The renewed federal concern with fiscal responsibility suggests that this might be a good time for Congress to take another look at the financial plight of the District of Columbia.
The District is facing serious financial problems. This point has been made in a series of articles in The Post over the last several months. Yet for some reason, the powers that be seem unwilling or unable to face up to this reality and its implications. One reason may be that they are confused by conflicting reports either of a substantial budget deficit or of a slight budget surplus. Their focus may also be blurred by the annual federal payment appropriated by Congress. The general attitude seems to be: Why worry too much when we are not yet bankrupt, especially since Uncle Sam is there to bail us out? The answer, of course, is that Uncle Sam may change his mind. And then what?
The most responsible answer to this question is for the District to seek from Congress the authority essential to create an adequate and equitable tax base for the District. As a general proposition, tax equity is thought to be achieved by combining the goals of matching the benefits provided by government with the burdens of paying for it and by a tax structure under which those who have or earn more pay more. Right now, unfortunately, no metropolitan government in this country experiences greater inequity in the sharing of the governmental costs than the District.
This is not to say that the sharing of costs among those who reside within the District is terribly unfair. It is true, as The Post has reported, that D.C. local taxes are the highest in the metropolitan area among families earning more than $30,000 annually. But the residents who earn in that bracket are not terribly overtaxed, especially when one considers how many fellow residents barely earn enough to live decently.
What is unconscionable is that District taxes as well as the annual federal payment to the District of Columbia are as high as they are because tens of thousands of people who earn substantial income in the District bear virtually none of the burden directly related to the benefits they derive. Thousands of accountants, consultants, lawyers, lobbyists and others annually earn $30,000, and much more, in the District, but pay not a cent of income tax to the District. It is a guess, but a reasonable one, that the aggregate untaxed personal incomes of these commuters equal or exceed the aggregate personal incomes of all D.C. residents. That they pay no income tax to the District is an offense against fairness and equity.
Moreover, the resulting inadequate tax base has led to local business taxes which, as reported, may chase many business employers, large and small, out of the District, thus worsening our financial plight. There is no moral justification for permitting this situation to continue.
There are however, political explanations for it. Commuters have effective voting representation in the Congress while the District does not, and the remainder of the Congress does not seem to care. Perhaps those other congressmen, if they think about it at all, assuage their consciences with the annual federal payment to the D.C. government. But that is a thoughtless response which produces many unfair results. Among other things, it means that their constituents--whether in Pocatello or Peoria--bear as large a share of that federal payment as those Virginians and Marylanders who derive quite immediate and substantial income benefits from the District. Why should that be?
What is required is the development of a politically palatable alternative to this indefensible, inequitable situation. The soundest idea is a "commuter tax." A politically palatable alternative must address the concerns, legitimate and selfish, of the members of Congress who represent Marylanders and Virginians. Although it will not be easy, it may be possible to allay the bulk of their traditional concerns about a commuter tax with a variety of concessions.
For example, one key feature might be to have Congress control all elements of this commuter tax. That might allay the traditional fear of excessive taxation by the District's city council. Similarly, the tax could be confined to the "upper bracket" group: those earning over $30,000 annually. This might reduce significantly the size of the constituency opposed to the tax, and render the opposition of the other less persuasive.
In addition, if necessary, the Congress could supplement the usual federal income tax deduction for state taxes paid with some offsetting benefits to the states of Maryland and Virginia. This might address concern over the loss of tax income those jurisdictions might suffer from a commuter tax since the net taxable income subject to the state tax of their resident D.C. commuters would be slightly reduced.
The shape and number of the pieces of the political puzzle are, however far less important than the ultimate outcome. The District of Columbia should not become increasingly financially insecure when tens of thousands who owe it a fair share of their income pay nothing. The nation as a whole has an interest in seeing to it that the District receives benefits of a fair tax on all the income derived from the conduct of business within its borders. It is unfair for those who derive that income to freeload. A Congress willing to end school lunches for the poor should be willing to end this free lunch for the affluent.