Evening star., 1939-07-08
Costly Compromise

Inc house cOnIereeS on the DlStrlCt
tax bill demanded a stiff price for
their agreement to million and
half dollar increase in the Federal
payment.
In the first place, Senator Overton
was forced to give way on the Over
ton formula which provided a definite
measurement of the Federal pay
ment, freeing it from the capricious
methods by which it has been set in
the past, and giving new, statutory
recognition of the Federal obligation
in support of the National Capital.
In this respect the Overton formula
was of more fundamental Importance
to the welfare of Washington than
the temporary increase of $1,500000
in the Federal payment. although
this increase is demanded not only
on equitable grounds but by the
practical realities of the Districts
current fiscal condition. The only
comforting offset to this loss is the
recognized fact that the Overton
formula has steadily gained adher-
ents from every group which has
given it sympathetic or even disinter-
ested study. 1t is by no means a
dead issue. Senator Overton is as
determined as ever not to let it die.
The other element in the stiff price
dam oyoIoI fn,. ho
in the Federal payment is the dis
torted and unspeakably unjust YER
sion of local income tax on which
agreement has at last been reached
by the confereeS. The tax burden, in
dollars and cents, added by this in
come tax bill is not of great impor-
tance, especially when considered in
connection with the taxes for which
it has been substituted But the
policy of the bill, representing a
compromise that has. only expediency
to commend it, is vicious departure
from sound taxing principles and a
dangerous blow to the people of the
Washington community.
This income tax bill is not levied in
accordance with any ability to pay.
1t is levied in accordance with the
ability to dodge taxes. Because men,
bers of the House were unwilling to
pay local taxes themselves crude
spectacle of tax lodging as was
ever spread upon any record-and
because they could not gracefully
dodge taxes themselves without like
wise exempting others on the public
pay roll, the compromise has been to
exempt all who are not "domiciled"
within the District of Columbia, re-
gardless of the length of time they
reside here, receiving all benefits of
residence, and regardless of the
source of income.
The effect is to free from the local
tax obligation the thousands of per-
sons, in and out of governmental
service, who in reality are residents
of the Capital community but who,
maintaining legal or voting residence
elsewhere will not be "domiciled"
within the District of Columbia under
judicial definitions of the term.
There is larger proportion of such
persons in the District than in any
other American city. Those thus ex-
empt will continue to reside and earn
living in the District They will
continue to enjoy equally with tax
payers all the benefits of government
for which local taxes are levied. They
will be in Washington, but, for tax
paying purposes, they will not be of
Washington.
The implications of this unjust dis
elimination are indeed serious for
the Washington taxpayer. The Fed
eral Government is steadily decreas-
ing the area of taxable real estate by
its own purchases and improvements.
Increasing thousands of taxpayers
are leaving Washington to live in the
adjacent States, while remaining a
part of the local population of wage
| earners. The disposition by the
House is to cut down the Federal
payment and even to do away with it
altogether. And now this wholesale
exemption has been made in local
taxpayers, creating a condition with
out precedent in any other American
| tax Jurisdiction.
The President alluded yesterday to
the seriousness of a condition under
which the District government is
functioning without legal authority.
That condition is due to refusal of
the House to consider the Senate as
a coordinate branch of Congress.
Just as serious, to the people of the
District, are the accumulating results
of the blind failure by alien legisla-
tors to comprehend their constitu-
tional responsibilities in the develop
ment of the American Capital or
their equitable responsibilities to half
million voteless American citizens
of Washington.