Evening star., 1934-12-09
Local Tax Proposals.

in the District press their proposals
in legislative form the purpose of
the changes or increases in taxation
should be made clear. No tax can
be justly levied unless it is urgently
demanded by existing conditions, and
the fact that citizens of Utah may
choose to tax their incomes as do the
citizens of some nineteen other States
does not represent a condition de-
manding the local taxation of incomes
in the District of Columbia or twenty
eight other States.
Senator King has informally re-
newed his proposals for local income
tax and local estate tax. The local
income tax is proposed as a substitute
for the existing tax on intangibles.
The estate tax. if patterned on the
majority of State inheritance or estate
taxes, would merely permit the Dis
trict of Columbia to collect a certain
percentage of the Federal estate tax
already collected here. If local
estate. tax were framed by a Congress
acting for the District as the State
Legislatures act for the States, mott
waited by similar sentiment, the tax
would not materially increase the
local tax burden, but would decrease
the amount now collected by the Ma
tional Government from this source.
The income tax is another thing,
and several factors must be con-
sidered in weighing its advantages.
If the local income tax-in addition
to the existing Federal income tax
is proposed merely as a substitute
form of tax for the intangibles tax,
there is no definite guarantee that
it would add materially to revenue
collections. 1t is demonstrable that
the collections from the intangibles
tax in the District are far more
efficiently made than in most of the
States. While there are many who
may escape the payment of the in
tangibles tax (Which in the current
fiscal year will yield about $4,000, ,0O0),
the ability of wealthy men to circum-
vent the income tax, through invest
ment in tax-exempt securities and
otherwise, has been so well demon
strated by the Senate's own inquiries
that it requires no further elabora-
tion here. And If the yield from
intangibles has fallen during the de-
cline Of market values, incomes have not
only fallen but some have been elimi-
mated entirely, as shown by the Fed
eral collections. There is, in addition
the fact that good horse can be
worked to death. The Federal Gov
ernment's dependence on income
taxes now, and the inescapable "pay
day" that will come with tax bur-
dens imposed by extraordinary New
Deal expenditures, should prevent
imposition of further local burdens
on an already heavily burdened
source of taxation.
II the purpose of the local in
come tax is to increase the local tax
burden, then the first consideration
relates to the adequacy of the exist
ing tax burden, a factor which the
President has chosen to determine for
himself. The adequacy of this local
tax burden is demonstrable, and has
been demonstrated in the past. It
can be demonstrated again.
IT Utah'S choice of State income
tax governs Senator Kings advocacy
of similar form of taxation for the
District, the District faces a dismal
outlook intaxation. For the Senators
from Mississippi, where the sales tax
has worked successfully, might want
that included in the local program
and West Virginia Senators would
doubtless favor imposing a strict max
imum limitation on direct property
taxes, with various forms of other
taxation as substitutes.
A recent Associated Press survey of
results in the States where the people
voted on taxation showed that three
States-Miehigan, washington and
Texas-decisively defeated income
taxes. And while there are twenty
States that levy income taxes COM
parable to the Federal levy, seventeen
Of the States in the past five years
have adopted the sales tax and now
depend on such tax for about $780,
100000 annually.
The question in the District is not
fundamentally one of local taxation,
but concerns chiefly the National
Governments willingness to meet its
own peculiar obligations in Capital
maintenance and development. When
that question is settled fairly and
satisfactorily, the logical next step
might become an examination OF the
local system of taxation to determine
whether substitute forms Of taxes are
more eollitable or more easily col.