Evening star., 1940-03-17

basis of their gross receipts, no pro-
vision having been made in the
former legislation authorizing the
Commissioners to charge mill tax.
AS result the amount for which
the tax could be collected was fixed
at 13 cents in a modified provision
of the former bill. The combina-
ton sales-income tax plan however
was killed in the House and the
present troublesome tax on personal
incomes which reaches down into
the lower brackets was substituted.
To Meet One Objection.
The Bates proposal being drafted
by Mr. Seal is intended to meet one
objection to the present District per-
sonal income levy, in that it would
tax non-residents for incomes de-
rived in the National Capital, but
allow credit against the tax upon an
individual domiciled in the District
for taxes paid to State upon any
part of his income derived from
sources without the District.
Mr.. Bates, who with Representa-
tive Dirksen, Republican, of Illinois,
sponsored adoption of the present
personal income levy, asked the CO.
operation of Mr. Seal in drafting a
perfection of the present law, with
the idea of preserving this levy.
Fear that the present personal in
come levy of the District would be-
come discriminatory tax was voiced
by District officials after the United
States Court of Appeals for the Dis
trict ruled recently, in effect. in
action on a test of the Districts S
former intangible personal property
tax, that the tax could not be ap-
piled without regard to whether a
person residing here held legal resi-
dence in some State and paid the
State tax.
Seals Views on Changes.
After drafting the proposed in
come tax changes for Mr.. Bates,
Mr.. Seal said:
"If the District act were amended
with the above suggestions, the Dis
trict would be assured of tax upon
at least all income earned in the
District or derived from sources
therein.
In the case of most Government
employees it would make no differ
ence whether such individuals paid
the tax as residents or non-resi-
dents. Individuals domiciled in the
District would pay tax on their en-
tire income and would receive a
credit against such tax for the
amount of income tax payable by
him to any State or territory upon
any part of his income derived from
sources without the District.
Income tax laws of some States
allow a credit against the tax i'm
posed upon residents or persons
domiciled in such States of the
amount of income taxes which
would be paid to the District upon
income derived from sources within
the District. Income tax laws Of
the following States contain credit
provisions in various forms: New
York, North Carolina, South Caro-
lima, Virginia, West Virginia, Ala
bama, Georgia. Iowa, Kansas, Ken
lucky, Maryland, Missippi and New
Mexico"
Mr.. Seal said that if the changes
he had drafted for Mr.. Bates were
enacted into law, two additional
sections also should be added. He
said one of these should require
every person subject to the jurisdic-
ton of the District to report all pay
ments in excess of 81 900 made dur
ing the taxable year to any indi-
vidual. The other, he said, should
provide for the withholding of the
tax at the source in cases where
such withholding of the tax is nec-
eSSary to protect the District.