Evening star. [volume] (Washington, D.C.) 1854-1972, 1937-04-15
Local Income Tax.

thirty-four) have adopted the local
income tax to increase their revenues,
the pressure has increased in recent
years for the levy of such a tax in the
District as a substitute for the intan-
gibles tax. 1t is proposed now as one Of
the new taxes. AS Objectionable as the
intangibles tax may be, there is danger
Of jumping from the frying pan into the
fire by substituting an income tax,
especially If the local income tax pro-
posal receives merely the superficial con-
sideration that it has so far been given.
The District intangibles tax has been
no slouch as revenue raiser, and its
potentialities In this respect have been
increased by the green slip provisions
OF the Federal income tax law. While
the income tax might produce more rev.
enue, the complications attending its
administration under the population
conditions peculiar to the District OF
Columbia may cut down the yield OF
what seems, at first glance, rich
source.
Some Of these complications will be
discussed in The Star articles beginning
today and continuing for several days,
which analyze the income tax proposal
and reveal the curious cases of dis
elimination and duplicate taxation
not to mention doubtful validity-which
are suggested by the bills provisions.
But todays article is concerned with
an equally important principle, which
Is the propriety of repeating in the
District of Columbia exactly that evil
which the Federal Government, through
its spokesman and agencies, has con-
demned in the States.
The whole pattern of taxation in
the United States is hodge podge of
duplicate, overlapping taxation, with
the Federal Government entering tax
fields hitherto reserved to the States
and with the States attempting to take
their cut from taxes in the past reserved
for the Federal Government. The in
come tax furnishes one of the glaring
examples Of the sort of injustice which
results from failure to coordinate the
taxing powers of the Federal and State
Governments. Many of the duplicate
tax evils which exist in the States
would be magnified and aggravated in
the District of Columbia, as The Star
articles of this series will show.
The Federal Government, as is gen.
orally known, has almost squeezed the
income tax dry. Only two sources of
new taxation, in fact, remain for the
Federal Government In case OF neces-
sity for substantial increases in revenue.
One source is the politically dangerous
broadening Of the base Of the income
tax reaching down into the lower in
come brackets. The other Is sales
tax the proposal of which at the outset
OF his administration Mortified" the
President. Although the public gener-
ally regards the Federal income tax as
a great source OF revenue, the total
personal income tax yield in the fiscal
year 1896 failed by over $300O00,000 to
produce the revenue received from liquor
a. tobacco taxes alone Even with the
higher rates now effective, personal in
come tax revenues will do no more than
equal tobacco and liquor taxes.
1t Is to be doubted If the people of the
United States would ever have sane
toned the income tax amendment had
they realized the tremendous increase
that would take place in the rates of
taxation. Surtaxes that did not exist on
incomes up to $4,000 in the first income
tax act after ratification of the amend
ment are now from four to fifteen per
cent. One per cent surtax rates have be-
come 80 per cent. Two per cent and three
per cent surtax rates have become 40
and So per cent, and six per cent sur
taxes, the highest in 1918, have become
rs per cent. The rates have moved
upward, and onward, and have perhaps
reached their limit in the upper brackets.
But local income tax if disappoint-
ing in Its original yield, would present
new worlds for tax-boosters to conquer.
Up would go the rates, and down would
go the exemptions. And the brake on
the tax-raising proclivities of Congress,
applied through the ballot box else
where, would not be present here Be-
fore leaping at an income tax as a
substitute form of taxation, taxpayers of
the District-though they have nothing
to say about it-would do well to look
carefully at the landing place.