Evening star., 1937-06-13
analysis Of District Tax Program Reach House Tomorrow

ton shall have been assessed under this title
only corresponding part of the dividends or
income received therefrom shall be deducted"
THIS presents Local aas owners Of stock in some
business here in the District with one Of the
most impossible problems ever presented to an
income taxpayer. How will he know what part
Of the big corporations income has been taxed
for its operations here In the District? No pro-
vision is made In the bill to help him solve this
problem.
District act has departed from the procedure
followed by the Federal Government in levying
income taxes, so that administrative officials
will not be able to follow the precedents set up
istration of tax law.
Inheritance and Estate Taxes.
Estimate Of Yield:
Committee-$800 900.
Method and Rate Of Tax:
The inheritance tax is levied on what is
received-1 per cent on value over IS 600
received by father, mother, husband, wife,
children or lineal descendants or lineal ances-
tors; per cent on value over $4,000 going to
brothers, sisters, nephews and nieces; S per
cent on value over $1,000 to grandnephews,
grandnieces and other persons, firms and cor
porations, except property transferred to public
charitable, educational or religious purposes
which Is exempt.
The estate tax, entirely different from the
inheritance tax, is levied generally on what
passes from the decadent and is designed to
bring into District revenues the 80 per cent of
Federal estate taxes based on 1925 act allowed
as credit
Comment:
Originally Incorporated into one bill, known
as an estate tax. these proposals have been
divided into two different measures, first an
inheritance tax, and second an estate tax
There is wide difference, not generally
recognized between these two different kinds
of death taxes. Generally speaking the estate
tax is considered much more fair. easier to
administer and quicker to collect
Throughout there has been no objection to
the estate tax, which would add no new bur-
dens on the District of Columbia, but would
obtain substantial income from tax which
now goes entirely to the Federal Government.
The inheritance tax, as drawn. is consid-
cred by experts to be badly drawn full of loop
holes, and so different from the Federal estate
tax and the revised Maryland and pending
Virginia inheritance taxes that administrators
Of estates in this city are expected to be faced
with some Of the worst snarls in tax procedure
ever preciptated on the community. Large
estates in this city often include property in
nearby Maryland and Virginia. This compli-
fact that the courts here in the past have
interpreted certain District law on the basis
OF the Maryland law, which prevailed for the
community when large part OF Maryland was
ceded to the District of Columbia.
Inheritance Tax Hits Small Estates.
The inheritance tax in the first place
reaches deep down into the small estates with
exemptions of only $4,000, $4,000 and $1,000,
fciaries. 1t virtually strikes at widows and
orphans" in the opinion Of some experts. The
rates, however, are not graduated. and are
relatively low, !, and per cent. The bill
is expected to yield but small return relatively
speaking, in comparison to the need of the
District and the blow it strikes at the small
estates.
In proposing that death taxes here should
be confined to the estate tax itself with it's 80
per cent credit from the 1926 Federal estate
tax base, experts here point out that the pro-
posed inheritance tax is so full Of loophoes
that alert administrators and executors prob
ably will avoid it anyway.
For instance, provisions in the inheritance
tax designed to catch transfers made by a man
during his lifetime, made or intended to take
effect In possession after DEATH are said to
be so weak that any expert could avoid virtually
all inheritance taxes
So fine can the law be drawn in effective
ness OF inheritance taxes, especially In bill
drafted such as this one, that one expert char
acterized "taxabity" under the bill as depend
ing on the difference between "tweedledum and
tWeedledee"
One difficulty Of an inheritance tax is the
delay in collection. Some wills are SO drawn
that distribution will not take place for years,
through complications and delays.
Levies Could Be Escaped
Apparently there is no interstate reciproc-
ity provision in either the inheritance or estate
tax bills. Without such reciprocity provision
there would be no legal means to prevent a
wealthy person taking all his securities out of
bank here in Washington and transferring
them to Alexandria, Va. Thus he could escape
death taxes from both the District and Vir-
gnia Neither could catch him, under the bill
as now written.
Estimates on the revenues expected from
inheritance taxes here are indefinite beyond
the general figure from the District Committee,
that both the inheritance and estate tax may
bring in about 100000.
Estimates on inheritance or estate taxes
are more or less guess, however, because of
the fact that in some years richer people die
than In other years. Past experience in the
District however gives some indication,
through the Federal estate tax figures
For the calendar year 1885 figures from the
Bureau OF Internal Revenue show that total
estate taxes due on returns filed were 81 $40, =
OO0 But the tax computed on the 1926 base
was only SSH 900, of which the 80 per cent
credit would have been $408 900, which could
have been collected by the District under a
simple estate tax act.
There is one serious omission in the estate
tax bill, section 10. That section fails to give
credit IN the 80 per cent tax levied on estates
here in the District, for the new inheritance
taxes proposed In another section of the omni-
bus bill. There seems to be no doubt that the
new inheritance taxes should be credited as
part of the 80 per cent to lessen the extra
amount due under this estate tax. But the
language now reads that credit shall be given
to ANY estate, Inheritance legacy, or success
sion tax lawfully imposed by any State or Ter
ritory of the United States, but leaves out
altogether the District of Columbia.
Two general provisions, listed as sections
rs and 26 OF the inheritance and estate tax