STATEMENT OF ELEANOR FOWLER

Mr. NICHOLS. The next witness is Miss Eleanor Fowler, executive secretary of the Washington Branch of the American League for Peace and Democracy.

Miss FOWLER. The Washington Branch of the American League for Peace and Democracy, representing a membership of over 670 Washington citizens, is on record as unalterably opposed to sales or consumption taxes.

Our organization regards such taxes as unfair and unwise from every social and economic point of view. Sales taxes hit those least able to pay most heavily, since people in the lower income groups necessarily pay the greatest proportionate share of such taxes.

a tax would still further limit their already inadequate budgets for the common necessities of life. It would be a tax on the wage earners and their families in Washington that they should not be forced to bear. Such taxes are recognized by merchants and economists as unwise. They tend to drive business out of the city. They tend to cut down the volume of retail trade.

Our organization believes that another form of taxation should be found for the District of Columbia-preferably the income tax. Income taxes are based on ability to pay. Those citizens who receive the most from society should be required to contribute the most for the protection of their privileges. An income tax in the District would be fair to all; and would not cut into the budgets of the low-income groups.

Mr. NICHOLS. If there is nothing further today, the subcommittee will adjourn until 10 a. m. next Wednesday.

(Thereupon at 1:25 p. m., Thursday, March 9, 1939, the subcommittee adjourned, until 10 a. m., Wednesday, March 15, 1939.)

TAXATION IN THE DISTRICT OF COLUMBIA

WEDNESDAY, MARCH 15, 1939

HOUSE OF REPRESENTATIVES,

COMMITTEE ON THE DISTRICT OF COLUMBIA,

Washington, D. C.

The subcommittee this day met at 10:20 a. m., Hon. Jack Nichols presiding, for further consideration of a bill to provide revenue for the District of Columbia.

STATEMENT OF DR. PAUL H. NYSTROM

Mr. NICHOLS. The first witness this morning is Mr. Nystrom. Mr. Nystrom, please give your full name and the name of the organization, if any, that you represent.

Mr. NYSTROM. My name is Paul H. Nystrom, 570 Seventh Avenue, New York City. My principal business or profession is professor of marketing at Columbia University.

I give part of my time as an officer of the Limited Price Variety Stores Association, which is a national trade association including 4,500 variety stores of the United States, they being both independent and chain stores.

Mr. NICHOLS. I presume that is the class of stores in which the 5- and 10-cent stores fall?

Mr. NYSTROM. Yes; that is right.

Mr. Chairman, it is my understanding that you are considering various proposals for raising money to take care of the fiscal situation in the District of Columbia, and among those proposals is the sales tax. Mr. NICHOLS. About how many of the class of merchants you represent are in business in the District of Columbia?

Mr. NYSTROM. I do not know how many there are, Mr. Chairman, but in our association we have 36 member stores in the District of Columbia, of which 26 are members of 5 chains and 10 are independent or individually owned stores.

Mr. NICHOLS. I presume that your association does not represent all of them.

Mr. NYSTROM. There are others, but I do not know how many.

I merely wish to add to the statement I began, by saying that in my capacity as an officer of the Limited Price Variety Stores Association I have had opportunity to observe and study the operation and effects of various taxes affecting the retail trade and particularly the variety trade. I have given special attention to the sales tax; and I would be very happy to place my experience or past observation at your service. Mr. NICHOLS. The committee will be glad to hear any observations you want to make applicable to the proposed tax plan.

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Mr. NYSTROM. Our chief concern in the variety trade, which, I think must be the chief concern of all retail stores selling low-priced goods, goods at less than $1 or 50 cents, is to find an administration of the sales tax that will be fair to all retailers.

There are very few retailers in any city who do not have a large number of items that are sold at low prices.

In the variety trade our sales below 25 cents amount to 90 percent of the business transacted, when you pass the 10-cent point. Consequently, a system of administration that neglects to take into account the large sales in the small-price items may be very unfair to retailers who sell such low-price goods.

