Evening star., 1941-03-25
Fiscal Dilemma


It is an interesting coincidence
that the Senate, by unanimous vote,
should have approved the Overton
plan. which sets up a fair and prac-
ticable measurement of the Federal
Governments fiscal obligation to the
District, on the same day that the
United States Court of Appeals was
invalidating the local income tax law
as an equitable revenue measure.
But the relationship between the
two begins and ends with the time
element involved The OvertOn plan,
which now has the approval Of the
entire membership of the Senate,
frankly reiterateS the national Obli-
CATION to contribute to the upkeep
and maintenance of the Federal City,
and then proposes a fair and work
able method Of annually measuring
that Federal obligation. In con-
tradistinction, the questions involved
in the appellate courts ruling on the
local income tax law are concerned
with ways and means of enabling
the District to raise its share of
revenue needed for the maintenance
of the Capital City. Congress- it is
true, has a definite responsibility in
both instances, but the responsibility
in each case is distinct and should
not be confused
Il u
the Senate, proposes no new recogni-
ton of Federal responsibility On
the contrary in proposing, after GER
tain deductions, that the Federal
payment to the District be based on
the ratio of Federal tax-exempt
acreage to the total land area of the
District, the Overton plan merely
advances an equitable and feasible
means of working out an obligation
which has been recognized in one
form or another for many years.
From 1873 to 1924 Congress adhered
to definite proportional principle,
beginning on a $3.50 basis and later
being reduced to 60 per cent for the
District and 40 per cent for the Fed
eral Government. Beginning in 1925,
however, the lump-sum principle was
adopted, with the result that the
fiscal relations question has been a
continuing subject of controversy.
It is estimated that the Overton plan,
If put into effect at this time, would
result in increasing the Federal pay
ment from the present S6,000,000
figure to about s9,39OOOO. There is
no valid argument which can be
made against either the increase or
the method, and it is to be hoped
that the House at this time will
consider the proposal from the stand
point Of its merits rather than on the
basis of individual prejudiceS.
In striking down the local income
tax law so far as persons claiming
legal residence in the States are con-
cerned, the Court of Appeals followed
its reasoning in the Sweeney case.
As matters now stand an estimated
total Of 10000 persons are relieved of
any obligation to pay any income tax
toward the maintenance Of the COM
munity services from which they
benefit to the same degree as their
taXpaying neighborS. Under those
circumstances, there can be no
equity in enforcing the tax against
any one, and the whole problem of
raising the revenue necessary for
running the District must be re-
opened by Congress.
What will be done there remains
to be seen. The House already has
refused either to amend the income
tax law to make it apply equitably to
all District residents, or to approve
other recommended methods of rails
ing additional revenue. Since the
problem is one of Congress- own max
ing, however, it is hardly conceivable
that the legislators will permit it to
remain Indefinitely without a just
solution.