Mayor Marion Barry has proposed that the city tax interest income from state and municipal bonds, a revenue source currently exempt from the District's income tax program.
Barry has also proposed, as part of a package to be the subject of a hearing Thursday, that the city remove an income tax exemption for congressional employes and for most presidential appointees.
Barry proposed the new tax on state and municipal bonds last winter, a measure that would bring the District government about $2.1 million in additional revenue.Under the plan, all state and municipal bond interest, except interest from bonds the District is able to market, would be subject to taxation for the first time.
The proposal is part of legislation designed to make collection of taxes easier for city residents and cheaper in administrative costs for the District government by "implementing greater conformity" between the District and federal personal income tax systems.
The legislation would not authorize the Internal Revenue Service to Collect the District income tax, a step Barry said he opposes "at this time." The plan would simplify the city government's tax forms by, among other things, establishing a one-page form for use whether taxpayers itemize their returns or not.
Little has been said about the bill among City Council members. Not even Councilman John Wilson, chairman of the committee on finance, has yet taken a formal stand on the bill, an aide said yesterday.
Previously introduced legislation on the conformity question would have cost the city about $10 million in lost revenue. The current bill, Barry wrote, would cause a potential loss for the city of about $300,000 for fiscal 1981 and 1982.
In essence, the legislation adopts provisions of the federal income tax code, but eliminates the so-called "marriage penalty."
Interest income from federal bonds, notes and bills is taxed under Federal regulations, but because states are barred under the Constitution from taxing such income, that difference would also remain, under the Barry proposal.