VIRGINIA AND THE CITIES AND COUNTIES OF THE METROPOLITAN AREA-Continued COMPARATIVE TAX RATES OF SELECTED BUSINESS AND PERSONAL TAXES IN THE DISTRICT OF COLUMBIA, THE STATES OF MARYLAND AND INDIVIDUAL INCOME-Continued Married person living with husband or Single person, or married person not liv- Dependents, each $800. Local income taxes may be imposed at Increases or decreases must be incre- All of the 23 counties and Baltimore City Mr. BROYHILL. Mr. Chairman, I should like to ask Mr. Danzansky a question. First of all I want to commend you, Mr. Danzansky, and the Board of Trade, for an excellent statement as usual, and particularly for the constructive suggestions you made therein, but at the same time, I express my disappointment in the position of the Board of Trade regarding the proposed so-called reciprocal income tax. I say, "socalled", as I think that is a misnomer. The name of your organization is the Metropolitan Washington Board of Trade, so you have members from all over the Metropolitan area. I am wondering if your statement does truly reflect the attitude of all those members of the Board of Trade. Mr. DANZANSKY. Yes, sir. It was reported out by our committee on, I think, its taxation or experts. It was reported to the Board of Directors, and it was unanimously passed by the Board of Directors. We have some sixty-odd members on the Board who are truly representative of business in the entire Metropolitan Washington area. COMMUTER (RECIPROCAL) INCOME TAX Mr. BROYHILL. I can't conceive of business people in the suburbs supporting this reciprocal tax, and I can't imagine of their supporting an organization which advocates a reciprocal tax, because it would be counter-productive as far as the suburbs are concerned. We had representatives here from the State of Virginia yesterday as well as from the State of Maryland. It was pointed out that, in fiscal year 1971-1972, which is the first fiscal year that this proposed tax would effect, this tax would cost the Commonwealth of Virginia $35 million. Of course the District Government estimates $17 million. That is going to impose quite an economic burden on the Commonwealth of Virginia, so I can't conceive of business people in suburban Virginia supporting that proposeal, which is going to cost this amount of revenue in Virginia. I recognize, of course the problem within the District of Columbia, and the fact that they have to make up whatever deficit they may face. We always seek to raise revenue, but never look at the fact that there might be improvement in the efficiency of the D.C. government. They can do no wrong. But be that as it may, we have to close the gap one way or another and I am for closing that gap. in Since you represent a trade organization for the Metropolitan Washington area as well as the District of Columbia, I am quite disappointed at the position taken by the Washington Board of Trade in regard to this tax. I think you tend to take the same attitude as do newspapers and many others in this area. They think solely of the core right here in the District of Columbia, and I agree that this is where the greatest economic problem happens to be. But I just feel that we ought to start looking a little bit more to our mutual responsibilities to the total area, and not just to the core itself. Mr. DANZANSKY. I wouldn't have a bigger advocate of what you have just said, in looking at the total area. I think, Mr. Congressman, if you were to look at this in the same context that I intended it, and perhaps I did not make our position clear, I think you have to start with the premise that there are things going on in our community, our total Metropolitan community, that are tending to destroy the core and each other while we are doing it, because, as Polly Shackle ton said, and as I tried to say in my talk, if you do destroy this core, the apple is going to rotten too. What we are proposing is that before this thing mushrooms, before it grows, that we should put a moratorium on taxes in the District, and let's not encourage these businessmen to flee the District. Mr. BROYHILL. I agree. Mr. DANZANSKY. Let's not encourage our people to flee the District. There is nothing wrong with building up the suburbs. It is great. That is part of a great metropolitan community, but one should not profit at the expense of another. Mr. BROYHILL. I agree. Mr. DANZANSKY. Wonderful. I say that similar. Mr. BROYHILL. But the reciprocal tax is a step in that direction. Mr. DANZANSKY. That is possible. What we are saying and what we want to make abundantly clear is that we think while this study is being made of the total picture-this isn't one of the studies to which the Chairman referred that is going to take forever, this is a one-year thing, with the new Little Hoover Commission, with the Council of Government hopefully if they will assume this obligation, to unify the tax situation here, to put everybody on the same kind of level as far as taxes are concerned. Mr. BROYHILL. I agree with you. Mr. DANZANSKY. And meanwhile to let Congress-that is our first recommendation-give us that additional $51 million in Federal payment, just for this year while that study is being made. Mr. CABELL. I think that is a good stopping point right there. Mr. Danzansky, let me see if other Members have questions. Mr. Mikva, do you have questions to direct to Mr. Danzansky? SALES TAX Mr. MIKYA. I do. Mr. Danzansky, first of all thank you for your statement for which I must commend you. I realize that many of your members are operating against their self-interest in terms of a reciprocal tax and that is very commendable. Has your organization made any study of how much sales tax is paid by out of District res idents to the District as against how much sales tax is paid by District residents to Virginia and Maryland suburbs? Mr. DANZANSKY. I know of no such study, Mr. Mikva. If there is one, and if I can put my hands on it, I will be happy to get it into the record. Mr. MIKVA. I would appreciate that. Just judging by the retail trade figures, I suspect that the balance is very heavily in favor of the suburban areas, looking at the increase in growth in retail trade in the adjoining areas, and looking at the large and very convenient shopping centers that are being developed in the suburbs. The reason I am asking is that obviously many of the witnesses who came in opposition to the tax cited the payment of sales taxes by Virginia and Maryland residents as evidence that