D.C.'s Commuter Tax Burden Discriminatory, Judges Told

Attorneys for the District's mayor, the D.C. Council and a group of city taxpayers argued before a federal appeals court yesterday that a congressional ban on a commuter tax discriminates against D.C. residents and forces them to shoulder one of the highest tax burdens in the nation.

They said that the ban has effectively forced the District's residents, who do not have a vote in Congress, to pay for the costs of providing city services to 300,000 daily commuters from Maryland and Virginia, who do have that vote.

"If the Congress raises taxes on its constituents, it risks being voted out of office," attorney John Nields said. "If it raises taxes on people who lack the vote, it risks nothing. . . . So Congress shifted the tax burden onto people who can't vote" for Congress.

The oral arguments before the U.S. Court of Appeals for the District of Columbia marked an effort by the District government and city advocates to revive a lawsuit they filed against the U.S. government in 2003 to overturn the commuter tax ban.

A lower federal court judge dismissed the suit a year ago, ruling that although the city's tax system was patently unfair to its residents, Congress had the power to impose this injustice on the municipality it created. The District wants the appeals court to order that the case be reopened so the city can attempt to gather facts to prove that the ban is discriminatory.

The original lawsuit, filed by Mayor Anthony A. Williams (D), council members and a group of 18 taxpayers, contended that the congressional ban, which dates to 1974, is unconstitutional and forces D.C. residents to pay higher taxes to support roads and other services for commuters. More than 41 communities across the country impose commuter taxes, and the city says that such a tax here could add $500 million to $1.4 billion a year to its treasury.

Justice Department lawyer Michael Raab told the three-judge appeals court panel that the District government appears to be claiming that the Constitution is unconstitutional. He said numerous court decisions have affirmed that the District is unique, as the framers of the Constitution had intended, and that it does not have the same rights and powers as states.

In yesterday's hearing, Judges Harry T. Edwards, Judith W. Rogers and Joseph Roberts each asked skeptical questions of both sides.

All three warned of a potentially fatal flaw in the District's criticism of the congressional ban, the same one that U.S. District Judge Ellen Segal Huvelle noted when she rejected the suit in March 2004. She called the tax inequity "regrettable and obvious" but said the courts don't have the authority to question Congress's decision-making in such a case. She based her ruling on the way the District was established under the Constitution as well as on several Supreme Court and federal appeals court decisions affirming Congress's power over the District.

But Walter Smith, leader of the advocacy group DC Appleseed and a lawyer who helped argue the city's case, told the judges that the court must scrutinize Congress's actions when they clearly benefit one government to the detriment of another.

"This [ban] was intended to benefit the states -- primarily Maryland and Virginia -- at the expense of the District," Smith said. "Its effect is to transfer hundreds of millions of dollars out of the treasury of the District of Columbia and into the treasuries of the states."

One humorous moment punctuated the otherwise cerebral hearing when Raab quoted an opinion from Antonin Scalia, who as an appeals court judge had stressed that District residents lacked the rights of state residents.

"Oh, he lives in Virginia," Edwards quipped. "You can't count that."