Evening star., 1937-04-18

This is the third of series of
Jour articles on the income tar,
Fridays article discussed some
OF the curious inequities and dis
examinations arising under the pro-
usions OF the bill eremptinQ Con-
gressmen and certain Federal Of
fctdls from that tar, ,phile leouino
other Federal officials subject to the
tar. Todays article discusses some
additional complications in COL
lection OF local income tar, re-
Sulting from conditions peculiar to
the District OF Columbia.
A TEMPTING to collect an in
~ come tax from non-residen
~ individuals and foreign" cor.
porations, located in Other
States, the new D. c. income tax bill
now before Congress, promises to rur
into veritable morass of difficulties
in administration.
Thousands of persons working II
the National Capital, but living ir
Maryland and Virginia, will be taxec
because their income is derived from
sources here in the District Of Co.
lumbia.
The problem of collecting this tax
from -non-residents is complicated
from an administrative point of view
by reciprocal credit provisions incor.
porated in both the D. c. bill and the
Virginia law. Maryland has no In
| come tax act, so Marylanders earning
their living here simply will have tc
pay the entire income tax to the Dis.
trict, plus what they pay in other
forms of taxation to Maryland.
Tax on Foreign Corporations.
Even more difficult to enforce, how
ever, according to experts, will bt the
complex provisions of the bill which
attempt to extract a tax from all for
eign" businesses and corporations
which own property here or which
transact any kind of profitable busi-
ness in the District, although their
principal headquarters and operations
are elsewhere. Efforts of many other
States to do this have resulted in
confusion and difficulty, leading tc
reversals in the Supreme Court of the
United States, forced amendment OF
State laws, disputes among tax col
lectors of the various States and, OF
course, double and triple taxation.
Designed to operate to the benefit
OF the taxpayer, both the District OF
Columbia bill and Virginia law have
credit provisions which uld prevent
both jurisdictions collecting their total
income tax. Should a taxpayer be
forced to pay District tax, q Vir-
glnia tax and Federal income tax a
perfect example would be established
OF triplicate taxation, against which
tax experts throughout the country
are now protesting. But even with
the reciprocal credit between the Dis
trlct OF Columbia and Virginia the tax
payer still is faced with duplicate tax
alton on his income by both Federal
and local tax collection agencies. The
District bill allows no credit for pay
ment OF Federal income taxes, allowed
by some States.
Try Reading It Aloud.
The system Of credit is complicated.
To obtain an idea of the apparent
complexity try reading and under
standing this:
whenever a nonresident taxpayer
OF the District of Columbia has be-
come liable to income tax to the State
where he resides upon his net income
for the taxable year, derived from
sources within the District of Colum-
bla and subject to taxation under this
act, the assessor shall credit the
amount OF income tax payable by him
under this act, with such proportion
OF the tax so payable by him, to the
state where he resides, as his income
subject to taxation under this act
bears to his entire income upon which
the tax so payable to such other State
was imposed, provided that such credit
shall be allowed only If the laws of
said State % grant a substantially
similar credit to residents of the Dis
tr1ct subject to income tax under such
laws, or CD impose a tax upon the
personal income Of its residents derived
from sources within the District and
exempt from taxation the personal in
comes OF residents of the District. No
credit shall be allowed against the
amount Of the tax on any income tax
able under this act which Is exempt
from taxation under the laws of such
other State"
Virginia has two kinds OF reciproc-
ity. First, it provides that residents
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 nom
residents subject to taxation In their
State OF residence on income earned
IN Virginia shall receive proportional
credit for taxes paid, provided the
State OF residence grants similar cred-
its to residents Of Virginia or exempts
from taxation the income Of residents
Of Virginia.
Reciprocity Provisions Confusing.
These reciprocity provisions present
the taxpayer who earns something in
the National Capital and lives in Vir-
ginia with whole flock Of questions
as complicated as the ones involving q
Federal income tax return.
One thing is cleared up for the vir-
ginian working in Washington. He
must make his return to the. Federal
Government in March. He must make
his return to the District of Columbia
before the last day of April, and he
must file his Virginia return by June
Ia month later. Thus If he has q
simple case, and earned al, his in