Evening star., 1937-05-28
more. Exemptions amount to these
same figures with $400 additional de-


same figures with $500 additional de-
duction for each dependent In the Fed
eral schedule. The Federal normal
tax rate is 4 per cent on complete net
income. The Federal surtax is gradu-
ated, beginning at per cent on all net
income between $4,000 and So, 900, and
running up to q total Of IS per cent
for all over $5,00O.000. This makes
a grand total for the top bracket Of
79 per cent. The District OF Columbia
bill would start the District income tax
at per cent, and run up to S per cent
for all over $4,000.
The nearby State Of Virginia has a
State income tax. which contains
certain reciprocity provisions, allowing
certain credit for income taxes paid
in the District Of Columbia These
provisions would be helpful, since the
District bill also has somewhat similar
reciprocity. The adjacent State of
Maryland has no income tax act.
The reason why residents in nearby
States will be affected by the proposed
District income tax is that the new
tax here would be levied not only on
residents. but on all income earned
here in the District, either by indi-
viduals or corporations. The difficult
ties Of collecting such taxes from non-
residents are expected to lead to COM
plexities. One means provided for
getting at the income Of non-residents
who earn their pay here is that all
employers must report their pay rolls
to the Government.
Marylanders who earn their living
here simply will have to pay both q
Federal tax and the District tax. The
case Of Virginian earning most of all
Of his pay here Is more complex.
Designed to operate to the benefit
of the taxpayer both the District bill
and the Virginia law have credit pro-
visions which would prevent both
Jurisdictions collecting their total in
come tax.
Virginia has two kinds OF reci-
procity. First, it provides that resi-
dents of Virginia liable to income tax
in other States shall be credited with
amounts paid to such other States
on their Virginia returns. Secondly,
Virginia provides that non-residents
subject to taxation in their State of
residence on income earned in Vir-
ginia shall receive proportional credit
for taxes paid. provided the State of
residence grants similar credits to resi-
dents Of Virginia or exempts from
taxation the income of residents Of
Virginia
Foreign" Corporations.
Much more difficult to enforce,
however according to experts, will be
the complex provisions of the bill
which attempt to extract tax from
all foreign" corporations and busi-
nesses which own property here or
which transact any kind of profitable
business in the District, even though
their principal headquarters and
operations are elsewhere Efforts of
many other States to do this have re-
suited in confusion and difficulty,
leading to reversals in the Supreme
Court Of the United States, disputes
among tax collectors of the various
States, and, Of course, double and
triple taxation.
The constitutional objection to Con-
gress acting as State Legislature
and levying a tax on Federal en-
ployes has been advanced from sew
eral different sources. Corporation
Counsel Elwood Seal raised it re-
Gently in questioning the constitu-
tionality of District income tax.
Suppose for instance. he pointed out,
that tax should be contested in the
courts and collections have to be made
under protest, possibly impounded,
pending court decision. This would
deprive the District of needed reve-
nue.. Collections under such local
tax act would not begin to roll into
the Golfers for about another year
yet, anyhow, it has been pointed out,
and the District needs funds sooner
than that.
Another constitutional, but some
what similar, point made against the
income tax act is that the District
itself originally was carved out Of the
States of Virginia and Maryland,
whose residents, as Federal employees,