Evening Star Newspaper, May 24, 1932, Page 4

A—4 =% LOCAL INCOME TAX URGED BY BUREA Rate Recommended to Sen- ate Lower Than That Fixed by Mapes Bill. (Continued From First Page.) in Government departments in Wash- ing would be taxed on the Federal salary, less personal exemption, because, while Virginia has an income tax law, it does not tax Federal salaries. Modified Rate Schedule. ‘The modified rate schedule proposed by the efficiency experts follows: 1 per cent on the first $10,000 of net income above the exemption; 2 per cent on the net income between $10,000 and $25,000; 3 per cent on the net income between $25,000 and $50,000, and 4 per cent on the net income over $50,000. The schedule in the Mapes bill goes up in sharper steps, as follows: One per cent of net income not ex- ceeding $2,000; 1'; per cent of the amount of net income in excess of $2,000, but not in excess of $5,000; 2 per cent in excess of $5,000, but not in excess of $10,000; 2!, per cent in excess of $10,000, but not exceeding $15,000; 3 per cent in excess of $15,000, but not exceeding $20.000; 3': per cent in ex- cess of $20.000, but not exceeding $30.000; 4 per cent of the amount in excess of $30,000, but not exceeding $50,000, and 5 per cent of the amount in excess of $50,000. Another high light of the report is the bureau’s conclusion that public utilities in the District are in a favored position as compared with representa- tive utilities elsewhere from the stand- point of taxation. The bureau recom- mends that these local utility taxes be made more commensurate with similar taxes elsewhere, but will submit a sep- arate report later on this subject. The subsequent report also will deal with taxatiqn of bonding, title and insurance companies. Bank Taxes Higher Here. ‘The bureau found that banks have been taxed higher in the District than the average for the country as a whole. 1t presented figures showing that for 10 vears ending in 1930 the total taxes paid by all banks in Washington were 887 per cent of their gross earnings, against 590 per cent for the entire | United States. ‘The report concludes that the various findncial institutions, now taxed on the basis of gross earnings or receipts, “might properly be exempted from the operation of the proposed income tax law, and their fair tax burden fixed by other forms of taxes.” Although pointing out in the begin- ning that its modified income tax meas- ure would raise no more next year than would result from retaining the in- tangible tax, the bureau argues that an income tax would bring about a more equitable distribution of the tax| burden as between property owners and non-property owners. It further argues that at present 85 per cent of District Tevenues are obtained from property taxes, which is characterized as a dis- proportionate share for property to bear. Third Report to Capper. ‘This is the third of a series of reports Chairman Capper of the Senate Com- mittee asked the Efficiency Bureau to prepare on the Mapes Committee pro- gram. The first dealt with the pro- posed tax on estates of decedents and | the second was a combined analysis of the doubling of the gasoline tax and the proposed registration fee on auto- mobiles by weight. In this third report the bureau points out that, as passed by the House, the estate, gasoline and automobile weight taxes would result in a net increase in District taxation ot $4,734.000, while the bureau’s changes | in those three bills would cut down the estimated increase to $2,741,000. or a reduction from the House bills of $1,993,000. “Whatever plan be adopted,” the re- port continues, “these measures contem- plate a_ substantial increase in taxes in the District of Columbia, and their consideration requires care to see that the burden is distributed equitably among the several classes.” ‘The bureau then points out that while its income tax plan will not increase local revenues, but merely produce at the outset the same reduced amount | expected to be obtained if the intangible property tax is retained during the com- ing year, in normal times the income tax will raise more than the present intangible law. Recommends 21 Changes. The bureau made the added argu- ment that “public utilities, not to be taxed under the bill, though now pay- ing less than other classes of taxpayers in the District, might well be called upon to make additional contributions, the resultant amount being more than sufficient to offset the effect of reduc- ing the rates in the pending billL” Besides scaling down the rate sched- ule, the bureau recommends 21 changes in the rules laid down in the House bill in order to make the proposed law more equitable. The most important changes urged by the bureau are that taxpayers be allowed to deduct from gross income the interest paid on indebtedness in- curred in financing a home, and that a single person who is the head of a family be alowed the same personal exemption accorded a married person, namely, $2,500. Changes Analyzed. The various changes it recommends in the House bill are analyzed by the bureau as follows: 1. The inclusion of two