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Mr. Bates. Do you think we ought to have something in the nature of a pilot plant in the District in which at least 20 percent of our expenditures in the District ought to be spent with our own organization, for instance, to establish a basis of cost, and from our own experience in the expenditures of that fund with our own organization, taking in all overhead and everything else as a real basis for cost determination of what the fair contract price ought to be!
Mr. KELLER. You have a basis for comparison. I think we all know why that is not done.
År. BATES. Why is it, in your opinion? Mr. KELLER. In my opinion, it is because the Highway Department likes to keep a small staff and every time they come up to Congress they say they have so many employees; the next year they have so many employees, and they are not increasing, buť there is some of that open-end thing on the other side, because you do not know how many people are employed on all these specific contracts; they do not show up on the District Highway Department's permanent roads. I suggest that it may be a reason why it is done in that particular way, sir.
Mr. BATES. That is all, Mr. Chairman.
Senator Cain. I have no questions. Mr. Keller, thank you very much.
Let me make one suggestion. Whether your testimony is given today or in the future, after you give your testimony, if you would provide the committee with a one-page summary in which you really head up the major items in which you are interested, either adversely or in a positive sense, we would appreciate it.
Mr. ŘELLER. I already have it in here—a one-page summary.
Senator Cain. We should now like to hear from Mr. J. C. Turner, who will represent Mr. C. F. Preller, of the Washington Central Labor Council
STATEMENT OF J. C. TURNER, CHAIRMAN OF THE TAX COMMITTEE
OF THE WASHINGTON CENTRAL LABOR UNION, AFFILIATED WITH THE AMERICAN FEDERATION OF LABOR
Mr. TURNER. My name is J. C. Turner, and I am chairman of the tax committee of the Washington Central Labor Union, affiliated with the American Federation of Labor.
We have tried to prepare a statement in accordance with the statements that we read in the public press as to what we should limit the statement to, and if, in the opinion of the chairman we deviate from that, we hope
Senator Cain. We notice it is rather a brief statement. If you just proceed and not take offense, if we think that some of it is more properly to be given at some other time, we will appreciate it.
Mr. TURNER. There is no organization in the city of Washington that is more vitally concerned with maintaining the level of governmental services and of public improvements for the District of Columbia than the Washington Central Labor Union of the American Federation of Labor.
This year the 160,000 members of our 200 affiliated local unions joined in celebrating our fiftieth anniversary. During those 50 years we have become an integrated part of the community, with our members and representatives participating in every worth-while activity of the community.
As citizens, we share in all benefits derived from the payment of taxes to the District government. We welcome this opportunity to express in a general way our position on the proposed budget and to indicate what we believe a fair and equitable tax program for the District should include. When your committee holds hearings on the various tax bills now before you, we hope to appear here again to voice our specific criticisms.
As to the 1918 budget, we do not believe the general fund estimate of $72,200,000 allocates sufficient amounts to education, health, and public welfare. Care of the needy, general health standards, and a sufficient number of well-built schools, staffed by adequately paid teachers, are mandatory in any modern city.
As to the highway fund estimate of $9,210,300, we believe that it could be cut back to the 1947 level. Some of the backlog of paving and resurfacing can be deferred to 1949. Such a cut would void the necessity for the proposed increase in the tax on fuel for motor vehicles.
Turning to the problem of raising sufficient revenues, we ask that the Congress enact a tax program that will be fair and equitable; a tax program that will recognize the basic democratic aim of placing the heavier burden of taxes on those best able to pay.
We wish to make it abundantly clear to the committee that in our opinion the levying of a sales tax is not required.
The workers in the lower-income brackets would suffer a reduced standard of living from such a tax, in that they spend all of their income to live. People in the higher brackets would merely experience a reduced rate of savings.