Therefore, I would like to urge that, in thinking about a sales-tax plan, you devise some method of administration either by sales brackets or by the application of tokens or coupons which will make it possible to have the tax collected from the consuming public in some fair proportion down as far as it can be practically carried.

Mr. NICHOLS. If I understand the purport of your statement, it is that your association, the association you represent, does not object to the sales tax as a tax, provided it is so administered that it brings all retailers into a uniform position?

Mr. NYSTROM. That is right.

The sales tax has become a matter of common practice throughout the United States. Of course, you have those facts before you and I need not dilate on them.

Mr. NICHOLS. When the plan now before the subcommittee left the Joint Committee on Taxation, which worked out the plan with the assistance and advice of the Citizens' Committee of the District of Columbia, insofar as the sales tax features of the plan are concerned, it was proposed that there be a 25-cent exemption allowed on all sales and that is the plan recommended in this report.

Since that time, upon advice from the chairman of this committee and some other groups of citizens within the District of Columbia, there is also before the committee in the form of a committee print, as it applies to sales, an exemption of only 13 cents.

In the first place, in reducing the exemption from 25 to 13 cents, we had in mind the very thing you are talking about, namely, doing equitably by those merchants whose bulk of sales are below 25 cents. We thought that we probably had hit the middle ground and it would not work undue hardship on those merchants by reducing that exemption to 13 cents. In the light of your experience, the committee would be glad to hear you if you have any remarks to direct at the 13-cent and the 25-cent exemptions.

Mr. NYSTRON. Experience quite definitely shows that setting the minimum, setting the point at 13 cents, makes it possible in the variety trade to recover most of the taxes that must be paid to the State, the municipality, or, in this case, the District of Columbia. That would probably mean the recovery of 90 percent of the taxes paid by the merchants, the recovery being from the consumers.

I can say from my knowledge of what has been accomplished elsewhere that such would be very satisfactory to the variety trade. From my general knowledge of other costs of retailing, I think it would be satisfactory-that 13 cents exemption for all classes of retailing would be satisfactory.

Mr. NICHOLS. I thought I understood you to say at the outset that your work at Columbia University was directed along a line such as

this.

Mr. NYSTROM. My work is primarily in marketing. That is not quite the same as taxation.

I cannot claim to be a tax expert; but I do follow the effect of taxes on the operation of stores. I am not an expert in the theory of

taxation.

Mr. NICHOLS. Would you mind giving the committee your opinion as to the better plan of administering a sales tax, one plan being the use of tokens or coupons, which compel the payment of taxes in excess of the purchase price of goods, as against the other plan proposed in this bill, where the tax is paid without tokens and is calculated on the cent basis.

Mr. NYSTROM. There are sound arguments for both methods. The coupon plan works very well in several States. There are certain minor inequities in the coupon plan, as there are in any other plan. I refer to a coupon of a certain amount, 1 mill or 2 mills on the smaller sales.

There have been other devices worked out, as in Ohio and North Carolina, providing for the sale of tax receipts to the retailers, who sell them to the customers. There is a 2-cent tax receipt to cover the purchase of $1, but it would be distributed evenly for all purchases. That involves considerable complexity and I am not sure that experience shows that it is sound.

The coupon plan, or direct collection of the tax, the amount of money to be registered separately in the cash register, either works very well. There are minor inequities in both plans.

Mr. NICHOLS. Do you think they are preferable to the plan proposed here?

Mr. NYSTROM. I have not had the opportunity to study this committee print you showed me a minute ago. If the plan is there I am not familiar with it.

Mr. NICHOLS. It does not provide for the use of coupons or tokens. Mr. NYSTROM. Is it a direct collection at the time of purchase? Mr. NICHOLS. Yes; it is a collection, but the settlement with the District of Columbia would be made by the merchant on the basis of gross sales.