new para- graphs in the list of definitions of terms used in the bill. One provides that the terms “paid” shall mean “paid or incurred” and ‘“peid or accrued.” and the term “received” shall mean “received or accrued,” according to the method of accounting used by the tax- payer. The other paragraph would more clearly definte the term “resident,” to mean: “The term ‘resident’ m its application to individuals shall mean any natural person domiciled in the District of Columbia and any other natural person who maintains a per- manent place of abode therein in which he or she spends in the aggregate more than seven months of the taxable year. provided, that cabinet officers and per- sons in the service of the United States . Government elected for a definite term of cilice shall not be considered as residents of the District of Columbia for the purposes of this secticn.” 2. This is the recommendation for de- duction of interest paid on the financ- ing of homes, the bureau pointing cut that most States and the Federal Go ernment ‘“recognize the salutary e fects of encouraging home ownershi] ‘The bureau declares that failure to al- low this expense in the District would be an anomaly when the expense in- curred to carry tax-exempt securities would be deductible as the section now stands.. “In the case of this latter type of transaction,” the report adds, “it is felt that the interest so paid out should not be deductible.” The bureau recom- mends the following section in the bil “All interest paid during the taxable year or indebtedness, except on indebt- edness incurred or continued to pur- | chase or carry obligations or securities the interest upon which is exempt from taxation under this act.” Allowances for Losses. 3. This deals with allowances for estimated losses on bad debts, and points out thatdin 1921 the Federal rev- enue law was $1ade to provide that de- ductions could be claimed either on the basis of worthless debts charged off, or on a reasonable addition to the reserve for bad debts. The practice has been ollowed in all succeeding Federal laws, d in view of the advantage of con- formity between the Federal and local 1aws the bureau suggests the bl be cihnged to allow Mucu:fi'fm THE EVENING STAR, WASHING Estimated Revenues From Proposed Income Tax for D. C. Based on Average Personal Exemption of $2,000 Income Blocks (Compiled From Federal Returns)* Under $1,0007 Under 1,000 $1,000 to 2,000t 1,000 to 1 3,0001 3,000 Number of Average $5 15 2,000 to 100,000 to 150,000 to 200,000 to 250,000 to 300,000 to 430,000 to 500,000 500,000 and over tAdditional Returns for District of Columbia: Nontaxable Taxable 14 542 70 $12,118.37 26.345.90 51, 51 30 168, 141 125, 202, 149, 131, 151, ,437.50 103, 47, .495.20 .141.25 142 105 149, 100, Average Net Rates in Bill 1% to 5% Net Income Income After Average Tax Estimated Returns Each Return Exemption Each Return Revenues 1159.87 ,832.96 ,596.60 Suggested Rates 1% to 4% Average Tax Estimated Each Revenues $12,118.37 26,345.90 51,673.20 51,246.11 28,611.67 101,826.60 ,673.20 ,246.11 ,753.89 554.00 95,865.64 82,064.00 142,264.72 107,309.95 96,258.56 19,921.92 54,354.96 53,213.76 185, 408,00 913.20 678.00 428.80 112,898.16 83,504.00 869.50 119,285.60 000.00 100,000.00 | ‘Total Individual. Corporations . 3,178, 5004 445.04 000.00 2,426,601.45 3,678, * Data obtained from statistics of income (years 1925 to 1929, inclusive), Bureau of Internal Revenue. 1 Classes nontaxable under the Federal income tax law, as specified exemptions exceeded net income. i Additional returns because of lower personal exemptions in the proposed District income tax law. ¢ Data unavailable showing income of corporations ac cording to income blocks. The bureau points out in its report that the figures in the table showing a comparison of the House bill and the bureau’s plans are based on an era of prosperity. will not exceed 75 per cent of the amount of the five-year average of 1925-1929, shown in the table. fore, that it has deducted 25 per cent from those average figures, leaving the estimated receipts from income taxes at | 2,759,000 under the House bill and $2,019,000 under the bureau's modification. ‘The bureau then goes on to 400.000.00 | 44504 2.826.601.45 estimate that probably incomes for 1932 It explains, there- within the tavable year, or, in the dis- cretion of the assessor, a reasonable ad- dition to the reserve for bad debts. It would also allow a charging off of pait of a debt found to be only partly re- coverable. 4. This suggests enumeration of items not deductable. The bureau says the House bill, for the most part, follows | the Federal and State laws in the enumeration of items to be included in | gross income and items deductable therefrom. but that no mention is made of items not deductable, such as per- sonal expenses, capital investments, rent and insurance on homes, and so forth. The bureau declares that the average taxpayer is inclined to claim all that is not specifically denied, and for this rea- son it recommends placing in the bill & list of expenses not deductable. 