In conclusion let me say that the Commissioners stand ready to render any assistance, or supply any information that is available to to them, which the committee may desire. Mr. NICHOLS. Now, Mr. Commissioner, do you say that those people who opposed the sales tax probably would favor an income tax. Commissioner HAZEN. Yes; they certainly will. Mr. NICHOLS. And does it not also follow, and has it not been your experience that those people who oppose an income tax for the most part favor a sales tax? Commissioner HAZEN. That is right; there are two interests. Then follows a tabulation showing revenue collections of the general fund of the District of Columbia, that is the actual revenues collected for the fiscal years 1937 and 1938 and the estimated revenue for the fiscal years 1939 and 1940. I would like to have that made a part of the record. Then I have a statement here which shows the gross receipts to be received under the new taxes recommended totaling $13,200,000 and with the repeal of the intangible personal property tax of $3,000,000 and the abandonment of the business privilege tax of $2,200,000, or a total of $5,200,000 that would leave a net increase of new taxes amounting to $8,000,000. Then the statement also shows a revenue deficit in the general fund as carried in the District of Columbia Budget of 1940 on the $1.50 tax rate of $4,250,000 and additional appropriation over budget amounts recommended by Burdette G. Lewis for 1940 for several categories of relief totaling $550,000 making a total of $4,800,000 to be deducted from the net increase from new taxes leaving a revenue surplus on the above-mentioned basis of $3,200,000 and then there is an estimate of a reduction in tax rate to $1.50 amounting to $3,300,000. Mr. NICHOLS. Do you want to have the two tabulations put in the record following your statement? Commissioner HAZEN. Yes, Mr. Chairman; I would like to have them put in the record. Mr. NICHOLS. They may be inserted. Commissioner HAZEN. In the memorandum you will note what we will receive from various items in this bill like the 2-percent retail sales tax, the nonsalary, nonwage, personal net-income tax, the 5-percent corporation net income tax, and the additional tax on publicutility corporations; parking lot tax of 2 percent on gross receipts and also prorating automobile personal-property tax. Mr. NICHOLS. All right, Mr. Commissioner; we will put both of the statements in the record. (The statements are as follows:) Revenue collections of the general fund of the District of Columbia 1 The fiscal year 1937 commenced with a revenue surplus of $2,845,785. Net relating to the fiscal year 1949. 1. A tax rate of $1.50 is used in arriving at the above revenue estimates for 1940. Congress prescribed a tax rate of $1.75 for the fiscal years 1938 and 1939. 2. The business-privilege tax expires at the close of the fiscal year 1939 and is therefore not included in the revenue estimates for 1940. 3. The District budget as submitted to Congress for 1940 carries general-fund appropriation charges amounting to $40,079,900. To this must be added items carried in other appropriation bills (chargeable to the general fund) amounting to $1,300,000, and the estimated revenue deficit at the close of the fiscal year 1939, amounting to $198,030. These three items total $41,577,930. 4. Using estimated general fund charges for 1940 (see par. 3) of $41,577.930, and estimated general fund revenue for that year (see 1940 column in table) of $37,370,000, leaves a prospective revenue deficit in the general fund for 1940 of $4,207,930. (This does not take into consideration additional relief appropriations of approximately $550,000 recommended by Burdette G. Lewis for 1940 beyond the amount carried in the District budget for that year.) 5. The District tax program now pending before Congress provides for the following: (a) 2-percent retail sales tax. Nonsalary, nonwage personal net income tax. $5,500,000 $3,000,000 2,200,000 5,200,000 4,700,000 (h) The tax program provides for an increase in the tax rate, but not to exceed $1.75. Office of the Auditor, D. C., Feb. 27, 1939. FEBRUARY 2, 1939. MEMORANDUM RELATING TO THE PROPOSED TAX PROGRAM FOR THE DISTRICT New taxes recommended: 2 percent retail sales tax___ OF COLUMBIA Nonsalary, nonwage, personal net income tax____ 5 percent corporation net income tax.. $1.75 tax rate on real estate and tangible personal property, including automobiles___ Additional taxes on public-utility corporations_ Parking lot tax, 2 percent on gross receipts. Prorating automobile personal property tax. Gross increase, new taxes... 