Mr. NYSTROM. That, I think, will work out all right, providing the exemption is set at 13 cents. The amount of taxes collected would would cover all the taxes the retailer would have to pay. A loss within a range of 10 percent is not material.

Mr. NICHOLS. We have in connection with the sales tax the exemption at 13 cents, and you think that will be equitable to the 5- and 10-cent and variety stores, as I understand?

Mr. NYSTROM. Yes.

STATEMENT OF MRS. JOHN BOYLE, JR.

Mr. NICHOLS. The next witness is Mrs. Boyle.

Mrs. BOYLE. Mr. Chairman and members of the committee, my name is Mrs. John Boyle, Jr., 3901 Ingomar Street NW., Washington, D. C.; and I am chairman of the Citizens' Committee for Fair Taxation.

I have come here representing not only the membership of our affiliated organizations, and those who have formally endorsed our program, but, to the best of my knowledge and belief, all the citizens of Washington who want a fair and decent tax program for this city. I submit to you for your information and for your record a list of organizations citizens, consumer, and labor groups-who have endorsed the program of the Citizens' Committee for Fair Taxation, and in affiliating have appointed three delegates to serve on the committee in various capacities.

I shall also submit to you the organizational set-up of the Citizens' Committee for Fair Taxation.

The officers are: Mrs. John Boyle, Jr., chairman; Mrs. Duncan Brock, executive secretary; W. Donald Brock, treasurer; Mrs. Mary V. Daugherty, chairman, publicity and education; Mr. Árthur Bernstein, chairman, research; Miss Rebecca Farnham, chairman, organization; and Miss Regina Ottenberg, chairman, finance.

The advisory council are: Msgr. John A. Ryan, David Cushman Coyle, Henry T. Hunt, Clarke Warburton, Arthur Schoenthal, Boyd Fisher, Jacob Baker, Woolsey Hall, W. W. Rodgers, Charles Houston, Herbert S. Wood, Harry S. Wender, Doxey Wilkerson, James McNamara, Sidney R. Katz, Mrs. Huston Thompson, Nanny Burroughs, J. Charles Laue, Francis J. McDonald, Faith Williams, Wilbur S. Finch, Mrs. Robert Olesen, Mrs. Louis Ottenberg, and John T. O'Rourke.

The organizations which have endorsed our program are: American Association of University Women; National Women's Trade Union League; Washington League of Women Shoppers, D. C.; Cooperative League; Consumers' Council of Washington; Bennings Citizens' Association; Bladensburg Road Citizens' Association; Brookland Neighborhood Civic Association; Hillsdale Civic Association; Pleasant Plains Civic Organization; Rock Creek Civic Organization; American Federation of Teachers, Local 440, American Federation of Labor; Brotherhood of Sleeping Car Porters; American Federation of Labor; Washington Division, Hotel and Restaurant Employees' Alliance, Local 80, American Federation of Labor; United Garment Workers of America, Local 11, American Federation of Labor.

Washington Industrial Union Council, Congress of Industrial Organizations, including 31 locals of the United Federal Workers of America and the following other locals: Amalgamated Clothing Workers of America; Cleaners and Laundry Department, Local 188-B, Amalgamated Clothing Workers of America; Journeymen Tailors' Department, Local 188; American Radio Telegraphists, Local 35; Federation of Architects, Engineers, Chemists, and Technicians; Oil Workers', Local 403; United Cafeteria Employees, Local 471; United Fur Workers; United Mine Workers of America, Local 7525; United Office and Professional Workers of America, Local 27; United Retail Employees, Local 113; United Shoe Workers of America, Local 136; Washington Newspaper Guild. The Washington Newspaper Guild, however, is not affiliated with the Citizens' Committee.

National Labor Relations Board Union; Brown Junior High Parent-Teachers Association; Dunbar Parent-Teachers Association; Washington Bar Association; National Negro Congress, Washington Branch; New Negro Alliance; Self-Culture Club; Washington Highland Citizens' Association; and Logan-Thomas Circle Citizen Asscciation.