5. This advocates a time limit on losses and points out that when the price or value of property has decreased sufficiently, a taxpayer might find it advantageous to sell the property just before the close of a taxable year and buy it back again after the beginning of the next year, thereby getting the | benefit of an allowable deduction. In | order to prevent the practice, the bureau | recommends a clause similar to one in the Federal law prohibiting a taxpayer, other than one in the business of buy ing and selling securities, from claiming as a deduction any loss from a sale of securities which is followed shortly or has been recently preceded by a pur- chase of substantially identical property. Use of Inventories. 6. This relates to use of inventories in determining income, and points out that the section of the House bill deal- | ing with the basis of computing that | income makes no reference to inven- tory. The bureau says that where pro- duction, purchase or sale of goods are involved, the increase or decrease in profit cannot be accurately measured | without the use of inventories. | 7. This relates to computation of | gains and losses and recalls that the | House bill disposes of this merely by a general provision that gross income shall include profits from dealings in real and personal property. The bu- | reau believes that questions arising in | this connection are so important !mt; adequate provision should be made. Pointing out that the Federal law con- | tains several.pages on this subject, the | bureau advises that the District law could be made concise by making the | Federal law applicable to computation | of gains or losses except where other- | wise specified in the local law. 8. This deals with filing of returns according to business year and recom- mends following the Federal practice ! of requiring fiscal year returns. The | House bill requires all returns to be| filed in March following the close of the taxable year. The bureau says this would not be satisfactory for incomes | computed cn an annual basis other than a calendar year, which is permitted by another section. Since March is the third month, the bureau suggests that taxpayers keeping accounts on a fiscal year basis should file returns during the third month after the close of their particular business year. 9. Penalty for delinquent returns. The House bill contains no provision for penalties other than cherging in- terest to taxpayers who are delinquent. ‘The personal property tax now in force provides a penalty of 20 per cent and the Federal law 25 per cent for delin- quent returns. In both cases these pen- alties are added and collected the same es the tax. The bureau recommends a section to provide for this. Exemption for Family Heads. 10. This is the recommendation that the $2,500 exemption for married per- sons be allowed also in the case of & single person who is the head of a family. Under the House bill, such a person is allowed only the $1,000 ex- emption. The bureau also - recom- mends that the credit for dependents, fixed in the House bill at $300 each, be determined by the situation on the last day of the year, and that where, the position as head of a family changes durin gthe year, the personal exemp- tions be prorated over the year. 11. Clarification of persons taxable. In this connection the bureau points out that from a reading of section 10 jof the House bill “it is clear that sal- | aries of persons working in the District, including employes in private enter- | prises, persons in the military and naval forces, and Federal employes, would -be taxed, though they may reside else- where. A question has arisen whether | Congressmen and cabinet officers, whose | compensation is not subject to State in- come taxes, have occupations carried on in the District of Columbia, so0 as to render them liable for the District in- come taxes imposed upon non-residents. As the bill now stands, the this section might require judicial in- terpretation. This uncertainty be removed by adding either of the fol- lowing provisions to section 10, accord- ing to the intent of Congress: ** ‘Provided, that compensation re- ceived from the Federal Government by cabinet officers, judges of the courts of the_United_States and_persons_elected 'BATHROOM HYGIENE DEMANDS safe, smooth, non- tating toilet tissue. for debts ascertained to be worthless | for a definite term of office shall not be | subject to tax under this act’; or *“Provided, that all persons receiving compensation from the United States, whose principal office in connection | therewith is 1n the District of Colum- | the Constitution was adopted, giving | bia, shall be taxed on such income. In | the case of the Presidents of the United | without States and judges of courts of the United States taking office after the en received as such shall be included in gross income. Recommends Reciprocity. 12. This recommends a cause for reciprocity to the States to avoid re- quiring & non-resident having income from sources within the District to be taxed here and again in the State of his domicile. 