3, 300, 000 360, 000 25, 000 40, 000 13, 200, 000 MEMORANDUM RELATING TO THE PROPOSED Tax Program for the DISTRICT OF COLUMBIA-Continued Repeal intangible personal property tax--- Net increase, new taxes. Revenue deficit, general fund, as carried in District of Columbia budget for 1940 ($1.50 tax rate). Additional appropriations (over budget amounts) recommended by Burdette G. Lewis for 1940 for several categories of relief. Revenue surplus, on above basis... Reduce tax rate to $1.50 - - Commissioner HAZEN. Mr. Chairman there will be considerable disagreement in regard to some of the features of this bill but it is a compromise that we feel should be adopted. The retail sales people are going to be in favor of that and income people will be in favor of that. They realize that neither one can get all they want, and so we believe that it is the best possible compromise that can be effected between the two interests, and if everybody would get behind it we could probably get this bill through. Mr. NICHOLS. Are the Commissioners really serious in their endorsement of the Overton plan? Commissioner HAZEN. Yes, sir; I am very seriously in favor of it. I think, Mr. Chairman, from what I have seen that it has considerable merit. Mr. NICHOLS. How much will it return? Commissioner HAZEN. It will return between $8,000,000 and $9,000,000. It seems to me that it is the fairest thing that anybody has proposed. Mr. NICHOLS. Do the Commissioners think that if the Government was to pay a sum of money to the District of Columbia equal to the amount of taxes represented by the tax amount property that it would equal the amount that would be obtainable under the Overton plan? Commissioner HAZEN. That is the Overton plan; they make certain deductions. Mr. NICHOLS. For streets and highways? Commissioner HAZEN. No; they take the total area of the exempt property in the District of Columbia and they compare it to other cities of comparable size. For instance, we have something like 40 percent of exempt property, while other cities have 20 percent exempt property. So we would deduct 20 percent from the 40 percent, and the Government pays the difference. In other words, the Overton plan proposes they do not pay any tax on park lands that are comparable park lands in other cities, but all above that the Government is to pay taxes on. We have a larger percentage of exempt property in the District of Columbia than in any other city in the country. Mr. NICHOLS. There are two States in the United States: Wyoming, which has Yellowstone National Park Commissioner HAZEN. Yes, sir. Mr. NICHOLS. Yellowstone National Park is a tremendous area; and then I think that Montana has the Glacier National Park. Commissioner HAZEN. I do not know where it is just at the moment. Mr. NICHOLS. It is in Montana, in the northern part of the State, and it comprises a vast area of tax-exempt property. Now in the case of Glacier National Park and Yellowstone National Park, they do take out of those two States large tax-exempt areas. Commissioner HAZEN. Yes, sir; my answer to that is this: In the first place, it is most nonproductive land on which the taxes are very little. Another thing, which is very important to my mind is that the State does not maintain those parks; they do not build roads and police them. They do not do anything to them, while in the District of Columbia, all of these parks are maintained by our general fund tax. Mr. NICHOLS. All right. What do you think about taking my State of Oklahoma? There is now in Washington a lobby from the State of Oklahoma that proposes to ask the Government to pay to the State of Oklahoma an amount of money to reimburse the State of Oklahoma for the vast area in the State of Oklahoma taken up by tax-exempt Indian lands. Now, you have an exact analogy to the District of Columbia there, because those lands are productive; they are farms, as good farms as we have in the State. The State maintains the highways around them; the Government does not spend a nickel on them; the State maintains a public-school system to which the Indians go to school, and the State bears all of the expenses. I do not know what area that totals, but at one time it was something like 40 percent of the area of the entire State of Oklahoma that was taken up in tax-exempt Indian lands; very productive lands. Don't you think that if the Government were to follow the Overton plan, wherever there was an analogy clearly approaching the situation that exists in the District