Earlier this month, U.S. District Court Judge Ellen Segal Huvelle dismissed a lawsuit filed by Mayor Anthony Williams and the D.C. Council that sought to overturn the the 1974 ban on commuter taxes, which prevent the District from imposing a commuter tax on Maryland and Virginia residents who work in D.C.
The 1974 ban on commuter taxes, part of the D.C. Home Rule Act, unfairly requires District residents to pay higher taxes to support infrastructure used by commuters from Maryland and Virginia and is unconstitutional under the Equal Protection clause.
Huvelle’s ruling is a blow for the rights of District residents and impedes the city’s ability to generate much-needed revenue.
Huvelle ruled in her 42-page statement that, “While the Court is sympathetic to the plaintiffs’ arguments and fully appreciates the manifest inequity created by the District’s inability to tax commuters, the Court lacks the power to grant the remedy that plaintiffs seek.” Under the law, only Congress can grant D.C. the right to impose such a tax.
According to the Mayor’s chief financial officer, the tax would compel the 500,000 people who live mostly in Maryland and Virginia but work in the District to pay a fee that could generate as much as $1.4 billion in revenue annually. These commuters earn nearly two-thirds of all income in D.C.-approximately $30 billion each year-but do not have to pay income taxes. Commuter taxes are common in metropolitan areas all over the country and create incentives for people to live within city limits, rather than in cheaper suburbs.
In a perfect world, Congress would overturn the ban and allow D.C. the right to compete with Maryland and Virginia to create a viable tax base, something that all 50 states are allowed to do. Furthermore, Congress does not grant D.C. adequate compensation for these commuters or for the huge tracts of federal lands that are unavailable to D.C. to tax. Because D.C. has no real Congressional representation while Maryland and Virginia have 23 Congressional delegates combined, the District has no legislative recourse to combat the unfair ban. As a result, the lawsuit was the District’s only hope to gain equitable rights to generate revenue. The judge’s ruling was constitutional but unfair, and this issue only further demonstrates the need for Congress to grant D.C. the same rights as states.
