Evening star., 1940-03-26
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even to consider the proposed local
sales-income tax will not become
apparent until the District appro-
priation bill is reported out later in
the week, it is clear enough that the
National Capital has been placed in
a most unenviable position.
Since yesterdays vote virtually
kills the sales-income tax bill for
this session, it appears that only
four courses remain open.
An effort might be made to amend
the present local income tax to
avoid the destructive effects of the
recent Court of Appeals decision in
the Sweeney case. Such an effort,
however, is certain to be inequitable
and inadequate as a revenue pro-
ducer unless the members of Con-
gress are willing to tax themselves
and their voting constituents in the
District-and that is so highly i'm
probable as to be virtually out of
the question.
A second course is to increase
the lump sum, at least to the
point where the threatened deficit
resulting from failure by the House
even to consider new tax legislation
will be avoided Senator Overton
said earlier in the session that he
would not, for this year, attempt to
have his proposed formula for fixing
the Federal payment adopted. But
that was before the breakdown in
District tax revenues, resulting in
part from an inequitable and un-
workable local income tax law and
in part from the recent Court of
Appeals decision, which practically
eliminates a substantial section of
potential local income taxpayers.
To the tax disabilities of the Dis
trict on which Senator Overtons S
formula for fixing the Federal pay
ment was based, there is added, now,
a new one. To the increasing amount
OF real property withdrawn from the
tax list by Government purchase and
exemption, there is added an increas-
ing number of tax-exempt individ-
uals, living in the community and
enjoying its benefits, yet contributing
nothing in direct taxes to its support.
This condition, already serious,
promises to become more so. The
deliberate refusal of the House to
consider tax bill which would, even
IN small degree, tax present non-
taxpaying residents of the District,
adds another and a most compelling
reason why the Federal payment
should in equity be increased. The
Overton formula is needed now more
than ever before. from the stand
point OF simple equity and from the
standpoint of meeting the minimum
needs of the Capital
As third choice, the appropria-
ton bill might be trimmed to stay
within available revenue, but it is
certain that such action would seri-
ously cripple essential municipal
functions in the Capital. If suffl-
ciently drastic cuts are made it is
highly probable that the relief and
public welfare items will suffer, and
that would not be without it's irony,
for the most vociferous opponents of
a revenue-producing sales tax have
been among the most ardent cham
pions of increases in these items.
The fourth possibility is that the
real estate tax rate will be increased.
In fact, under existing law, it is GER
tain that the rate will be increased
at the beginning of the fiscal year if
a deficit is in sight. Recourse to this
device, however, would work an un-
considerable injustice to District
property owners, whose taxes already
are relatively too high. An increase
in the already high real estate tax
would hit hardest those 'least able
to pay'-those whose situation was
pleaded by the opponents of the sales
tax. Those who escape the direct
tax on property will feel it none the
less, for it is quite apt to be passed
on in the form of rent increases.
True friends of the District-those
who are realistically interested in its
welfare-can only contemplate with
deep regret the refusal of the House
even to consider the Nichols bill, or
to texamine the situation which led
to its introduction. It's provisions
are essentially the same as those
recommended in the Pond report
after long and careful study of the
local problem. This report included
sales tax, not because of any par
ticular fondness for it, but because
1t appeared to constitute the only
feasible means of raising the revenue
which the District so urgently needs.
But now that Congress, in effect, has
discarded the Nichols version of this
plan without even examining 1t the
whole problem once again is tossed
back in the lap of the legislature.