afford to assist.

Mr. SHELTON. Yes, Senator, but if they stop at the hotel, do they not pay for the expense at that hotel and does not the hotel have funds and therefore pays more taxes, and if we do not levy the tax, more people will come here.

Also, it does not put a burden on the people of the country who would like to see the National Government. It does not put a burden on them to be able to do so. I mean, we are putting a burden on these people which they probably should not bear.

Now, however dire the necessity that this tax forces on people, they have it to pay.

Of course, you exempt food, medicine, and medical assistance, and

all of that.

You exempt some, but if you exempt, for example, candy and all the things that have been mentioned here this afternoon, what about the other things that the poor people, milk and things like that, have to buy?

Of course, if you exempt all foods, and that is really the point, you exempt a great many things, finally candy, that are bought by the wealthy more generally than by the poor, it does not hold up against any principle of taxation.

Now, an income or property tax does not lead to these inequities. For example, some woman riding in a car with me the other day said, "I hope we will get that sales tax. So many people do not pay any taxes."

I replied: "Do you know anybody who does not have to pay a realestate tax?"

"A lot of people do not own that property."

"Do they not pay it in their rent?"

"Oh, I had not thought of that.”

I said: "You try to rent property where the tax is on it and you will see the difference. Of course, if you have competition and cannot rent property and get your taxes, you will get out of that property and get out of it as soon as you can.'

But if it is a case where you have a margin, everybody has to pay it, and of course all the people in this city have to pay property taxes, so they are not exempt from those things.

I have already made my general suggestion that a 2-percent tax or whatever is necessary to be considered in addition to the income tax and that gets all of us more or less equitably, those that are able to pay it.

I think I will make a separate point of this No. 5. It is not according to duty to pay or ability to pay.

Ability to pay in tax history has been taken as a duty to pay. It is assumed that ability to pay should measure a person's proportion of

taxes.

Ad valorem tax on property is not quite that, but it is ad valorem so it is in the nature of approaching that principle, so it is not an extremely bad tax. So the main canons of taxes stand up for both the income tax and the property tax.

We have had testimony here this afternoon regarding how the amount we need, $19,000,000, might be had. I do not know the proportion, $6,000,000, for example, from the Government of the United States, $5,000,000 from income, $7,000,000 from property.

Mr. BATES. Where do you get the $5,000,000 income? The estimate is only $2,500,000, and about $500,000 on property of business. Mr. SHELTON. Do you mean at the present rate?

Mr. BATES. In the bill.

That is the estimate, Mr. West, about $3,000,000?
Mr. WEST. That is correct.

With the tax on unincorporated business, it will run $3,000,000.
Mr. Shelton is suggesting an increase in rates.

Mr. SHELTON. I understood from the witness this afternoon that is what she suggested.

Mr. BATES. We have had a lot of suggestions but that is not in the bill.

Mr. SHELTON. The bill is not permanent, it can be changed?

Mr. BATES. It is still there to be considered among the others. Mr. SHELTON. Well, now, as to the total budget, that question you have raised very definitely from the witness here this afternoon.

As to that total budget, that is a question. Of course, we are going into a permanent policy for a number of years running into $20,000,000 and $30,000,000 a year. That is questionable, and any policy that starts wrong is bad. If you start improvements that should not be

9953847-50

made, you are starting in the wrong direction and making a wrong kind of improvement.

Senator CAIN. Are there improvements intended for the District which you would rather not see produced?

Mr. SHELTON. We are proposing a short subway, downtown, a few buildings over the west of the White House grounds as proposed in the subway bill. That would do as much good as the underground subway as we have here in the Capitol.

Mr. BATES. For 3 weeks, Mr. Shelton, we have been holding these hearings and giving people the opportunity to come here and express themselves against the program that has been suggested by the District Commissioners, and, as I have said on many occasions, we have to gear the revenue needs to the program that they have set forth and they have geared that program themselves by the suggested types of revenues that they need to meet the requirements, financial requirements, of that program.

