You hear it all the time: One of the District’s biggest handicaps is the fact that 70 percent of jobs are held by people who take their paychecks home to Maryland or Virginia or wherever else they live, beyond D.C.’s fiscal reach. We’d like to tax that income at its source, but any actual attempt to do so would never fly.
So today, interim Councilmember Sekou Biddle—in a substantive attempt to keep his job, while his campaign shop goes after competitors—introduced legislation to solve a small chunk of that problem. The D.C. government might not be able to tax other peoples’ employees, but it can make “voluntary” contributions a condition of hiring for its own workforce, which composes 37,600 out of the District’s 726,000 jobs. The Condition of Employment Act of 2011 would require new hires who live outside the District to agree to pay back four percent of their salaries. There’s no estimate yet of how much cash this would net the District back from its own employees (and the hiring freeze makes its near-term revenue-generating potential pretty low).
But wait—how exactly is that different from a tax, which would be prohibited by the Home Rule Act? Biddle’s office says the distinction comes in because employees could “theoretically…negotiate away this requirement during the pre-hiring period.” Or, the agency could agree to just pay the person a higher salary to offset the remittance, which means there’s no net gain to the District at all.
There is precedent for such a tax-in-name-only: New York City’s Section 1127 condition of employment payment, which has a more complicated formula but amounts to something similar, was instated in the 1970s and has so far held up against legal challenges. D.C., of course, has to deal with Congress, which might still take issue with this one. So never fear, Mitchellville-living city employees—Biddle’s creative commuter tax may not get anywhere anyway.