made on or before the 15th day of February 1939, and the tax shall be paid in two equal installments on the 15th day of February and the 15th day of May 1939. The other provisions of title X relating to payment are substantially similar to provisions of the Federal income tax law relating to the same subject.

All persons within the District of Columbia except disbursing officers of the United States Government shall withhold the tax imposed by title X from any payments due or made by them to nonresidents of the District of Columbia.

Title X provides that the assessor of the District of Columbia is authorized and required to administer the provisions of title X with the authority in the Commissioners of the District of Columbia to promulgate regulations for the administration and enforcement of title X. Provision is made in title X for refunds of overpayments of taxes upon a claim for such filed by the taxpayer with the assessor. If the assessor disallows any part of the claim for refund the taxpayer may within 90 days thereafter appeal to the Board of Tax Appeals of the District of Columbia established by title IX of the act and prosecute his appeal in the manner set forth in sections 3 and 4 of title IX of the act.

Authority is given to the Commissioners to compromise a tax when in their opinion there is any doubt as to the liability of the taxpayer. Penalties for the failure to file returns or pay the tax or the filling of fraudulent returns are provided in title X substantially similar to provisions relating to the same subject in the Federal income-tax law. Although it is readily conceded by most people that of all taxes a graduated income tax conforms most closely to the universally accepted principle of taxation according to ability to pay, the objection is sometimes raised that the rates of a specific proposal are excessive. In the case of the proposed District tax on individual incomes, the nominal rates vary from 1 percent on the first $2,000 of net income to 10 percent on net incomes over $50,000. These rates, for incomes in the lower brackets, place considerably less burden on the taxpayer than any other tax that would meet present District needs. And even for that portion of the higher incomes which is taxed at the top rate under the bill, 10 percent, the actual tax can hardly be considered excessive. This much should be made clear at the outset: A stated bracket rate does not apply to the taxpayer's total income, but only to a part of it. Take, for example, an unmarried man who has an income of $70,000. The 10-percent rate applies to only that portion which is in excess of $50,000 or $20,000. This man would pay a tax of $4,930, which is not 10 percent, but an average effective rate of 7.04 percent.

In the second place, the burden imposed by the enactment of the proposed District income tax is considerably lessened because the tax is allowed as a deduction in determining the net income upon which the Federal tax is computed.

Thus the man with an income of $70,000 who pays $4,930 to the District, would as a result pay $2,097 less in taxes to the Federal Government than he would have paid if there were no District tax. His net additional burden, as distinguished from his actual tax payment, therefore, is only $2,833, not $4,930. And reference to the accompanying table shows that his burden is not 7.04 percent but only 4.04 percent.

In fact, as the accompanying table further shows, in no case does the District burden exceed 4.1 percent. This maximum percentage applies to net incomes in the neighborhood of $60,000.

The percentage burdens shown in the tables, moreover, are calculated without allowance for two important deductions. First of these is a credit for the amount of District intangible property tax paid. The estimated yield of the proposed income tax has been placed at $5,000,000, whereas the estimated yield of the intangible levy is $3,000,000. About $2,500,000 would be credited against the income tax, thus further reducing the burden by 50 percent.

Finally the credits for taxes paid to other States, which will be permitted under the proposed plan, will cut the burden again.

The tax as proposed is fair and equitable in principle, and the distribution of its burden is such that in no case will it create a hardship. Care has been taken, it may be noted, to credit the payment of other taxes to avoid the hardship arising from a double tax. It is a first step toward a rational and effective fiscal policy for the District of Columbia.

There follows a table showing the effect of the tax imposed by title X upon the income of married persons with three dependents.

Maximum District of Columbia income taxes and net burden of proposed rates for married persons with 3 dependents-All income from salaries, $3,500 to $500,000 [Without credits for personal property or State income taxes paid]

Title XI repeals that portion of the act of June 29, 1922, providing for Federal contribution of 40 percent of the annual expenses of the District of Columbia and the participation by the United States to the same extent in the miscellaneous revenues of the District of Columbia. The act of June 29, 1922, provided, among other things, that on and after July 1, 1922, the expenses of the District of Columbia should be divided between the United States, and the District of

Columbia, respectively, 40 percent and 60 percent. This proportionate arrangement thereby became permanent law.

In consideration of the United States assuming 40 percent of the expense of the District, it was further provided by the said act that on and after July 1, 1922, certain miscellaneous revenues collected by the District each year, other than taxes, should be deposited in the Treasury partly to the credit of the United States and partly to the credit of the District, the part in each case being dependent upon the proportion of the appropriations each year as paid by each.

For example, in the fiscal year, 1923, the amount credited to the United States amounted to $902,077, and in the fiscal year 1924, $860,127.

However, beginning with the fiscal year 1925, Congress abandoned the 60-40 ratio of appropriations for the District and has substituted each year since in lieu thereof a lump-sum amount as the Federal Government's part of the cost of the District government. In the enacting clause of each District appropriation act, commencing with 1925, appears language under which the District receives credit for the full amount of these miscellaneous revenue collections, this being necessary to overcome the permanent law in the act of June 29, 1922, requiring these collections to be divided between the United States and the District. In other words, when Congress departed from the observance of that part of the act of June 29, 1922, providing for the payment of appropriations on a 60-40 basis, by the substitution of a lump sum each year, it also departed from that part of the said act requiring certain miscellaneous revenues to be divided between the two governments by including in each annual appropriation act of the District language under which the District received credit for the entire collections of these miscellaneous revenues.

It is proposed by title XI of the bill to repeal those portions of the act of June 29, 1922, that fix a percentage ratio of 60-40 as the basis for appropriating for the expenses of the District of Columbia, and for the division of the miscellaneous revenues between the District of Columbia and the United States, in the same ratio. The repeal of such portions of the act of June 29, 1922, will obviate the necessity of continuing the practice of carrying a saving clause in the annual appropriation acts of the District of Columbia.

The portions of the act of June 29, 1922, repealed by the bill are as follows:

[That, annually, from and after July 1, 1922, 60 per centum of such expenses of the District of Columbia as Congress may appropriate for shall be paid out of the revenues of the District of Columbia derived from taxation and privileges, and the remaining 40 per centum by the United States, excepting such items of expense as Congress may direct shall be paid on another basis;] * * * [and

that after June 30, 1922, where the United States is the owner of ground or the holder thereof in trust for the public, upon which improvements have been made at the joint expense of the United States and the District of Columbia, the revenues therefrom shall first be used to pay the United States 3 per centum of the full value of the ground as a ground rent, and the remainder shall be divided between them in the same proportion that each contributed to said improvements, and for such purposes the Assessor for the District of Columbia shall fix the full value of the ground after he has first made oath that he will fairly and impartially appraise the same; and that after June 30, 1922, any revenue derived from any activity or source whatever, including motor-vehicle licenses, not otherwise herein disposed of, which activity or source of revenue is appropriated for by both the United States and the District of Columbia, shall be divided between the two in the same proportion that each has contributed thereto; *1.

*

TITLE XII. TAX ON BEER

Title XII imposes a tax of 50 cents a barrel on beer sold in the District of Columbia. At the present time there is no tax upon beer in the District of Columbia, although a similar tax is imposed in most every State of the Union and a substantial amount of revenue is raised thereby.

It is estimated that a tax of 50 cents a barrel on beer sold in the District of Columbia will raise additional revenue amounting to $200,000.

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