In this present period of inflated prices, with many wage earners forced to live at standards only slightly above subsistence levels, the sales tax would be a very great hardship. This regressive tax, of which, incidentally, the proposed public utility tax is in effect a part, violates the generally accepted principle of democratic taxation—ability to
Full employment and economic security in a framework of expanding democracy should be the objective of every American. This pernicious sales tax would assist in defeating such an objective.
Is pent-up consumers' demands are met and the producers are looking for new markets, the sales tax will depress the purchasing power of low-income groups at the very time purchasing power is most needed.
Without effective consumer demand there can be no prosperity.
In addition to the social and economic shortcomings of the sales tax, it should be pointed out that practically every organization in Washington, at the tax hearing of the Commissioners last September, either opposed the sales tax or suggested that it only be used as a last resort.
In a recent poll by the Washington Post, 69 percent of the District residents expressed opposition to the sales tax. The imposition of this tax would be against the expressed will of the people of the District.
During the period of the depression many States adopted a sales tax in order to prevent complete bankruptcy. A preponderant majority of those States did not have an income tax. Many of these States have since exchanged their sales tax for an income tax. The State of Maryland has in the last few days adopted a sales tax. The constitution of Maryland prohibits progressive income taxes. In the District we do have a progressive income tax. From the standpoint of justice and sound economy the income tax is the best source of revenue.
In the opinion of the Washington Central Labor Union there are sources of revenue other than the sales tax which would not only be preferable in every way, but also would produce the required level of revenue.
The first of these is the Federal contribution. In the fiscal years 1925 to 1930, the Federal contribution was $9,000,000 per year, and amounted to 26.1 percent of the general fund.
In the current year the Federal contribution is $8,000,000, and amounts to 11.5 percent of the general fund. As the amount of Government property and Government functions have increased greatly since 1930, it should follow that the Federal Government's contribution should bear a proportionate increase. The portion of the water supply being used by the Federal Government without charge is a great burden on the District.
Foreign governments have increased their tax-exempt holdings in the District. The cost of providing school facilities without tuition for children from neighboring States without charge is another expense borne by this small area of the District of Columbia as a concomitant of being the seat of government.
A fixed formula similar to that embodied in S. 215, should be passed by the Eightieth Congress. If enacted, it will mean a payment of $12,100,000 in 1948, or an increase in payment of $4,100,000. Considering the services rendered, we believe the formula should be so designed that the total contribution for 1948 should total a minimum of $14,000,000.
The income tax is the second most important source of revenue your committee should consider.
The present law suffers from poor enforcement. Although only 85,000 District returns were filed last year, over 125,000 Federal returns were filed in 1939, when the Federal exemptions were the same as the present District law.
With present advances in income and growth in population, the number of returns should be above 160,000.
All employees in the District, including the Federal Government, should be required to file with the District Government a copy of their
pay rolls on a quarterly, semiannual or annual basis. Such a procedure would make the job of apprehending the chiselers much simpler.
The District Board of Commissioners is to be congratulated on its espousal of a change in the residence requirements for income-tax purposes.
The tricky concept of domicile as presently interpreted is grossly unjust to the other taxpayers of the District. If those who are domiciled here on the last day of the taxable year and those who main
tain a place of abode in the District for more than 7 months of the taxable year, whether domiciled here or not, are required to pay District of Columbia income taxes, there will be a great increase in revenues from this source.
As to the income taxes proposed by the Commissioners, we believe that the exemptions are too low, and the graduations in the higher brackets not sufficient to obtain an adequate return for the District from this source.
We would propose an exemption for a married couple of $3,000 with $600 for each dependent.
We recommend for your consideration the following schedule:
Taxable income of the first $1,500, a tax rate of 112 percent; for $1,500 to $1,500, 2 percent; for $1,500 to $10,000 taxable income, levy 212 percent; for people earning $10,000 and over taxable income, 3 percent.
These increases would make the District of Columbia income tax more nearly equal to the Virginia tax. With a change to residence basis, an increase in rate, and of great importance, a thorough collection of the District of Columbia income tax, estimates as to yield should be revised upward from the stated $7,050,000 of Budget Officer Fowler.
