Beleaguered residents of the nation's capital may soon enjoy tax relief so far denied to the rest of us: a flat federal income tax and elimination of all capital gains taxes. Political observers say support for the proposal submitted by the District's Democratic Delegate, Eleanor Holmes Norton, is growing among Republicans in Congress.

• The plan would levy a flat 15 percent federal tax on all bona fide District of Columbia residents -- with the first $25,000 of income exempt for single filers and $30,000 exempt for married couples.

• Capital gains taxes would be zeroed out on investments in the District made by residents.

• Senate Majority Leader Trent Lott would not require residency for investors and he would add a $5,000 tax credit for first-time home buyers so as to lure the middle class back into the city.

The District's population has dropped by a third over the last 30 years, and the number of taxpayers and their wealth is declining as well.

• Individual income tax returns filed in Washington have dropped from 307,000 20 years ago to only 281,000 in 1994.

• Of the 1994 returns, nearly two-thirds were filed by those with adjusted gross incomes below $30,000.

• Just 12 percent were filed by those earning between $50,000 and $100,000, compared to 16 percent for the entire nation.

Of course, the District has very high taxes of its own. The top income tax rate goes up to 9.5 percent, far higher than surrounding areas. DC also has higher sales taxes, a vast political patronage machine, and very poor public services, from schools to police protection.

Supporters say the reforms are needed because the city is on the verge of social and economic collapse. They hope that passage of the plan will result in a building boom in the city as suburbanites return and shore up its tax base.

Sources: Editorial, "Fixing a Flat," Wall Street Journal, May 19, 1997; Op ed, Pete du Pont, Policy Chairman, National Center for Policy Analysis, July 23, 1996.