Evening star., 1939-03-28
D. G. Taxes
Continued From First Page.)

drafted the program under con-
sideration by this subcommittee.
But in the light of yesterdays de-
cision of the Supreme Court it seems
to me the question is definitely
settled whether one government can
tax the salaries of employees of an
other government. That certainly
puts very different face on the job
of this subcommittee.
1T appears to me that the $4,000
exemption in the income tax fea-
ture of the present program is no
longer necessary. The $4,000 ex-
emption was written into the pro-
gram to force a test of the legality
of an income tax.
The subcommittee now is faced
with a problem that don't make it's
job much easier. 1t is now known
the District can tax the salaries of
Federal employees. This confronts
us with practical situation. How
much will an income tax produce at
given rates, and how much it would
yield from Federal employees domi-
ciled in the District who have legal
residences in the States, and how
much of an offset will be allowed?
This furnishes somebody with a
sizable mathematical job.
The Supreme Court decision
changes the problem of the subcom-
mittee but doesn't lessen it any"
Dirksen Questions Sales Tax.
Representative Dirksen, Republi-
can, of Illinois, a subcommittee
member who twice championed an
income tax plan for the District,
only to have it rejected in the House,
Immediately questioned the neces-
sity of continuing a sales tax pro-
vision in the new tax plan.
That's debatable," said Chairman
Nichols. IF YOU want to broaden
the tax base it is debatable."
The subcommittee members then
engaged in a discussion of the effect
of an income tax on the salaries of
Federal employees who are domiciled
in Washington but who maintain
legal residence in the States with
Mr. Morgan and Herbert S. Wood, a
representative of the Citizens Com
mittee for Fair Taxation, who had
been called as the first witness.
Mr.. Wood said he saw no reason
why a Government employe domi-
ciled in the District throughout the
yea. but who has legal residence
in State. should not be required
to pay an income tax in the Dis
trict. He admitted the State in
which an employe maintained
legal residence also could tax his
income in Washington, but declared
this problem should be put up to
the States to avoid triple taxation.
The income should be taxed in the
jurisdiction in which it is earned.
he argued, and the credit should
come from the other side"
Mr.. Morgan also said if States
tax Federal employees on incomes
earned in Washington and the Dis
trict does the same, these workers
would be subject to triple taxation
on income-by the Federal. State
and District governments. He also
pointed out if the District permits
credits for income taxes paid the
States, the local income tax might
not raise sufficient revenues to keep
the municipal government out of the
red.
One Hearing Suggested.
Chairman Nichols said revisions
in the tax program would be made
by. the subcommittee in executive
session, and that perhaps one pun-
lie hearing would be held on The
altered plan.
He also warned that there is a
possibility that the widely con-
demned business privilege tax on
gross receipts, which is to automati-