In examining other sources of revenue it should be noted relative to the property tax that there has not been a reassessment survey of all taxable properties since 1936. Entire neighborhoods have sprung up in various sections of the city. Movements of business to different sections of the city and various other phenomena have caused radical changes in the time value of property. Much needed revenue is going uncollected for lack of a current reassessment.
The Washington Central Labor Union is opposed to excise taxes in any form. The National Tax Committee of the American Federation of Labor has characterized such taxes as nuisance taxes. They are simply variations of the sales tax.
Thousands of members of the unions affiliated with the Central Labor Union are employed in industries whose continued prosperity may be seriously threatened by the imposition of tax increases on beer, wine, liquor, cigarettes, and amusements. Musicians, bartenders, waiters and waitresses, truck drivers, cooks, and many other workers believe their jobs will be jeopardized.
If a greater Federal contribution is not forthcoming, and if the increased income taxes on a residence basis with a more thorough system of collections, plus the increased revenues that should be forthcoming from a reassessment of property should prove inadequate to meet the need, then we suggest that the Congress increase the tax rate on income-producing property in the District.
We propose this tax only as a last resort, but believe that it is infinitely preferable to a sales tax in any form, including the very regressive sales tax on public-utility bills.
Historically the lottery has had considerable use as a method for raising revenue. In the Washington Central Labor Union there has been a great deal of discussion about its applicability to the District fiscal problem.
We mention it for consideration by your committee, but at the present time do not endorse it.
Senator Cain. Thank you. It is a very full statement.
I have just one question. You mentioned at the outset that you were anxious to have the District, as I understood it, spend more money for health and educational facilities and requirements. What do you have in mind about that?
Mr. TURNER. We have not any specific amounts, merely that there have been complaints that have come from all over the city about the fact that those particular fields of education, health, and public welfare have been cut to the bare minimum, and there is a feeling that perhaps some of the money in the highway fund instead of being allocated
Senator Cain. You should look to the general fund.
Mr. TURNER. That would not increase the budget, but we have made our criticism on the collection of taxes at the present time. We feel that more money should be allocated to the collection of taxes, and the employers should make a quarterly or semiannual report to the District government as to the incomes of their employees in order that there may be a better check of people who are not paying that.
Senator Cain. I wonder if either on or off the record you would care to say anything further about the lottery. It would be quite all right with me, for example, if you cared to make any statements off the record.
Mr. TURNER. Off the record.
Senator Cain. You brought up an interesting subject, but you have not done anything with it, and we would like to know if you have any thinking behind the suggestion.
Mr. TURNER. I would like to tell you off the record.
Senator Cain. Mr. Turner, Mr. Bates would like to ask you a question.
Mr. BATEs. Mr. Turner, have you any suggestions to the committee as to any possible criticism that there is of the administration of the District government, other than the one criticism you had here about the efficiency of the tax-collection system.
Mr. TURNER. Yes; I had that criticism. I feel they should have more funds in that particular part of the function of government. I know it is the fault of the people who are administering the taxcollection procedure, but it may be the fault of not having enough money, and I have also said in regard to the matter of reassessment, I think that 11 years is too long to go in a city where you have had a dynamic change.
Mr. Bates. Well, of course, all through the war period when we had an inflated situation, that was not really the time to start a revaluation of any community, but, of course, you are familiar with the fact that the assessors this year have revalued the whole community and, as a result, I think, have added about $180,000,000 to the value of the properties here.
Mr. TURNER. I wenty-percent increase, which we favor very much.
Mr. BATES. I do not know whether it is a flat 20 percent, but in some instances it is. I think that applies probably to residential property.
Mr. TURNER. Yes, sir,
Mr. BATES. But I think the new values will bring in about $180,000,000 of increased taxable valuations.
Mr. TURNER. Yes, sir.