13. This deals with allowance for net losses of former years. Pointing out that a corporation might have large earnings one year that would be wiped out by losses in the succeeding year, or | vice versa, the bureau points out that the Pederal law of 1928 allows a tax- paver to recoup losses over two years and suggests an amendment along this line as being equitable 14. Non-taxability of dividends from District corporations. The bureau ex | presses the belief that the House bill would exempt from tax here dividencs from national banks and mutual sav- ings banks threughout the United States and suggests an amendment to confine the exemption to dividends from banks, trust companies and building and loan associations in the District. 15. Under the heading of inclusion of life insurance and gross income, the bureau suggests that amounts received under life insurance policies be ex- empted whether the beneficiary is an in- dividual or business firm. 16. This recommends uniformity of period for paying tax to conform with the existing practice here. Filing of Returns. 17. Filing of returns. The bureau points out that under the House bill every resident of the District would be required to file a return whether or not he had any net income. Follow- ing this literally, more than 400,000 persons would annually report through returns, though less than 60,000 would pay any tax. The bureau says this would increase the cost of administra- tion without serving any useful pur- pose, and suggests that returns be lim- ited .to individuals with a net income for the taxable vear of $1,000 or over if single, every individual having a net income of $2.500 if married and living with husband or wife, every individual having a gross income of $5,000 regard- less of the amount of net income, every corporation, estate, joint stock com- pany, partnership or association or- ganized for profit (except those spe- cifically exempted). 18. This recommends a three-year statute of limitations, beyond which the Government will not assess addi tional taxes, nor the taxpayer claim refunds. 19. This recommendation would en- able the assessor to make rules and regulations governing the keeping of records of income by taxpayers." 20. This would outline in more detail the time within which appeals could be heard by the Board of Tax Appeals. 21. This last recommendation pro- vides that if the income tax is enacted as a substitute for the intangible tax, that the latter be repealed as of Jan uary 1, 1933, and that the assessment made under this section on intangible personal property shall be at one-half the annual rate to cover only the period from July 1, 1932, to December 31, 1932. Early History Reviewed. After reviewing the early history of income taxation in various parts of the world, the bureau said that early in the nineteenth century agitation arose in the United States for a national tax on incomes. It was not until 1862, how- ever, that such a tax was levied to meet demands of the Civil War. Defects of administration caused its repeal 10 years later, the report explains. In 1894 this form of tax was revived and applied to individuals and cor- porations, but the next year, the bureau points out, the act was declared uncon- Over 30 Years of Quality Service All Risk Is Eliminated —when your FUR COAT, WOOLENS, RUGS and DRA- PERIES come to us for sum- mer care. Merchants Moth-Proof STORAGE is 100% effective Our Prices Are Less Than Usual for Moth-Proof Storage Promt Collections and Deliveries Phone NAT. 6900 Merchants™ Transfer and Storage Co. JOHN L. NEWBOLD, JR., President | AP.W. 3o Satin Gissue 920-922 E St.—Nat. 6900 Storage—Moving—Packing—Shipping stitutional by the Supreme Court on | the ground that the tax was direct and | must be apportioned to the States ac- cording to representation. | years later the sixteenth amendment to | Congress power to levy an income tax apportionment among _ the | States. The Federal Government, there- | fore, has had a national income tax | actment of this act the compensation ' since 1913. | Turning to the history of income tax- ation in the States, the bureau said that in the decade following 1840 seven States had income tax laws, but “most of these laws became ineffectual because of poor administration and evasion. This, the bureau observi led to their | | repeal or non-enforcement, and for 40 vears following the Civil War income | taxation made little gains. “At the beginning of this century,” the report continues, “only five States— Massachusetts, North Carolina, South Carolina, Virginia and Oklahoma—used the tax, and even in some of these its | abandonment was considered. Within | the next 10 years a viewpoint favorable to the income tax developed.” Wisconsin Leads Change. In 1911, the report continued, Wiscon- sin enacted a carefully prepared law on the subject, designed to correct diffi- culties that had befallen other States, espetially in regard to administration. “Other States,” the bureau declares, radually followed, and in the last few | years the movement has had a signifi- cant development, receiving added im- petus by the increased costs