in the daily press. I may say that the head of the committee of taxation is the wife of Major Donovan.

I would like to call attention to the fact that women quite largely represent the buying power in a community, and if women, thoughtfully and carefully, are willing to endorse the sales tax it means that a large proportion is willing to take that tax upon themselves in order to take care of the community.

Mr. NICHOLS. If I understand correctly, the meetings of the Federation of Women's Clubs in the District are attended by delegates from the various associate clubs, and at a recent meeting held here there were between 90 and 125 such delegates present as representatives of the associate clubs, and you were authorized and directed to make the statement you are making here this morning.

Mrs. WILEY. That is right.

The final paragraph of the report of Mrs. Donovan recommends the appointment of a spokesman to appear here for the federation, that recommendation was adopted, and I was appointed spokesman. Mr. NICHOLS. How many members are on the committee? Mrs. WILEY. I have five on the committee. When we meet we have from 15 to 50 at our luncheons.

Mr. NICHCLS. How large is the Kalorama Citizens' Association? Mrs. WILEY. That association is not large, having a paid-up membership of 81 members. There are never more than, say, 25 and usually only 15 present at the meeting of that association.

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We feel that all cannot be experts; and the people in these groups I represent feel that the Pond committee was a very fine one. that committee are five District officials, of whom I know three, and I have a very high personal regard for their ability. Of the five on the citizens' committee I know three or four, and I have a high regard for them. Mr. Carruthers, president of the Federation of Citizens' Associations, is one of the widest known an most beloved men in the District.

Then there is Mrs. Ernest Feild Parkinson, of the Voteless District of Columbia League of Women Voters. I think we must trust the opinion of these experts. Also, I should mention that Mr. Robert V. Fleming, chairman of the committee on municipal finance of the Washington Board of Trade, is a member of the advisory committee. I agree with Mr. Lusk that this is the best plan we have ever had outlined for consideration.

I am speaking, as I said a while ago, on the Pond plan as it was outlined in the newspapers. I do not know about the changes that have been sugggested.

I wish to outline the arguments which prompted the action of the groups I have mentioned.

Mr. DIRKSEN. Your endorsement, then, is of the plan disclosed in the newspapers and does not embrace the changes suggested to the subcommittee by Mr. Morgan this morning?

Mrs. WILEY. That is right.

Mr. DIRKSEN. You are not authorized to put your groups on record with respect to the proposed changes?

Mrs. WILEY. No. I am for the plan that came out in the Evening Star.

The new tax program is intended not only to supply more taxes for the next fiscal year, commencing July 1, 1939, but for subsequent

fiscal years as well. In other words, the pending tax program is proposed as a permanent measure to cover some 7 years commencing with the fiscal year 1940, as against the two emergency tax measures passed by Congress during the last 2 years.

The new tax program includes a combination proposal for a 2 percent sales tax, with exemptions of food and medicines and sales under 25 cents. Coupled with the sales tax is a nonsalary, nonwage personal net income tax with rates ranging from 2 percent to 7 percent. Under this income measure any salary in excess of $14,000 will be subject to taxation.

The new tax program also includes a 5 percent corporation net income tax, a tax of 4 percent on the gross receipts of the Potomac Electric Power Co., the Chesapeake & Potomac Telephone Co. and the Washington Gas Light Co. The Capital Transit Co. would pay by 3 percent on its gross receipts.

Also included in the new tax program is a parking-lot tax of 2 percent on gross receipts. This tax is proposed to reimburse the District. for the loss of taxes due to the demolition of buildings.

A further item in the program provides for prorating the personalproperty tax on automobiles, as against the present practice under which a newly purchased car escapes taxation for an entire year if purchased any time after January 1 of any year.

The program further authorizes an increase in the tax rate on real estate and tangible personal property when necessary. It is, however, stipulated that the tax rate shall in no year exceed $1.75.

These several taxes, with the tax rate remaining at $1.50 in the next fiscal year, would raise an estimated total of $9,900,000. The new tax program provides for the repeal of the present tax on intangible property which now raises $3,000,000 and the abandonment of the business-privilege tax which this year is estimated to supply $2,200,000. Deducting these amounts from the gross revenue increase of $9,900,000 leaves a net increase which the District would probably obtain in the fiscal year 1940 of $4,700,000.

The population of the District of Columbia is steadily increasing. It has risen from 439,000 in 1920 to an estimated 630,000 in 1938 or an estimated 191,000 in 18 years, or over 40 percent in that time.