of Columbia, that the Government would then treat all other sections of the United States alike, whether they be States or cities, in the same manner and give them the same treatment that the District of Columbia would receive? Commissioner HAZEN. Mr. Chairman, it is going far afield for the matter that I have thought of but it seems to me it should. Mr. NICHOLS. Of course, it is not far afield. all. Commissioner HAZEN. I mean, I have not given it any thought at Mr. NICHOLS. Concededly, the District of Columbia wants no treatment better than any other sections of the United States. Commissioner HAZEN. I agree with you; yes, sir. As I have stated, Mr. Chairman, around these Federal buildings we maintain streets, sidewalks, curbs, gutters, lights, police and fire protection, and that is a very big item, which you can readily understand. Mr. NICHOLS. For which you receive $5,000,000. Commissioner HAZEN. Yes; but it does not touch the cost of it. Take Potomac Park and Rock Creek Park. Mr. NICHOLS. I mean that it does not touch the cost; if the District of Columbia is only interested in being made whole, and is not interested in making money out of it, why is it not more equitable to compute the cost of the services and so on, that you are talking about, and let the Government reimburse the District for the excessive cost to the District? Commissioner HAZEN. Of course, that is a very involved matter and our experts figured up that the District renders to the Federal Government something like $12,000,000 in real cost. That, of course, is to be offset to some extent, by services rendered to the District, but those are the figures which our experts worked out; that was originally in the Jacobs report. They have it figured out that the District renders the Federal Government services valued at approximately $12,000,000. Mr. BATES. Mr. Chairman, let us put that question in reverse to the Commissioner. Let us assume that the Government desired to erect another building costing the Government $3,000,000 and when you consider, in that building, they would have a pay roll of $1,000,000 a month, and then if the Federal Government says to you tomorrow: "Here, Mr. Commissioner, we are going to erect a new building; we are in doubt as to whether to erect a building in Baltimore or Washington, D. C., or in the outlying territory of the District." Now, you have this case of where a building is going to be erected which will develop $1,000,000 pay roll, to build up the purchasing power of the people. Commissioner HAZEN. Yes. Mr. BATES. And also the entire amount of that would come in to the community. Commissioner HAZEN. Yes. Mr. BATES. They would say: "In Baltimore, or in the outlying sections of the District, we are offered land free upon which to erect this building. Now, we will give you the opportunity of giving us that required land, or we will accept the offer of the outlying district." What would you do as Commissioner of the District of Columbia? Commissioner HAZEN. I will answer it by saying that if Henry Ford came here and were to erect a building of the same cost, he would have to pay the cost. Mr. BATES. What would you do under those conditions? Commissioner HAZEN. I still think they should pay their proportionate cost of operating in the District. Mr. BATES. I am not asking you in that fashion. I am asking you as the Commissioner of the District of Columbia, if the Federal Government asked you that question. Commissioner HAZEN. What will you do when the Government owns, say, 75 percent of the taxable property in the District? Now this curve on Government ownership is going up at the rate of 12% percent, while private property is going down at the same rate. Now, in 13 years they will be equal; that is, Government-owned property and privately owned property will be equal. Mr. NICHOLS. You mean that then there will be 50 percent of the property owned in the District of Columbia owned by the Government, and 50 percent owned privately? Commissioner HAZEN. Yes; there will come a time when private owners cannot maintain the Government. Of course, when it comes to the point where 75 percent is Government owned by the Federal Government, I venture to say then that the private property owners cannot pay for the maintenance of the city. Mr. NICHOLS. I have been advised by Senator King, of Utah, that 60 percent of the entire area of the State of Oklahoma is non-taxbearing lands held by the Federal Government. Commissioner HAZEN. That may be, but I bet the State does not pay for the maintenance of that. |