of govern- ment. Today income tax laws are in effect in nearly half of the States.” ‘Turning next to its reasons for favor- | ing substitution of an income tax for the intangible personal property tax, the report declares that a tax on_tangible | personality has met with only slight | opposition where the rates have been reasonable, but that the intangible | property tax “has been severely criti- | cized almost from the beginning, and because of well founded objections is | slowly being replaced.” | "It has been opposed,” according to | the report, “as being in effect a type of double taxation on the ground that in | an economic sense bonds, stocks and like evidences in property rights are not | wealth but merely represent equities il tangible or real property already sub- ! Jected to taxation.” | ‘The bureau adds, however, that the | | most serious objection “is the flagrant | evasion of the tax.” The report states that, while intangible property is easily | concealed, legislatures have hesitated to | | give assessors broad investigational powers. “No satisfactory means are available for determining the extent of the eva- | sion of intangible property tax in the District of Columbia,” the report goes on. “A comparative statement of taxes and assessments in 23 representative cities (ranging in population from 252,- | 981 to 900,429), found on page 44 of the | | report of the Select Committee, shows | that Washington has the second highest | assessment valuation of personal prop- | | erty. being exceeded only by Baltimore, | a city nearly twice its size. On intan- | gible property Washington has the | | highest assessment valuation. Efficiency Is Seen. “These figures lead to the belief that | the District of Columbia has possibl; a| | more effective administration of the Yaw | | than any of the other cities in the | group. But this does not mean that a | large proportion of the intangibles are | taxed in the District. , | | _“As the aggregate value of personal | | property far exceeds that of real prop- | erty, one might expect, taking into ac- | count the exemptions allowed in the District personal tax laws, which in the aggregate are relatively small, that the | | valuation of personality would approach | that of realty, which is about $1,200,- i000,000, yet the assessed valuation of | local personal property amounted to | only $650,000.000. “Much of the dif- ference must have been made up of un- | | reported intangible property, as it is much more difficult to locate for as- | sessment purposes and is more easlly | concealed. ‘'The value of intangibles in the Dis: | | | Last two days of inches, 65c. Washable tops and 6th and D Sts. N.W, ON, D. | $2,742,986.37 in 1931. | bined total income amounts to more Sensational Sale! Heat and moisture proof table pads. Lowest prices in city, we believe. Made to fit any style table. Extra leaves up to 10 All High-Grade Pads at 40% Reduction We take orders for future delivery at this special sale price. rite and our with sampies to measure your tavle. NATIONAL TABLE PAD CO. (Stewart Bldg. . trict may be roughly checked through the Pederal returns. Income from divi- dends and interest reported in indi- vidual returns by taxpayers in the Dis- trict, exclusive of exempt interest on Liberty bonds and State obligations, etc, amounts to about $50,000,000 a year. On an assumed average eerning of 5 per cent, the investment would be a billion dollars, yet the intangible roperty assessment is little more than alf this amount.’ Although emphasizing the difficulties of assessing intangibles as compared with other classes of property, the re- port admits that conditions have been improved in the District in the last few years by the enactment in 1929 of & iaw, which the Bureau of Efficiency it- self recommended, providing that if any person neglects or refuses to file a return of personal property apd the assessor certifies that in his opinion the best information obtainable does not afford a satisfactory basis for assess- ment, the Commissioners may petition the Supreme Court of the District for & mandamus to compel the person to file a sworn return. Filings Are Forced. The District auditor in commenting on the finances for 1931 states that notwithstandinig the market slump the levy on intangibles increased in 1931 because the Commissioners were able to institute mandamus proceedings compel the filing of returns, and that during the past year it was unneces- sary to take legal action after a num- ber of persons were advised of the pro- vision of law, the bureau points out. A table accompanying the report shows that during the last 14 years the annual tax collected by the District on intangible personalty has increased steadily from $890,779.39 in 1918 to It has exceeded $2.000,000 a year since 1925. ‘The bureau argues that from a social viewpoint all individuals should share in the support of the Government in proportion to their respective abilities, and adds: | “In the District the opportunity exists | for many persons with substantial in- comes from professions or from invest- ments in tax-exempt local stocks or Government bonds to escape virtually all direct taxes. As the bill, if enacted, will effect a more equitable distribution of the tax burden between property owners and non-property owners hav- ing ability to pay taxes, it is the opin- fon of this bureau that a decided im- provement will be made in the District taxing system by the substitution of an income tax for the present tax on in- tangible property. Property Taxes Cited. “The bureau is further influenced in its view by the general situation on property taxes. Heretofore the money raised in the District of Columbia to meet expenses has been obtained al- most entirely from taxes on real and | personal property. Last year the cash | revenues of the District were $30.416.