they were paying their share for the services that they in fact enjoy while they are earning their living here. I think the figures will not bear them out. If you can find such a study it, or if your organization could undertake one would be very helpful. Mr. DANZANSKY. We will be happy to check. Mr. MIKVA. Let me ask another question along the same line. Maybe this too would be something that we had better ask the District itself. I keep thinking that as businessmen you may have resources and access to some of this information that those in the District might not have. My own district includes city and suburbs and therefore I see both sides of this coin, many of my suburbanites who earn their living in Chicago end up paying quite a bit toward the support of the services in Chicago in a variety of ways. They pay sales taxes obviously, but in addition, they pay a State income tax, and a portion of the real estate tax that they pay goes for city services. For instance, we have a county welfare department, so since most of the welfare recipients are in the city, the suburbanites pay a portion of that cost through their county real estate taxes. They pay for various kinds of law enforcement activities that are done on a countywide basis. Is there any kind of a study that would show how Washington gets shortchanged here in that respect? In other words, the diminution of tax effort that goes to the District because in the case of people who live in Maryland and Virginia any taxes they pay in Maryland or Virginia go solely for Maryland or Virginia services. Mr. DANZANSKY. Just the broad, overall picture of services, and the fact that we can't pay for them. I don't know of any specific study, Mr. Congressman. As you know, this is one of the problems of the District of Columbia. I promise you that Mr. Broyhill and his constituents, and Mr. Hogan and Mr. Gude and their constituents, have more in common with the District of Columbia than they do respectfully with Richmond or Annapolis. Until we have this realization that this in fact is one metropolitan community-and frankly I couldn't care less, as a native Washingtonian, whether the people of the District of Columbia worked in Prince Georges County or in Virginia or in Maryland. It wouldn't matter. It doesn't matter whether industry is out there and Washington becomes a bedroom as far as I am concerned. All we are concerned with is the total economic viability of all of our people, and we want our services paid for. We think the Federal Government has a tremendous responsibility. Mr. MIKVA. I don't want us to shirk that responsibility, but I would guess, for example, and it is merely a guess, that perhaps as much as a third of every tax dollar that my suburbanites or that other suburbanites in Illinois pay goes to support services directly related to the City of Chicago, welfare, police, and others that we talk about. Mr. CABELL. The time is up. Mr. MIKVA. I would guess here that would not be so. It would be only sales tax, is that right? Mr. DANZANSKY. Yes, sir. DISTRICT BENEFITS FROM COMMUTERS Mr. CABELL. Time is up, but I have something here that I think follows your line of questioning. Mr. Danzansky, in testimony given yesterday by Mr. Louis Goldstein, Comptroller of the Treasury for the State of Maryland, and I quote this paragraph from his statement: "In this connection the Maryland Division of Economic Development, at our request, made a detailed analysis of the effect on the economy of the District of the activities of Maryland residents who work there. This analysis indicated that approximately $160 million is spent in the District by our resident workers." Would you care to comment on that? Mr. DANZANSKY. I am glad to hear it and I have a great deal of respect for Mr. Goldstein, and I am not questioning his figures. I think what this points up. I don't think there ought to be a study made by the District of Columbia budget people, by the Maryland economic people or by the Virginia economic people, each of whom, as you know, have different approaches as commissions to problems, each of which may have blinkers on as far as their own constituencies are concerned. RECOMMENDATIONS I think that the study should be a general study. I think it should be made by the Council of Governments. I think it should be made by the Little Hoover Commission. We are not operating for this reciprocal tax. We are operating for it as a substitute for Federal payment because we don't know of any other way to do it, except to tax the citizens of the District of Columbia further, and encourage them to leave the District, and remove whatever viable economic tax base we have left. I just wanted to get it in the proper perspective. We say, A, Federal payment, B, reciprocal tax, and over the entire thing we ask for this committee study. I would hope that you would not accept as gospel-and I know you did ask for comments on it so you obviously aren't a Maryland economic development study or a Virginia one or a Board of Trade one or a District of Columbia one. I would like to see a study made by constituted agencies, such as the Little Hoover Commission and the Council of Governments. Mr. CABELL. If I may paraphrase your statement then, would it be appropriate to say that in your opinion these surveys and analyses should not be made by private, interested parties, because they are apt to be loaded? Mr. DANZANSKY. I wouldn't say "apt". It is more likely that they would be loaded. Mr. CABELL. Mr. Link, did you have a question you would like to direct to Mr. Danzansky while he is on the hot seat? Mr. LINK. Yesterday I raised the question and asked the people from Maryland here if they would consider annexing the City of Washington to the State, and we didn't have time to go into that. You indicated that there is a great common bond of interest in this Metropolitan area that extended over a wide area, including I would take it, from your observation, parts of two States. Do you think that that could be part of the answer for this large community here, and establishing either Statehood or annexing it to one of the States or both States? Mr. DANZANSKY. I don't think it would solve this specific problem, no, sir. I think we ought to deal with the political reality of the District of Columbia, and we ought to deal with the communication reality of the fact that we are related to each other, we in Virginia, we in Maryland, and we in the District of Columbia, and if we don't do it to |