The District of Columbia's delegate to Congress, Eleanor Holmes Norton, says the city is in "freefall" -- plagued by debt, crime, lousy schools, declining city services and flight to the suburbs. So she is urging Congress to pass sweeping federal income tax cuts -- including a 15 percent flat tax -- for district residents.

The aim of the woman whom friend Jack Kemp once called a "card-carrying, Hegelian, honest-to-goodness liberal Democrat" is to keep middle-class residents in the city and lure back those who have fled to Maryland and Virginia, thereby increasing the city's tax base.

Here is the plan:

• A $15,000 exemption for single filers, $25,000 for single heads of households, and $30,000 for married joint filers -- resulting in no federal income tax for residents in those categories.

• A 15 percent flat tax on wage income -- at the same time keeping deductions for mortgage interest and charitable contributions.

• No tax on income from capital gains as long as it comes from investments in the district.

D.C., where the population has dropped by a third in 30 years, faces a host of seemingly insurmountable problems:

• Its population is shrinking at a faster rate than any other big American city, excepting only St. Louis.

• Last year, it had a record budget shortfall of nearly $400 million -- and that on top of $3 billion in long-term debt.

• The average combined SAT scores of district public school students was 717 last year, compared to a national average of 910.

• In 1995, there were 360 homicides in the district, compared to 98 in Boston, a city of comparable size -- while other crimes have also skyrocketed.

The city's economic dilemma is obvious when one considers that only 33,000 tax-filers -- 11.5 percent -- had incomes between $50,000 and $100,000 in 1993. That compares with 20 percent nationwide. About two-thirds of all tax filers there have an adjusted gross income of under $30,000.

Would the plan work? According to one analyst, "there would be a stampede across the 14th Street Bridge (to get back) into the District."

Source: James M. Pethokoukis, "A Hong Kong on the Potomac?" Investor's Business Daily, May 2, 1996.