The increase in governmental costs is not in direct proportion to the increase in population. I have learned that the maintenance and operating costs of the Government have increased at the rate of 4 percent a year over the past 18 years. In dollars this increase has been from $17,378,359 in 1920 to $40,064,883 in 1938, an increase for the 18-year period of $22,686,524, or more than doubled. There is also increased expenditure for capital outlay with a constantly increasing population. Capital outlay for 1920 was $2,750,880 and for 1937 it was $7,083,400

At the same time that this increased expense is going on the taxable area of real estate is constantly decreasing. In 1937 I learned that the taxable real estate was only 45.4 percent of the land area. Also since 1934 there has been a reduction of the Federal contribution.

In the face of these difficult facts we must rationalize the situation and facing the facts decide what is the fairest and most constant source of revenue. The groups which I represent believe that the Citizens Tax Advisory Committee has evolved the surest and fairest method to arrive at this needed revenue.

The reason why the sales tax can raise revenue without resting so severely on any one group or combination of groups is because all groups contribute something without paying on the bare necessities of food and medicine.

People with investment income will pay both the proposed income tax and the sales tax. Those who do not pay any income tax will pay only the sales tax.

The entire income of the District will thus be subject to tax.

It is known that an ordinary personal income tax, including Federal salaries, is of doubtful constitutionality and if passed and then found illegal we would awake one morning to find that the tax on real estate would have to take up the entire deficit.

The greatest industry in the District of Columbia is the Government. Our principal output from a business standpoint is laws, our principal business lawmaking. Unless the Federal Government is willing to give a definite proportion of the cost of the Federal city then the only certain way of reaching the Federal Government is by the indirect method of retail sales taxation.

The present plan is an attempt to weld the two forms of taxation together so as to compose a graduated income tax on all income.

The Evening Star pointed out on January 17 that recent Bureau of Labor statistics figures show that three-quarters of the total family expenditures in the lowest income groups goes for food and housing combined. On the basis of these figures it has been estimated that a $1,000 income would pay less than $5 in retail sales taxes spread over an entire year. People with earned income over $14,000 or investment income over $500 will pay both the sales tax and the personal income tax, the combination resulting in effective progressive taxation.

The combined personal income-retail sales tax will have a broad base. Civic responsibility and tax consciousness go hand in hand. Only under such a situation will there be sufficient popular interest in taxation.

There are no large industrial establishments in the District and the local wealth is extremely mobile. Even the Federal Government has to depend on its selective sales taxes in order to balance the extremely fluctuating yield of the income tax which suffers in times of depression.

It is estimated that around 3,000,000 visitors annually spend about $38,000,000 in the District of Columbia. They are responsible for some of the costs of Government and should contribute through the sales tax.

An income tax on all salaries except Federal salaries would be unfair. Whereas a sales tax will reach all according to their expenditures without discrimination as to the sources of their income. The transient, the sightseer, the seasonal sojourner, those who hold Government office for a year or two and then go back to the States will all contribute something toward maintaining the costly ornamental features of the District for which they are in part responsible.

Then I think too we should consider the tremendous service which is granted every resident of the District by the Government, for instance

For protection of life and property, $7,237,304; for health and sanitation, $3,106,172; for maintenance of highways, $767,906; for public welfare, $8,709,608; for education, $13,069,845; for recreation, $1,743,768; amounting to $31,634,803.

Surely everyone who benefits from this tremendous outlay should help according to his income, however small, to defray these splendid services.

Mr. NICHOLS. We thank you very kindly for the intelligent and precise manner in which you presented your statement. It is refreshing to receive such a statement in the manner yours has come to this committee.

Mr. DIRKEN. Are you a member of the League of Women Voters? Mrs. WILEY. No. They took an opposite view.

Mr. BATES. Has your organization given any particular study to the real-estate tax here in order to determine whether or not real estate, which benefits more than anything else from the increased purchasing power of people who work in the District, bears a just proportion of the cost of the District government?

Mrs. WILEY. The assessments are very high. The Women's Club is assessed at $97,000, while we could not get more than $30,000 for it. I do not believe I could get the amount at which my own house is assessed.

Mr. BATES. Is your own house assessed on a 100 percent basis? Mrs. WILEY. Yes.

Mr. BATES. Do you know whether that is a general policy in the District, to assess property at 100 percent?

Mrs. WILEY. I think it is.

Mr. BATES. That is not an unwise policy, to assess everybody on a 100 percent basis.

Mrs. WILEY. It puts us to a disadvantage. When new Members of Congress come here they think we have a very decided advantage in taxation. The City Club pays $1,400 tax a year.

Mr. BATES. Adjustments may be necessary. I think that is the reason the Board of Tax Appeals is to be set up, to adjudicate complaints.

Is it not the general practice, at least by statute, to provide that property shall be assessed on a basis of 100 percent?