If we did not have that program, we would not need these additional revenues.

That is why I have asked the Commissioners to give me a complete program over a number of years and financing it over a period of years from all available revenue of present sources and also revenues that will develop as a result of the new sources.

Mr. SHELTON. That seems right.

Mr. BATES. But we depend upon. the citizens of this city, too, to advise us as to what is wrong about the program, and as to the necessity of it, the wisdom of it.

Mr. Lusk came here this afternoon and made the suggestion that we look into the advisability of the Dupont Circle project at an estimated cost of $3,800,000. That is a tremendous sum of money to provide an underpass for one circle in the District.

We have to multiply that a dozen times. That will run into $48,000,000 or $50,000,000.

Those are matters that the Commissioners and interested citizens of the District must grapple with and come to the determination as to the advisability of that in relation to the over-all needs of the District, not tomorrow but 5 or 20 years from tomorrow.

I am fully in accord with the desire of a planning board to project these programs over a series of years to reach ultimately the objective, whether the objective may be highway construction, school construction, public works of any kind, water system. It all ought to be projected over a period of years so we will know where we are headed. Mr. SHELTON. That is the point in my former testimony in regard to the highway problem.

I think we started wrong. What we need first is an overpass from the new bridges they are building on the Potomac across to Baltimore, and on the main road which has heavy traffic, and these large trucks which are coming through the city and killing people because trucks cannot stop so quickly.

Senator CAIN. You need a lot of capital improvements in Washington, D. C., which can only be secured from money from some source. Mr. SHELTON. You can build one of these and it would be worth 20 times as much now, and not for the future, and that is the reason you are going wrong with this highway problem.

Senator CAIN. Have you expressed yourself in regard to the highway board here?

Mr. SHELTON. In my testimony?
Senator CAIN. To them.

Mr. SHELTON. No; I have not.

Mr. BATES. The results represent many years of study and survey by the engineers of the traffic needs of the District, highway needs, and there are some disputes, I understand, among the experts as to what is the right thing to do.

Mr. SHELTON. We could overpass a hundred crossings in that system at the expense of the things we are talking about.

Regarding that improvement in Dupont Circle, we are proposing there to put rails down under that circle and continue them right on down through the city.

That means two tracks, north- and south-bound, two safety platforms all the way down, all the way where the two streets join, Mount Pleasant and Connecticut Avenue, and come down to the circle.

Then you have four lanes for streetcars in the center, and very little left on the edges to load and unload your traffic at the curb, local busses, and no room for through traffic, and there you can carry only half the traffic which you could if you left it open in the center and put on busses, loading and dicharging at the curb, and you would reduce the 72 deaths which we had from streetcars last year if you finally eliminated streetcars.

Mr. BATES. I think you had better sit down and write a memorandum to the Highway Department here expressing your viewpoint. Perhaps they will be glad to give it some study.

Will you proceed with your statement?

Mr. SHELTON. I am practically finished.

I merely made five fundamental basic points against the sales tax, and I have offered some suggestions. I have others as to the substitutes you might make.

Mr. BATES. Thank you.

That will finish the hearing for today.

We had around 30 witnesses today, Mr. Chairman, and they all had time to express themselves.

Senator CAIN. We also have 20,000 petitions.

The CHAIRMAN. I compliment you gentlemen for the work you are doing and your patience.

Senator CAIN. Let me suggest to you, Mr. Chairman, the people of the District mostly are very busy. They cannot come, so they send to us their general thinking on this subject of the gasoline bill.

Mr. BATES. We expect that tomorrow morning, Senator, we might finish up our hearings.

I think we have about nine witnesses tomorrow morning and that will bring an end to all the testimony.

It was suggested that we might get together, the chairman of both the House and Senate committee and our own subcommittee, and have a conference together after we get this testimony in such shape that we can roll it out on the table and quickly understand the over-all situation.

I am asking that the Commissioners provide me with a complete schedule of estimated expenditures over a period of several years in