Evening star., 1937-03-30
Proposal Prompts Questions
at Hearing on Yield and
Application.


Jacobs in his fiscal relations report as
one OF the potential sources Of revenue
to be tapped to offset the huge deficit
that would confront the District if the
three-point formula is approved by
Congress. Other potential sources
were recommended, too, notably an
inheritance tax, an increase in the
gasoline tax, weight tax on automo-
biles and higher or better distributed
business taxes, but the discussion Gen.
tered chiefly around the income tax
because of its wide ramifications.
Collins Raises Question.
Chairman Collins himself injected
the question into the discussion when
he asked: who would pay the In
come tax?"
McAneny, didn't know the answer.
That, he said, "is a question to be
determined
The reason asked the question, ="
Collins declared, ''ts because while I
have always favored an income tax for
the District, it has been suggested to
me that it would not raise as much
taxes us the Intangible tax because
most of the income in the District
comes from Government employees who
would be exempt from the payment of
those taxes"
But McAneny reasoned. if the tas
is applied to Federal employees as vel
as those in private employment il
would produce, at a rate of 3 pe,
cent, between $4,000, 900 and 50 600, DOT
year.
Representative Kennedy, Democrat
OF Maryland pointed out, however
that many Federal employees who
work in Washington live in Virginia
or Maryland, and that while Virginia
has an income tax it is forbidden by
law to tax the income Of Govern
ment workers
McAneny argued that "the Gov
ernment has the right, clearly, to
impose taxes on its workers, if 1t
chooses to do so.'
States Rights Enter.
That would mean a corresponding
right that must be given to the
States" declared Collins.
Perhaps morally So said Nc
Aneny. "but there would not be any
legal obligation"
That would be the result" replied
Collins.
That the States are forbidden to
do, to assess an income tax on Fed
eral employees" continued McAneny
The States replied Collins,
would not relinquish that right to
the District of Columbia"
L presume" McAneny declared
there would be some caustic discus
sion in other places"
so, after ALL" Collins said, you
do not know how much revenue would
come from an income tax?"
Mo- he answered.
George Lord, Detroit tax expert,
who assisted the special Mapes Com
mittee Of the House with its fiscal
relations investigation some years
ago, told the subcommittee the net
amount OF income that would be
subject to taxation from Federal
employees would be "a negligible guam
tlty compared with the total revenue
derived from an income tax in the
District"
Il do not know just what the
average salaries and wages of the
employees is at this time, excepting, of
course, that Of the executive officers
OF the Government, he said. How
ever, dare say, it will not average
more than $1,7oo or $1,000 a year"
Would Exempt Non-Residents.
In imposing the income tax. Lord
said he would exempt non-residents
who pay an income tax in the State
"in which they have their legal
domicile."
Representative Engel, Republican,
of Michigan asked if the District
could levy an income tax on a person
who is not resident.
I'm reference to the question OF resi-
dence," said Lord Il think there is
misconception about that. If you
have followed the courts on that ques-
ton, as undoubtedly you have, you
will remember that the courts have
been a little ticklish about saying to
a man who lives In one place the year
round and votes in another that his
legal residence is where he votes"
That is not the class I am talking
about" declared Engel For instance,
here is a man who is working, we will
say, in the Department Of Justice:
He lives in Virginia. He comes to
town across the bridge every day.
That is his home; he votes there. He
drives back there every night. You
could not reach him, could you?"
Thomas F. Murphy, assistant con-
troller of the Farm Credit Administra-
ton. who formerly was assistant chief
of the old United States Bureau of
Efficiency, answered the question:
I'VE drafted bill which had a pro-
vision in it that tax would be levied
on incomes derived in Washington
and that resident Of Maryland or
Virginia would be entitled to credit
for the tax he paid, in the State in
which it was paid"