Friday, November 4, 2005

A federal appeals court yesterday ruled that Congress has the authority to prevent the D.C. government from taxing commuters.

In a unanimous decision, the U.S. Court of Appeals for the District said the Constitution clearly grants Congress “exclusive authority” to govern the District, tossing out a lawsuit brought by more than 30 plaintiffs — including Mayor Anthony A. Williams — who sought to impose a commuter tax.

“The policy choices are Congress’ to make,” the court said. The decision was written by Judge John G. Roberts, now the chief justice of the U.S. Supreme Court. He was a member of the appellate court when the lawsuit was argued there in April.

Reaction to yesterday’s ruling, which upheld a U.S. District Court decision last year, was mixed across the region.

U.S. Rep. Thomas M. Davis III, a Virginia Republican who has supported a plan that would give the District a vote in the House, hailed the decision and said it came as no surprise to him. He said the city needs to develop its tax base and not “soak commuters.”

D.C. Delegate Eleanor Holmes Norton, a Democrat, said the ruling should prod Congress to fix the District’s “unique economic inequality by at least approving the Fair Federal Compensation Act,” a bill she has co-sponsored with Mr. Davis.

“The region’s opposition to a commuter tax was not unexpected,” said Mrs. Norton, the District’s nonvoting congressional representative. “I am grateful to each of them, however, for co-sponsoring our structural imbalance bill, and will ask them to help me in my efforts to get a hearing and passage this session.

“Their help on this bill would begin to make up for today’s disappointment.”

The legislation references a 2003 audit by the Government Accountability Office that found the District is saddled with an annual budget deficit of $470 million to $1.1 billion because of a structural imbalance emerging from federal mandates and regulations. In addition, the District cannot tax 53 percent of its acreage, which is occupied by the federal government and nonprofit groups.

The Fair Federal Compensation Act would provide the District an annual $800 million federal payment next year to address the structural imbalance. Subsequent annual payments would be increased by 4 percent or by the percentage by which the Consumer Price Index rises that year.

Last year, the District received $560 million in federal aid to round out the city’s $8.2 billion budget.

D.C. Council member Adrian M. Fenty, a Ward 4 Democrat who is running for mayor next year, said he will introduce a bill to call for a referendum that would abolish the D.C. Home Rule Charter’s ban on a commuter tax, then impose such a tax.

“The court’s decision is outrageous,” Mr. Fenty said. “It flies in the face of why this country was founded.

“It is a matter of fundamental fairness that we move to release the shackles of this congressionally imposed ban on taxing income earned in the District,” he said.

Mr. Williams, a Democrat, also voiced his displeasure with the court ruling, noting that cities such as New York and Philadelphia have levied taxes on commuters.

“The people of the District bear the burden of this unfair limitation,” he said. “As we’ve argued countless times, a commuter tax would not have any impact on Maryland and Virginia residents, who would be able to deduct the taxes they pay to D.C. from their state taxes.”

But Maryland Deputy Attorney General Michael Berman disagreed.

“Those other states would be forced to cut services or tax citizens who do not commute into the District to make up the shortfall,” said Mr. Berman, who argued the case on behalf of the state last April.

Virginia Attorney General Judith Williams Jagdmann, who argued the case with Maryland and the Justice Department, seconded Mr. Berman’s comments.

“This is an enormous victory for all the hard-working men and women of Virginia who work in the District to provide for their families,” Mrs. Jagdmann said.

About 500,000 workers commute to the District.

• This article is based in part on wire service reports.

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