Evening star. [volume] (Washington, D.C.) 1854-1972, 1955-03-13
Tough Legal Shedding Seen If D. c. SIops
Levy on Gross Income of All Employees
BY Phil Yeoeer and John Stark

ono Jonn ozark
tax the problem OF fair play is apt
to rear its head.
For example, would 1t be fair to
tax the self-employed on the basis
of gross income? Such persons
must deduct many expenses before
their income can be considered
earnings. Conversely, would it not
be discrimination to tax payrolls
only and leave the self employed
untaXed?
Or would it be fair to allow Dis
trict residents a payroll tax set
off against their regular District
income tax, when Maryland and
Virginia wage-earners cannot set
off against their State income
taxes? On the other hand. if Dis
trict residents are not allowed a
payroll or earnings tax credit against
their District income tax. then they
have the same squawk as their
Maryland and Virginia counter
parts-double taxation.
Question Of Necessity
Finally. there is the question Of
necessity.
In modern-day tax law the courts
have a disposition to look beyond
the mechanism of pure tax theory
or tax philosophy They also look
to the needs of taxing jurisdiction.
If it is out of the question for a
government unit to collect one type
Of tax, then it may be granted extra
leeway in levying what otherwise
might be an unacceptable tax.
There is no question that the
District needs the money. District
of Columbia tax authorities are not
looking for new revenue just to
make taxpayers squirm; 1t is their
job to find the money somewhere.
There is, however big doubt in
the minds of some tax experts as to
whether the need is great enough
to justify a payroll or earnings tax.
They point to existing tax loop
holes which might be closed with
considerable effectiveness.
Lenieney
One Of these loopholes involves
the leniency of the present District
income tax. Just how lenient tbs
tax is can be gagged by comparing
it with the income tax of the va
rious States. At present there are
81 States which levy an income tax,
20 of them on earned income. Only
4 nf fhncn Gfofnc -
lana, Montana and Mississippi
impose taxes lower than the Dis
trict's at low and middle income
levels. At high income levels only
Arkansas. California, Louisiana,
Maryland, Mississippi and New
Mexico have more lenient taxes.
The District tax is so per cent be-
low the average State level.
A second loophole is to be found
in the residency provisions of Dis
trict tax law. Many people who
live in the District-and who have
done so for number of years
pay no District income tax. This Is
because they keep their legal resi-
dence in another State and because
the Federal courts have held that
they, as non-residents, are not tax
able by the District The Supreme
Court held in 1941 that District
residents are not taxable II they
have the fixed and definite intent"
to return to their home State, no
matter how long they reside here.
If the District authorities decide the
person has no definite intent. then
he can be taxed. If he still pays
State tax, then he may subtract his
State payments from his District
tax. In the District, however, the
rule on intent is more liberal than
in most States.
Could be that so long as these
loopholes exist the courts will take
dim view Of other kinds Of inc4me
taxes. -