Where now on voting rights? Let's fight for tax fairness.

By Chuck Ludlam
Sunday, June 27, 2010

Now that the D.C. vote legislation is stalled, it's time to shift tactics and focus to the key reason why a vote in the House of Representatives is so badly needed: the crippling provision in the home-rule charter that bars the District from imposing a tax on income earned in the city by nonresidents.

Taxes on the income of nonresidents are ubiquitous in the United States. Every state with an income tax imposes one. Nearly every city with income taxes impose them. Scores of countries impose these taxes.

Notably, Maryland imposes a tax on D.C. residents who earn income in Maryland. Maryland even imposes a surcharge on the income earned in Maryland by nonresidents. Maryland's 23 counties and the city of Baltimore tax nonresident income. So does Virginia. It is grossly unfair that they can impose a tax on us, but we can't impose a tax on them.

Imposing such a tax is crucial to the District. The city can't tax federal government land, and it no longer receives a federal payment in lieu of taxes. It can't tax federal government income generated in the District. It can't tax the income of the innumerable nonprofit organizations that come to the District because it is the federal city. All these tax-exempt entities deprive the District of income it desperately needs for city functions. As a result, the District must impose higher income and property taxes on its residents.

Keep in mind, imposing a tax on the income of nonresidents would be of no great consequence to the nonresidents themselves. They would receive a tax credit for the taxes they pay to the District on their Maryland or Virginia tax returns. Maryland and Virginia would lose revenue, of course. But they have ways to make up this money that are not available to the District. Plus, Maryland and Virginia have a vital interest in the health of the District.

And here's where D.C. voting comes in. When such an amendment to the home-rule charter is introduced and the Maryland and Virginia congressional delegations oppose it, we'll all see precisely why the District needs a vote in the Congress. Introducing this bill would support the push for voting rights, not distract from it.

One way to make a nonresident income tax more palatable to Maryland and Virginia would be to dedicate some of the tax to the Washington Metropolitan Area Transit Authority, the regional mass transit agency. Money could also be dedicated toward covering a multibillion-dollar shortfall in funding for capital improvements for WMATA for the next 10 years. An amendment to the home-rule charter could be offered as an amendment to the WMATA appropriations legislation.

We need a commitment by Mayor Adrian M. Fenty, Council Chairman Vincent C. Gray and the D.C. Council to push for this amendment with the same energy they've given to securing us a vote. We need a similar commitment from the Obama administration, which has yet to show that it is interested in supporting the District. Because this amendment does not impose a net new tax on anyone and simply shifts which jurisdiction receives revenue, national Republicans should not oppose it. When the Maryland and Virginia representatives oppose the tax, they will expose the rank hypocrisy of their states imposing a tax on District residents who work in their states while opposing reciprocity.

Someday the District might get the vote it deserves. But in the meantime we need to give the District the revenue it needs to become a great city.

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