Let’s pick up where we left off Monday, encouraging Congress to go slow with future discussions regarding a new tax — a D.C. commuter tax.
Advocates say allowing the District to levy an income tax on people who live elsewhere but work in the District would help alleviate a structural imbalance created by a federal legislative prohibition against such a tax.
But there are alternatives that would help the nation’s capital maintain some vital services available for everyone who lives, works and visits here.
Discussions on a new commuter tax were renewed when Rep. Darrell E. Issa, California Republican, recently recommended congressional deliberations on the issue.
To help formulate debate, I am outlining some of the facts that the General Accounting Office, the investigative arm of Congress since renamed the Government Accountability Office, discussed in a detailed report delivered in May 2003, which means the solid groundwork for any discussions have long been in the hands of Congress.
First of all, the GAO defined the phrase structural imbalance, the preferred term of D.C. tax-and-spenders, as “a fiscal system’s inability to fund an average level of public services” with local taxes and federal aid.
In its study, the GAO looked at several costs, such as the costs to provide a basket of services that include public safety. At the same time, the analyses of costs unique to the nation’s capital, such as crowd control and public safety measures for presidential inaugurations, were excluded. (Fair enough, since the federal government reimburses the city for some of those expenses.)
Obviously, the dollars, but not the sense, of the GAO report will need updating.
1) How effectively are the costs to provide basic services, such as public safety, offset by the District’s home-grown revenues?
“Using fiscal year 2000 information, GAO obtained its lowest estimate of the District’s structural deficit — $470 million — by combining the District’s cost of providing the average state basket of services with GAO’s highest estimate of the District’s revenue capacity. All other combinations led to higher estimates of the structural imbalance — up to more than $1.1 billion,” the study said.
2) How much money would the District stand to rake in if the federal government permitted the city to implement a nonresident income tax?
The report said that would be “difficult to estimate” because the revenue consequences would ultimately depend on how the tax is designed and how nonresidents and neighboring governments would react.
For example, the federal government could assume the full burden, and, in such a case, “would have to either reduce spending or make up for this revenue loss by other means.”
(Sort of like the ongoing war between the parties.)
3) What would happen in Virginia and Maryland?
“If the states of Maryland and Virginia allowed their residents to fully credit any tax paid to the District against their state income-tax liabilities, then those two states would suffer a revenue loss,” the report said. “The two states might respond to a District commuter tax by taxing the income of District residents who work within their jurisdictions or increasing the tax rates on all of their residents.”
But I guarantee this: Congressional and state lawmakers in Maryland and Virginia aren’t going to sit idly by and allow a Republican House leader to begin siphoning off local and state revenues.
Perhaps it’s time to revisit a federal “payment in lieu of taxes,” an annual federal appropriation that can be tied to, say, public safety simply because this is the nation’s capital.
Inaugurations, big trials such as that of Roger Clemens, the height of tourism season and other super-duper events mean every aspect of a first-response must be at the ready — and it’s Congress‘ job to make sure the capital is prepared.
• Deborah Simmons can be reached at email@example.com.