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ANTIPROFITEERING RENT BILL
SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA
UNITED STATES SENATE
ON THE BILL
H. R. 9248
A BILL TO PREVENT EXTORTION, TO IMPOSE TAXES UPON
AND FOR OTHER PURPOSES
MARCH 26, 27, 28, AND APRIL 5, 1918
COMMITTEE ON THE DISTRICT OF COLUMBIA.
JOHN WALTER SMITH, Maryland, Chairman. ATLEE POMERENE, Ohio.
WILLIAM P. DILLINGHAM, Vermont. HENRY F. HOLLIS, New Hampshire.
WESLEY L. JONES, Washington. WILLARD SAULSBURY, Delaware.
WILLIAM S. KENYON, Iowa. THOMAS S. MARTIN, Virginia.
LAWRENCE Y. SHERMAN, Illinois. JAMES D. PHELAN, California.
WILLIAM M. CALDER, New York. JAMES K. VARDAMAN, Mississippi.
HARRY S. NEW, Indiana. WILLIAM H. KING, Utah.
CLARENCE M. TAYLOR, Clerk.
SUBCOMMITTEE ON H. R. 9248.
Mr. POMERENE, Chairman.
ANTIPROFITEERING RENT BILL.
TUESDAY, MARCH 26, 1918.
UNITED STATES SENATE,
Washington, D. C. The subcommittee met at 10 o'clock a. m., pursuant to call of the chairman, in the committee room, Capitol, Senator Atlee Pomerene presiding.
Present, Senators Pomerene (chairman), Hollis, Dillingham, and Sherman.
The subcommittee had under consideration the bill (H. R. 9248) to prevent extortion, to impose taxes upon certain incomes in the District of Columbia, and for other purposes, which is as follows:
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the term “real estate" as herein used shall be construed to include lands, buildings, parts of buildings, hotels, houses, dwellings, apartments, rooms, suites of rooms, and every other improvement or structure whatsoever on land situated and being in the District of Columbia.
The word “person” when used in this act shall be construed to include individuals, partnerships, joint-stock companies, associations, corporations, societies or bodies corporate.
Any word in this act importing the masculine gender shall be construed to extend and be applicable to females or artificial persons or bodies.
The term “incomes from real estate” as herein used shall be construed to include all amounts received for the daily, weekly, monthly, or yearly use or occupancy of real estate or for any part of any of such periods of time.
Sec. 2. That, in addition to other taxes imposed by law, there is hereby levied and shall be assessed, collected, and paid to the District of Columbia an annual tax of one hundred per centum upon so much of the income from real estate of every person, whether resident or nonresident of said District, received from and after April first, nineteen hundred and eighteen, as exceeds the deductions herein allowed. For the purpose of ascertaining the amount of income subject to said tax, there shall be deducted from the gross income reported as herein provided so much thereof as equals the average amount charged for the use and occupancy of the same property for the same or a corresponding number of days, weeks, months, or year, or for any part of any of such periods of time, in, of, or during the twelve months immediately preceding September thirtieth, nineteen hundred and sixteen, plus ten per centum thereof additional except in cases where the property was rented or leased “furnished" during the period before September thirtieth, nineteen hundred and sixteen, entering into the computation, and is rented "unfurnished” during the taxable period, in which cases the said additional deduction shall not be allowed.
If no such income was charged or received during said period of twelve months, then the deduction from such gross income of each ta sabie year shall be an amount equal to ten per centum of the value of the property, including furniture, if any, producing the income as determined by the assessor of the District of Columbia for the purposes of this act, and at the same rate for any greater or less period of time: Provided, however, That in cases of such last-named property where the landlord furnishes heat, light, or elevator service, an additional deduction of an amount equal to the actual cost to the landlord of the heat, light, and elevator service so furnished shall be allowed.
In cases where the property was rented “unfurnished” for the period before September thirtieth, nineteen hundred and sixteen, used in the said computation, and is
rented "furnished” during the taxable period, then the additional deduction from such gross income shall be increased by fifteen per centum of the value of the fur-' nishings.
If the real estate producing the income has been materially improved since September thirtieth, nineteen hundred and sixteen, there shall be an additional deduction from such gross income of an amount equal to ten per centum of the actual cost of such improvements: Provided, That no such deduction shall be allowed for the cost of repairs made necessary or desirable by the ordinary wear and tear of rented or leased property.
No other exemption or deduction from such gross income shall be allowed. It is the intent and purpose of this act to tax at the rate herein fixed so much of every income from real estate as exceeds the deductions specifically authorized by this section.
In cases where a charge is made for the use of real estate furnished or unfurnished, and for food, meals, or board, it shall be the duty of the assessor of the District of Columbia to ascertain what proportion of the total increase in the charge for the combined accommodations furnished to any person is due to the increased cost of materials and labor utilized in furnishing such accommodations, and the remainder of the increase in the charge made to any person for the combined accommodations furnished him shall be regarded, for the purposes of this act, as increase in the income from the real estate used by such person.
