Councilman Thomas to Tax Non-Resident DC Employees & Contractors?
There’s some confusion out there regarding purported commuter tax proposed by Councilman Harry Thomas Jr. (D-Ward 5). Councilman Thomas is proposing an amendment to the budget this year that would tax non-resident employees and contractors who work for the District of Columbia, whose income is paid out of non-federal line items.
That would mean District employees whose living is made serving federally appropriated line items would not be subject to such a tax. It’s also not clear what the city would charge these individuals, but somehow they’ve come up with a total benefit to the city of $70M. They’ll do the taxation “at the source,” meaning that the city will keep a portion of the contractor/employee’s pay for themselves, as well as assessing the standard taxes for the employee/contractor’s given home state. Confused yet? Yeah, me too. All I know is that it sounds like an end-around the problems with previous commuter taxes.
Councilman Thomas can be reached via email or phone at 202.724.8028 if you’d like to give the Councilman your feedback.
When we asked one of our authors who lives outside the District, but works for the city, they said that the councilman’s plan was “some bullshitty bullshit,” and asked “Does he really want all of Arlington to move into DC? Where would we fit?”
Comments
11 Responses to “Councilman Thomas to Tax Non-Resident DC Employees & Contractors?”
May 25th, 2010 at 4:56 pm
MD and VA residents who work in the District but pay no DC income taxes clearly create a “free rider” problem. After all, they spend a considerable amount of time in the District and receive services from the District that they don’t pay for. And it’s not a few people; it’s a bunch. In this regard, a commuter tax makes sense.
However, a commuter tax that is applied based on who you work for seems arbitrary and patently unfair. Either tax them all or don’t tax anyone. And I would further propose that any commuter tax paid by VA or MD residents should be offset by a tax credit in the state of their residency. After all, while DC is paying for free riders, MD and VA are collecting taxes from people who require less services (because they’re being provided by DC).
May 25th, 2010 at 5:01 pm
Keep in mind, Eric, that these are people who don’t pay taxes to the District in other ways. The city assesses parking taxes, parking meter fees, sales taxes, restaurant taxes and other methods, many of which target people who come into the city on a daily basis. Rare is the person who pays no tax to DC, but is there constantly.
May 25th, 2010 at 5:01 pm
Another very interesting point made by a few people: wouldn’t this be taxation without representation?
May 25th, 2010 at 5:25 pm
“wouldn’t this be taxation without representation?”
yeah, that would be unconscionable in a democracy.
May 25th, 2010 at 5:26 pm
It’s worth noting (and someone should check into this) that Maryland law doesn’t outright list DC residents as exempt from Maryland taxes; I believe it discusses jurisdictions which do not impose taxes upon Maryland residents for work performed in that state.
If Maryland thus decides to begin taxing District residents for work performed in Maryland (and subjecting them to the additional 1.5% nonresident tax), DC is the loser here: I believe some estimates are that 20 – 30% of DC residents work outside DC in Maryland or Virginia. DC offers a dollar-for-dollar credit for taxes paid to another state, meaning that DC would lose the revenues generated those individuals come tax time.
DC, Maryland and Virginia are so close together that having reciprocity in tax collections benefits everyone. If DC starts to muck with that reciprocity, things are going to get ugly, and to the detriment of DC workers.
May 25th, 2010 at 5:29 pm
@taxed: Hey, I’m just saying that it would be unconscionably ironic for the District to whinge about its own situation while doing it to others.
May 25th, 2010 at 5:56 pm
I don’t disagree with you, Tom, in that commuters into DC pay other types of taxes (I’m assuming that this is what you meant to say and the “don’t pay taxes” was a typo). But I think that’s a red herring because those are taxes that people who live and work in DC also pay. Yes, it collects some revenue from the commuters but probably less than what is expended on providing services to them.
But the Taxation Without Representation argument is a fair point.
May 26th, 2010 at 10:21 am
I live in Virginia and own a Restaurant in DC. I pay DC more taxes than anybody. This is BS.
May 26th, 2010 at 10:22 am
Well, Jake, unless you’re a contractor or employee of the District Government, you’re probably not going to feel it.
September 22nd, 2010 at 8:14 pm
We are not moving to DC to escape the ban. We’ve heard about the city services, the crime, and we kind of like the greenery in Maryland and Virginia. We feel safer in Alexandria….
Just say if the DC commuter tax passes will it be offset by a tax credit in Maryland and Virginia?
September 22nd, 2010 at 8:17 pm
Are guns legal in DC yet?
Virginia: a gun a month is not just a law, it’s a good idea.
If you’re a criminal where are you going to do crime? Pistol packing Virginia/Maryland or disarmed DC?