- 539, exclusive of the gasoline tax, or $32,157,461 if the gasoline tax is in- cluded. Of this amount general prop- erty taxes procuced $27,286,319. These significant figures show an abnormal situation, in which real and personal property are being a disproportionate part of the cost of the municipal gov- ernment. Scarcely a tax authority can | be found to uphold the property tax as | the chief source of direct contribution— and vet in the District it constitutes 85 | per cent of the total reverues.” | Sources Analyzed. { In analyzing the sources of taxable income in the District the bureau begins by pointing out that under the Federal | revenue act it falls roughly into two | classes—individual. including trusts and estates; corporation, including joint stock companies and other associations | organized for profit. The gross income reported by resi- dents of the District for Federal tax | purposes increased from $229,000.000 in | 1925 to $277,000,000 in 1929, the average being $245000.000. Nearly half of this amount, the bureau says, was realized from salaries and wages, in large part | paid by the Feceral Government. The next item of income, about 20 per cent, represented dividencs and interest. Earnings from individual and partner- ship businesses accounted for 15 per cent, and profits from sales of capital assets, rents, royalties and all other in- | come made up the remalning 15 per cent. From the gross income there were deducted losses, interest, taxes, | contributions and other allowances to- taling $32,000.000, leaving an average net income reported for the period of $213,000,000. i Because of the non-commercial char- acter of Washington, the bureau Ob-i serves, corporations are less important | here than in other cities of the same size in the United States. “The total taxable income of all cor- porations in the District during the | period 1925 to 1929 averaged $59,000.000 | a year. Of this approximately 60 per ! cent was received by railroads and public utilities, 15 per cent by banks and financial institutions, 12 per cent by trading businesses. 7 per cent by manufacturers, and the remaining 6 per cent by all others. Of particular significance is the fact that a large part of the net income of the local corporations would not be subject to! the District income tax, as such in- comes are received by public utilities and financial institutions exempted un- der section 22, which reads as follows: Exempted by Statutes. “All corporations within the District of Columbia which pay & tax upon their gross earnings or receipts shall be ex- empt from the provisions of this act. The report then points out that while ! the corporations now paying taxes on | the basis of gross receipts are but a small percentage .of the number of businesses in the District, their com- than one-third of the $59,000,000 local corporate income reported for Federal taxation during the period 1925-29. More than another third, earned by railroads, would be taxable only as to a very small part of the income, repre- senting the portion derived from busi- ness transacted in the District, the re- port adds. N “Excluding these two groups, actually less than $15,000.000 is left to tax. fore exempting any particular business from the operation of the proposed law, manifestly the first step is to determine whether they now pay a fair share of the cost of government. The consid- eration becomes the more important as three other revenue measures for the District are before Congress, namely, the estate tax, the doubling of the gas tax, and the automobile registration fee based on weight.” The bureau then points out that, as written by the House, the estate tax, the additional 2 cents on tire gas tax and the automobile weight tax would result in a net increase of $4,734.00C in District taxation. As modified by the Bureau of Efficiency, those three bills this green flannel backs. salesman will TUESDAY, MAY Na. 9389 24, 1932. would increase local taxation by $2,741,- 000. Whatever plan.may be adopted as to those bills, the bureau points out that they conf te substantial in- creases in taxation in the District, “and their consideration requires care to see that the burden is distributed equitably among the several classes.” Divided in Two Groups. ‘The corporations now taxed on gross earnings or receipts, and therefore ex- empted