Evening star., 1939-01-20
Speedy Action Seen
To Bar Retroactive
Tax Collections
But Less Hoste Is Eviden,
On Ending Immunity Of
U. 5. and Stote Salaries
BY JOHN C. HENRY.

BY JOHN G. HENRY.
Speedy congressional action on
legislation to check the Treasury
Department from making retroac-
tive collections of taxes on salaries
or securities of State agencies was
in prospect today, but noticeably
less haste was evident on the ques-
ton of statutory authorization fol
reciprocal taxation of salaries ano
securities of Federal, State and loca.
governments.
Warning that the Treasury would
make such collection efforts if nc
action is forthcoming by March Is
President Roosevelt yesterday called
for legislative termination of the
tax immunities heretofore granted
private income from public sources
The promise of speed on prevent
ing retroactive Federal collections
from certain groups, as apparently
are justifiable under recent rulings
of the Supreme Court, came from
Chairman Doughton of the House
Ways and Means Committee, who
said legislation will be on its way
well before the March Is deadline.
Immunities to Be Studied.
However, more thorough and pro-
tracted study of the proposal for
sweeping away all immunities would
be undertaken, he said, adding that
there may be some discussion of it
when the committee meets on other
matters today.
In the Senate, special commit
tee created to study the problem is
In recess until February Z, when it
will hear opponents of the idea
Government experts supporting the
plan testified on Wednesday.
With the committee not expected
to report its conclusions before
March /, as directed, little margin
Of time exists before the March
IS deadline.
e Chairman Harrison of the Senate
Finance Committee said his group
probably will await the report of the
special committee before consider
ing the problem.
VI Deep interest.
Likelihood that the legislation will
be adopted eventually, however is
of deep interest to the approximately
100000 Federal employees now work
ing in Washington and to some
146.000 others employed outside the
District.
For instance, those working here
but living in Maryland or Virginia
would be taxed on their income not
only by the Federal Government, buI
by whichever of the States is theil
home. Both Maryland and Virginia
have State income tax laws
In addition, many of these MAIN
tain voting residence in other States
which might lead to further claims
OF tax liability against their salaries
For Government employees who
both work and live in the District
athe Federal tax might be supple
~mented by an eventual District in
~come tax and an assessment BY
States where they may claim voting
residence.
Subject to State Laws.
The 746 900 Government worker.
outside the District would be subject
to whatever State laws are in effec
where they reside. In this connec.
tlon, about 30 States now have in
come tax laws, with others consider.
Eng their enactment.
aaA AS for new Federal income from
taxing State and local employees
sfhe Treasury Department estimate
ssthat. about 100000 are earning
sufficient salary to become liable
The yield from this group is esti
mated at about S16,O0O,0OO.
Because of the variations in rate
now in effect or contemplated BY
the States no accurate estimate ha
been made of how much would bt
collected from Federal employees.
AS for the taXability of income
from public securities, the Treasury
Department estimates that there are
about sos 600, 0,000000 in partial OF
wholly exempt Federal, State anc
local securities outstanding. Of thi!
total, $46000,000,000 are Fedora
issues with the remainder being
State and local.
19 Billion Held by Individuals.
OF this total, also, the $4,000, ,OOO,-
600 State and local are wholly ex.
empt as are some $1,000 100000 o1
the Federal issue. The remaining
$26 000,000,000 in Federal bonds are
exempt only from normal taxes bu
net the surtaXes.
And of most personal interest il
any plan to tax the income from
such securities is the fact that abou
$19,000,000, are held by individual
investors as compared to institutions
and Government agency holders.
Although the pending proposal i.
for taxation of future issues only
the citation of this quantity of pub
lie: securities outstanding serves tt
give a measure of tendencies to in
vest in such directions rather thar
in corporate issues.