Thanks to a local tax code based on federal laws of 1939, any resemblance between your U.S. return and the District forms is nearly accidental. The city laws differ on such such things as the allowable standard deduction, the treatment of earned income, the lack of a minimum-tax provision and the kinds of expenses that maybe substracted as itemized deductions.
As you may recall, we've been suggesting for more than a few Aprils now that the District bring its income-tax law more into line with the federal code - a step taken by a number of states already - so that taxpayers could use essentially the same computations as they do for the federal tax. Though the District has made a few changes over the years, the typical response from city hall has been that such a switch would have certain complex and apparently incomprehensible ramifications on the operation of the municipal abacus . . . or something.
Anyway, we're pleased to note that City Council member Hilda Mason has introduced a measure that could bring fast, fast relief from the pains of migraine arithmetic. Her bill would simply provide that the city's entire personal-income-tax code conform to that of the federal government. Thus, the D.C. tax would become a fixed percentage of the amount owed to the federal government.
The benefits of such a change are appealing. The measure not only would spare individual taxpayers untold grief, it also could save the city millions in collection costs. Under a 1976 federal law, any state or the District of Columbia, if its tax laws conform to the federal laws, may arrange for the Internal Revenue Service to handle its administration, collection and enforcement - at no cost. Thus, IRS would send out federal forms with any required special questions for District residents. You'd need only one check to pay both taxes. Also, the IRS would take over payroll withholding so each taxpayer and employer would have a single withholding.
True, there could be tax-policy differences that might make conformity with the federal code seem unacceptable at the city level.But the arrangement could always be altered. As it stands, the switch would make the District law more progressive while enabling the city to collect the same amount of revenue.On balance, the trade-offs seem appealing to us. We hope other council members will give Mrs. Mason's bill serious study and enact some such measure before another year goes by.