from the House income tax bill, are classified by the Efficiency Bureau into two_groups—financial institutions and public utilities. Taking up the financial institutions, the Emc’mcy Bu- Teau expresses the following view: “National banks and trust companies pay a relatively high tax—6 per cent on their gross earnings—compared with the average in the States. Statistics on g:nck expenses compiled by H. N. Stronck 0., the 10-year period 1921 to 1930 the total taxes paid by all banks in the District of Columbia were 8.87 per cent of their gross earnings, against 5.90 per cent fo rthe entire United States. Last year the Federal Reserve Bank of the fifth Federal Reserve district paid in taxes of all kinds about $5.60 on every $100 gross income, whereas in the District in some cases bank taxes exceeded $12. A survey of the income tax laws made by the Committee on Taxation of the American Bankers’ Association, published in September, 1931, shows that of 20 States having corporation income taxes ten tax all banks, three tax only State banks and seven exempt all banks. “Incorporated savings banks pay a tax of 4 per cent on gross earnings afte~ deducting interest on deposits. Their working capital is made up largely of savings accounts, on which interest at 3 per cent is paid. Were not the deduction for interest allowed, the tax would be burdensome and in some cases | prohibitive. Owing to the narrow mar- gin of profit, any increase in the tax would ultimately lead to the reduction of interest paid to depositors or would weaken the banks' resources, either re- sult being undesirable. Bad Results Feared. “Some of the banks situated might be forced out of busi- ness. Although the tax paid by sav- ings banks is not as high as that on national banks and trust companies, nevertheless it averages about 7 per cent of their gross earnings—a figure higher than the average tax paid by all banks in the country. States having income taxes exempt sav- ings banks. “The total taxes paid by banks in the District of Columbia for the fiscal year 1931, exclusive of real estate ta: amounted to $859.922.14 “Building and loan a: commonly come to be regarded as pub- lic benefactors, their pus pose is to aid persons who otherwise would be unable to purchase homes. They also furnish a means for ceposi- tors of small amounts to earn a fair interest return on secured investments. ‘Where a rate of 5 per cent is paid on deposits and 6 per cent charged as in- terest on loans, but 1 per cent remains for a margin on which business is done. Accordingly, a 2 per cent tax on mi gage interest received, without the privi- lege of deducting interest paid, amounts to 12 per cent of the net interest earned. The policy of the Federal Gov- ernment and most of the States is to exempt this class of establishments from income taxes if substantiallv all the business is confined to making loans to members. Taxes in the District, ex- clusive of real property taxes, assessed against building and loan associations for 1931 amounted to $79.264.06. ciations have ' SLEEPING HUMANS ARE LIKENED nk consultants, show that for | of | Richmond reported that member banks ! less favorably | The majority of | Girl Tries Suicide; Leaps Eight Stories And Only Breaks Leg By the Associated Press. * SAN JOSE, Calif., May 24— Miss Irene Johnson, attractive blonde of 20, leaped from the eighth story of a San Jose Hotel. She fell through the top of a parked motor car onto the cush- joned seat. Taken to a hospital today, physicians found a broken leg her only injury. The police record said the woman sought to end her worries. Sea Lion on Hike Thumbs Free Ride From Auto Driver Husky Youngster Gets Lodging at Zoo in San Diego. By the Assoclated Press SAN DIEGO, Callf, May 24—A husky young sea lion found hiking in the dust of a highway five miles from the Pacific Ocean revealled last night in a bath at the San Diego Zoo. Richard M. Allen, motorist, saw the seal waddling along on its short flip- pers and notified z0o officials who were than a few hundred feet from water voluntaril, The sea lion got back to water and food in the outdoor tank at the zoo. Kcepers thought a fisherman might have captured brought it ashore {and turned it loose after learning of its vigorous appetite. FOUND GUILTY IN SLAYING BY JURY IN MONTGOMERY Special Dispatch to The 8 ROCKVILLE, Md., May 24—A ver- dict of guilty of murder in the first degree, but without capital punishmer was rendered by a e Circui Court here late 1 of Samuel Mu 3 charged of E Jord: also colored, of Ck The shooting occuried last November 22, in the home of Alice Powell, colored. t Haiti, a colored settiement adjoining Rockville, where the two men, who werc employed on public works in Rockville, roomed. It was charged by the prose- cution that Brown interfered in a quarrel between Jordan and his and that he shot and ins Jordan with a shot gun without provo- cation. Brown claimed that whe ed to protect the woman Jordan poi a revolver at him and that him in self-defense. nder it is incumbent upon the c tence Brown to life im Brown was represented by A John E. Oxley