- The Washington Times - Tuesday, February 25, 2003

Two D.C. Council members are expected to introduce a bill next week that would tax commuters from Maryland and Virginia on incomes they earn in the District, saying residents from those states benefit from city services, but don't pay for them.
D.C. Council members Jack Evans, Ward 2 Democrat and chairman of the Committee on Finance and Revenue, and Adrian M. Fenty, Ward 4 Democrat, said they will introduce the "Commuter Tax Act of 2003" March 4. The measure would amend D.C. law and impose a tax on salaries and wages earned by nonresidents.
"What is not fair is to get a service and not pay your fair share for it," Mr. Evans said in a written statement.
Under the proposed measure, a commuter whose taxable income is under $10,000 would be taxed 0.5 percent; a commuter with a taxable income between $10,000 and $40,000 would be taxed 1 percent, and those with a taxable income above $40,000 would be taxed 2 percent.
The commuter tax on individuals' incomes would be offset by a full credit on their own state's tax returns, the council members said.
All 13 members of the council say they will support the measure.
Rep. Thomas M. Davis III, Virginia Republican and chairman of the House committee that has authority to override legislation passed by the D.C. Council, said through a spokesman yesterday that almost every member of the regional congressional delegation opposes a commuter tax.
Mr. Fenty noted that Maryland and Virginia tax the incomes of D.C. residents who work in their cities, but refuse to allow the city to do the same, which he said "is really thievery."
"My residents who work in Virginia and Maryland does it, too pay a portion of their income to Virginia, and yet Tom Davis runs around saying a commuter tax will never happen in the District," Mr. Fenty said.
"They are concerned they will be hit by a $500 million tax credit for their residents."
Mr. Fenty and Mr. Evans said the universal principle of taxation is the primary right to tax income where it is earned.
Louisville, Ky., Philadelphia, Detroit, Cincinnati and Cleveland have levied commuter taxes that range from 1.45 percent to 4 percent on nonresidents. New York City saw its 30-year-old tax repealed by the state legislature in 1999. New York Mayor Michael R. Bloomberg is trying to get a new commuter tax instituted at a rate six times higher than that of the repealed tax.
Two-thirds of all income earned in the District is earned by nonresidents and 57 percent of all real property located in the District is not taxable because it is owned by the federal government.
Since the District can tax only one-third of income earned in the city, D.C. residents are taxed at higher rates than other jurisdictions.
The tax rates range from 6 percent to 9.3 percent in the District, from 2 percent to 5.7 percent in Virginia and from 3.2 percent to 7.76 percent in Maryland, the council members said.
The higher tax rates borne by D.C. residents are a consequence of many individual taxpayers leaving the city, further shrinking its tax base.
The measure is the latest attempt by D.C. officials to address a structural imbalance in the city's finances. But every attempt to institute a "commuter tax" has failed so far.
Already, Rep. Albert R. Wynn, Maryland Democrat, said yesterday he has long opposed any measure that would take money from the very commuters that make such a huge contribution to the District's economy.
Mr. Wynn added that a commuter tax would not foster regional cooperation, but instead might encourage counties to impose reciprocal taxes on D.C. residents who work in their jurisdictions.
Delegate Eleanor Holmes Norton, the District's nonvoting Democratic representative, is again pushing a measure that would send 2 percent of the federal taxes paid by commuters to the District's treasury. Because Congress has traditionally blocked commuter-tax measures, Mrs. Norton is seeking alternatives, an aide said.

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