Sec. 3. That, on or before the tenth of July, nineteen hundred and eighteen, a true and accurate return under oath shall be made by each “person” subject to said tax, or his authorized agent, to the assessor of the District of Columbia, setting forth specifically the gross amount of such income from all separate sources accrued during the period from April first, nineteen hundred and eighteen, to June thirtieth, nineteen hundred and eighteen, and the deductions to which he may be entitled under this act; and the said taxes thereon, computed as provided in section two, shall become due and collectible on or before September first, nineteen hundred and eighteen. And on or before the tenth of August, nineteen hundred and eighteen, and of each and every month thereafter a true and accurate return under oath shall be made by each person subject to said tax, or by “his" authorized agent, to the said assessor, setting forth specifically the gross amount of such income from all separate sources accrued during the next preceding month, together with a statement of such deductions. If any person subject to said tax fails to make any such return at the time herein fixed, or makes, willfully or otherwise, a false or fraudulent return, the assessor of the District of Columbia shall make the return from his own knowledge or from such information as he can obtain through testimony or by any other means; and the return so made shall be sufficient for all purposes of this act. To the amount of the tax due upon all returns 80 made by the assessor there shall be added a penalty of fifty per centum of the tax: but when it shall appear that the failure to file the return or the making of a false return was due to an unavoidable or excusable cause, the said penalty may be abated by the Commissioners of the District of Columbia. It shall be the duty of said Commissioners to prepare and furnish to each taxpayer making application therefor printed forms on which such returns shall be made. The tax and penalties which are assessed, levied, and made payable by any of the provisions of this act are hereby made a superior lien on the property, both real and personal, from the use or occupany of which the taxable income has been derived: Provided, however, That the said entire personal property, without any exemption whatever, shall be exhausted before the real estate is proceeded against for either taxes or penalties. The said taxes and penalties shall be assessed by the same officers, at the same time except as herein otherwise provided, and by similar proceedings as are other taxes on real and personal property in said District.
Sec. 4. That if any person or agent subject to said tax fails to file his return as and when herein required, or offers to file a return which, in the opinion of said assessor, is erroneous, false or fraudulent, the said assessor shall be empowered to examine the books, papers and accounts of such person, and to summon him or any other person having possession, custody or care of books, papers and accounts relating to the business or income of such person, or the lessee, or any other person, to appear before him and produce such books, papers and accounts at a time and place named in the summons, and to give testimony and to answer interrogatories under oath respecting any subject relating to the said income or the return thereof.
Sec. 5. That all leases, contracts, and agreements, expressed or implied, providing for the payment of any larger amount of money, or at a higher rate, than that fixed by the deductions herein allowed, for the use or occupancy of any "real estate," are hereby declared to be contrary to public policy and unenforcible; and any person who shall hereafter pay for the use or occupancy of any "real estate" anv amount of money, or at a rate, exceeding that fixed by such deductions, may sue therefor in the Munici. pal Court or in the Supreme Court of the District of Columbia, without regard to the amount in controversy, and in such action shall be entitled to recover of the person receiving such excess, or his agent in the transaction, double the amount thereof and the costs of suit, including a reasonable attorney's fee of not less than $50; but no such action shall be instituted more than five years after the termination of the lease or other agreement under which such payments were made.
SEC. 6. That the provisions of this act shall not apply to any income from real estate, the amount of which was fixed by lease, contract, or agreement made before October first, nineteen hundred and sixteen, and which was not subsequently increased except as stipulated in such lease, contract, or agreement.
Sec. 7. That the Commissioners of the District of Columbia are hereby authorized and directed to make all reasonable and needed rules and regulations for the enforcement of this act.
Sec. 8. That if any clause, sentence paragraph or part of this act shall for any reason be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, or part thereof directly involved in the controversy in which such judgment shall have been rendered.
Sec. 9. That this act shall remain in force until one year after a treaty of peace between the Imperial German Government and the Government of the United States of America shall have been concluded.
Senator POMERENE. How many of those present desire to be heard ? (A number of the gentlemen present held up their hands.) Senator POMERINE. What organizations are represented here?
Mr. CHARLES W. FAIRFAX. I represent the Real Estate Brokers' Association.
Mr. GEORGE R. LINKINS. I represent the Board of Trade.
Mr. CHARLES S. SHREVE. I represent the Federation of Citizens' Associations.
Senator POMERENE. Does any one represent the hotel association ?
Mr. IRVING O. Ball. The hotel association representative, Mr. Hight, has not arrived yet.
Senator POMERENE. Is there any one here representing those who are seeking relief under this legislation ?
Mr. H. J. BROWN. I am.
Senator POMERENE. I think we will proceed. Mr. Fairfax, we will hear you first.
STATEMENT OF CHARLES W. FAIRFAX, ESQ. Mr. FAIRFAX. Mr. Chairman and members of the committee. I want to express the thanks of the Real Estate Brokers' Association to you gentlemen for your courtesy in affording us the privilege of this hearing in connection with the consideration of the bill known as H. R. 9248.
We wish to protest against the principle involved and the provisions outlined in this bill. Legislation providing for a horizontal percentage of increase in rentals is price fixing that is unfair either to tenants or to landlords. No one can contemplate the extraordinary increase in the cost of materials, labor, fuel, supplies, service, and other expenses required in the maintenance of all classes of buildings and furnishings during the period of the war without realizing that realizing private capital will not seek employment for building operations when the income is so limited as to make the investment unprofitable. This will retard the expansion of your National Capital. and will force the Government to build all the needed space required for its departments and employees. Numerous plans for building projects are pending, awaiting the final decision of Congress concerning this legislation.