of Rockville and State’s Attorner Stedman Prescott conducted the prosecution. The jury was out for one hour. the verdict TO VEGETABLES BY SCIENTIST Do Nothing, Enjoy Nothing and Are Partly Asleep, While Supposed to Be Awake. “When a person falls asleep. he loses made of most of his personal dignity. He begins to behave much like a vegetable and looks the part. Apparently he does nothing, knows nothing and enjo nothing until he recovers from th: condition. In this manner he spends a third of his life. and the effects of sleep persist through a good part of the other third.” Dr. H. M. Johnson, professor of psy- chology at the Graduate School, Amer- ican University, thus described sleep to the Educational Research Club of Washington at a dinner meeting last night in the Kennedy-Warren Ap: ments. Many time-honored beliefs re- garding the best sleeping postures are at variance with tests conducted while he was doing research work at the Mel- londlnsllluu in Pittsburgh, the speaker said. In discussing the study, descriptions of which have been published in scien- tific journals, Dr. Johnson confined his remarks largely to the results of a study and $60 to Qur own special shades—and Reduced from $25, $30 and $35 to 2 20 children during normal sleep. The speaker said children most peacefully are likely to st v times in a night, adop ing awkward and often grotesque tions which require considerable mus lar effort to maintain. Johnson con- the soundest sleep, but to make gross changes of position on 20 to 45, or even 60. occasions during a typical what we should expect of a he dividual.” Dr. Johnson said the study indicated the sleeper’s bed should pe: take and to hold in comfort erately long different box positions as are nece sary to give every part of his body, its proper turn, a chance to rest This means. in effect, Johnson added, that the sleeper dem: a variety of resting poses and should not be limited in this choice. Opportunities —-three of them--profitable investments in quality and fashion at worth-while savings up in their make, employing worsteds of unusual quality—fashioned in single and double breasted models—and Reduced from $30 and $35 to Glenbrook Top Coats Camel'’s hair, tweed, etc. Single and double breasted—in the popular gray and tan of these garments. The Mode—F at Eleventh the case | 533 Glenbrook Suits *19 No charge for alterations on any ANTLPAY CUT RALLY SET FOR' TONIGHT Organizations Asked to At- tend Will Represent Directly 10,000,000 Taxpayers. Representatives of many organiza- tions whose membership is affected by | threatened pay-cut legislation will meet |in the executive council room of the | American Federation of Labor Build- ing tonight to organize formally, adopt and put into effect their program of co-operation with the American Fed- tion of s camy against cuts and furloughs | C. W. Browning, chairman of the Legislation Committee, Joint Confer- ence on Affiliation with the American Federation of Labor, said today: “Tremendous enthusiasm has met the invitation of the American Fed- eration of Labor to all interested na- tional organizations to co-operate at this time of National emergency in de- feating _the orgainzed propaganda against the Government, its organiza- tion and personnel, both military and civil, and its relief of needy veterans. . The conference, which Mr. Browne ing represents, is composed of mem- | bers ‘and unions of the National Fed- | eration of Federal Employes According to Mr. Browning, Willlam Green, president of the A. F. of L., has accepted the leadership of this joint ign k2 g citizens, it is estimated, 1 all the workinj us | lation. it | ELECTED P.-T. A. HEAD By a Staf! Cor; adent of The Star. CABIN JOHN, Md, May 24.—Mrs. A. L. Titcomb was elected president of }(he Glen Echo-Cabin John Elementary School Parent-Teacher Association last Mrs. O. L. Meeks of Brook- . was named vice president; Mrs. A ins of Cabin John Park, sec- Irs. E. N. Maxim of Cabin unced that = special held at the home of in Brockmont June 27 standing committee for Jo! meeting will be Mrs. Titcomb to appoint next term. D. A. R. CHOOSES OFFICERS LEONARDTOW Maj Md.. May 24—The as Chapter, D. A. ity chose officers George P. vice regent, ‘Washington, Mrs. Stephen rdt secretary Mrs. Wilmer Russell : recording secretary of Le r' ¢ thews of h of Milestow ar, Mrs. J. Frank Coad ,lotte Hall Md. and Elizabeth Ewing of W All but Mi n, of Char- Miss gton, D. C. Miss Ewing FIVE QUALIFY FOR MEDALS By a Staff Correspondent of The St SILVER SPRING. Md.. May 24 —Five of the 18 members of the local National rd company who opened the annua: firing season on the range at Camg lbert C. Ritchie Sunday have qualified for medals, it was announced today. Walker qualified as an er and Sergt. A. rpshooters with 15. respectively, Searss foriado’ and Pvt. Va a score of 192. Burchell’s Famous Bouquet This Superb Csffee At 25¢ per Lb. N.W.BURCHELL 817-819 Fourteenth St. Superior Food Products since 1856 Fashion Park Suits —of their distinctive single and double breasted modeling—made exclusive worsteds—and Reduced from $40, $45, $50, $55