Mrs. WILEY. I do not understand that such is law.

Mr. NICHOLS. We have a 60-percent assessment in Oklahoma. Many States have statutes providing for assessment under 100, while many other States have a provision just like the District of Columbia.

Mr. BATES. In the State of Massachusetts, the assessment is on a 100-percent basis. We feel that our real-estate value should be carried on a fair market, and therefore the assessments are upon the basis of 100 percent. In other cases it does not apply. The principle is there. There is an adjustment of the rate to the values in order to have a uniform system.

Do you know many cases here wherein property has been sold far in excess of the value at which it is assessed?

Mrs. WILEY. Not of my own knowledge. I could look into that. Mr. BATES. I think it would be wise to do that, if you have the time. The board of assessors could give that information, of course. They could give us a break-down of the sales and show what percentage of the property has been sold at a price in excess of the assess

ments.

Mrs. WILEY. I always thought that because we have high assessments we have low rates, and in that way there was an evening.

DISTRICT OF COLUMBIA FEDERATION OF WOMEN'S CLUBS

RESOLUTION PASSED JUNE 21, 1937, IN RE RAISING ADDITIONAL REVENUE FOR THE DISTRICT OF COLUMBIA

Whereas Congress has for 15 years ignored its own act of June 29, 1922, providing that 40 percent of the cost of the Federal City should be borne by the National Government, which proportion if carried out today would amount to $16,000,000; and

Whereas Congress refuses to take into consideration the fact that since 28 percent of the land of the city is occupied by the National Government, assessed at a value of $648,790,000 and that if this valuation were multiplied at the rate of $1.50 the obligation of the Federal Government would be $9,731,000; and

Whereas since 1934 Congress has only contributed 21 percent of its share of the burden of maintaining the Federal City, created in the Constitution as the seat of Government, and whereas while the cost of the city has gone up the Federal contribution has gone down; and

Whereas due to this injustice the unfortunate people of the District of Columbia are today obliged to raise between seven and ten million dollars additional from some source or other; in order to defray the cost of the absolute necessities of city government; and

Whereas the women of a community constitute its buying element and are deeply concerned with whatever touches the family pocketbook; therefore be it Resolved, That we, the members of the District of Columbia Federation of Women's Clubs, consider on the whole that some form of selective sales tax, now operating in 24 States, which has been recommended by the Federation of Citizens' Associations, the Board of Trade, and the Commissioners of the Distict of Columbia, is the fairest tax, under the circumstances, since it operates on everyone alike, who enjoys the benefits of living in the Capital City and we urge Congress to advocate such selective sales tax in lieu of an income tax or of an increased real-estate tax; and be it further

Resolved, That a copy of this resolution be sent to the chairmen of the Appropriations Committees of the House and Senate and to the Commissioners of the District of Columbia.

Respectfully submitted.

(Signed) JESSE K. BIDDLE, President, District of Columbia Federation of Women's Clubs.

DISTRICT TAXES

FEBRUARY 27, 1939.

I am submitting this short report as the chairman of the committee on taxation. The new tax program for the District of Columbia is still pending before the subcommittee of the House committee headed by Representative Jack Nichols, of Oklahoma. Public hearings have been postponed due to the absence, because of illness, of Dr. Pond, of Albany, N. Y., the tax expert employed by the Congressional Joint Committee on Internal Revenue Taxation.

The federation is aware that Congress at the previous session provided for a study of the District's tax structure with the purpose in view of raising additional revenue to meet the needs of municipal services.

Congress has already passed two emergency, or stopgap revenue measures to provide necessary additional revenue for the fiscal years 1938 and 1939.

The new program is intended not only to supply more taxes for the next fiscal year, commencing July 1, 1939, but for subsequent fiscal years as well. In other words, the pending tax program is proposed as a permanent measure to cover some 7 years commencing with the fiscal year 1940, as against the two emergency tax measures passed by Congress during the past 2 years.

The new tax program included a combination proposal for a 2 percent retail sales tax, with exemptions of food and medicines, and sales under 25 cents. Coupled with the sales tax is a nonsalary, nonwage personal net-income tax with rates ranging from 2 to 7 percent. Under this income measure any salary in excess of $14,000 will be subject to taxation.

The new tax program also included a 5-percent corporation net-income tax, a tax of 4 percent on the gross receipts of the Potomac Electric Power Co., the Chesapeake & Potomac Telephone Co., and the Washington Gas Light Co. The Capital Transit Co. would pay but 3 percent on its gross receipts.

Also included in the new tax program is a parking-lot tax of 2 percent on gross receipts. This tax is proposed to reimburse the District for the loss of taxes due to the demolition of buildings.