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THURSDAY, JUNE 10, 1971
HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON BUSINESS,
COMMERCE AND FISCAL AFFAIRS OF THE
COMMITTEE ON THE DISTRICT OF COLUMBIA,
Washington, D.C. The Subcommittee met, pursuant to call, at 10:15 a.m. in Room 1310, Longworth House Office Building, the Honorable Earle Cabell (Chariman of the Subcommittee), presiding.
Present: Representatives Cabell (presiding), Link, Nelsen, and Brovhill.
Also Present: James T. Clark, Clerk; Hayden S. Garber, Counsel; Patric Kelly, Assistant Counsel; John Hogan, Minority Clerk; Leonard O. Hilder, Legislative Assistant; Paul Y. Little, Consultant."
Mr. CABELL. The hearing will come to order. I believe that Mr. Back was scheduled to finish his testimony. Will you proceed?
STATEMENT OF COMMISSIONER WALTER E. WASHINGTON, ACCOMPANIED BY GRAHAM WATT, ASSISTANT TO COMMISSIONER; KENNETH BACK, DIRECTOR, FINANCE AND REVENUE; COMER COPPIE, BUDGET OFFICER, AND MAX CHAPIN, DEPUTY BUDGET OFFICER-Resumed
Mr. BACK. All right. Mr. Chairman, I would like to use an easel with some charts which I hope you will be able to see, if I may, to indicate the level of taxation in the District of Columbia as compared to the metropolitan area in Washington and as compared to the 25 largest cities in the country.
As you know as chairman, comparing tax levels is a difficult process because everyone has different types of taxes and different levels of assessment and so forth.
I feel that probably the most reliable way is to compare the tax that the individual himself pays and try to compute his taxes applying all of the applicable taxes whether they be county, city, or state taxes. We had to make some assumptions about family size and price of homes and various other assumptions, but once the assumptions are made, we apply the same rationale to each of the cities.
Also, I have some smaller charts here which I would like to provide you with if you have trouble seeing the charts here.
Chart 1 shows the taxes that would be paid by an individual family of four consisting of a family of four with a husband and wife and two children. This first chart shows a person living in the various jurisdictions in the Washington metropolitan area at an assumed level of $10,000. If you can follow me on the chart, you will see that when we have computed the income tax, the real estate tax, and the sales tax-these are the three major taxes that the individual paysthe lowest tax area of the Washington metorpolitan area is in Arlington County with a total tax on a $10,000 income of $697. You will observe that the District of Columbia is third from the top with a total tax of $821. The highest in this area is Prince Georges County with a total of these three taxes of $1,041.
Now, I hope you can see the chart. If you can't you can follow me
on the smaller charts.
The second chart is exactly like the first one except it assumes a $20,000 income level. The relative position of the District stays the same. There is no difference. We are still third from the top in the metropolitan area. It shows that the District of Columbia tax on these three major taxes, when you add them up, it is higher than all of the Virginia jurisdictions and somewhat lower than the American jurisdictions.
We went one step further in Chart number 4. Here we related the tax as a percent of the income. We have broken it down here showing the lowest burden and the highest burden and the average burden. You will note that at the $5,000 income level, in Arlington County it takes 62 percent of the $5,000 income level in order to pay the states and local taxes. In the District it takes 68 percent at the $5,000 income level whereas in Prince Georges County it takes 78 percent.
That is about the same relationship as the other chart (Chart 3) shows. It shows that the District tax exceeds the average at the $9,000 income level at about 8.2 percent.
Now, I would like to go to Chart 6 if I might. This chart shows the major tax liability as a percentage of the income in Washington compared with the average in the nation's 25 largest cities. Here you will see that when we have computed these three major taxes and added them up and taken them as a percentage of the income, that the lowest tax area of the 25 cities is Houston, Texas and the highest tax burden in relation to income is Milwaukee.
You can see from the chart that the District at the lower income level is slightly below the average and then at the $15,000 income level exceeds the average of the 25 cities in the level of taxation. Again, at the $5,000 level Houston's taxation is 4.3 percent of the income to pay state and local taxes; again the District's is 6.8 percent of the $5,000 income level, Milwaukee's is 14.6 percent. Milwaukee at the $25,000 income level taxes 15.7 percent of the $25,000 in state and local taxes. The District taxes 9 percent of $25,000. The average is 8.1 percent. Houston's is 3 percent.
Mr. Chairman. I can discuss this in as much detail as you like. I thought it might be useful for the Committee to see where the District stands from a taxation comparative point of view within the metropolitan area and comparing the 25 largest cities with regard to the three major taxes that the individual pays, namely the property tax, sales tax, and income tax. We know that an individual also pays a cigarette tax if he smokes and an alcoholic beverage tax, but they are somewhat left up to his discretion as to whether or not he wants to pay the taxes by buying the product.
The three taxes we have used here (income, realty, and sales) are taxes everyone pays, and they represent the largest part of the state and local tax burden.