State Disputes

The District of Columbia, plagued by income shortages, is currently preparing to sue Maryland and Virginia for the right to tax residents of these states who work in the District (Schoenberg, 1). Spearheaded by the Mayor of the District, Anthony Williams, the suit argues that every other state in the country except the District is able to tax commuters who work in their state. In line with legislation introduced in Congress by Eleanor Holmes Norton (D-D.C.), "Maryland and Virginia workers who work in the District would be taxed 2 percent of their annual salaries by the District" (Fehr 1). The stakes involved in this lawsuit on both sides are enormous, since more than two-thirds of the residents who earn income in the District are not residents "Such a tax would raise about $400 million a year for the District" (Fehr 1).

While residents of Virginia and Maryland are opposed to the commuter tax, District officials say it is necessary because of their narrow tax base and the fact that commuters who work in the District cost the District money in terms of public services like police protection, sanitation, road construction and repair and fire services. Further, commuters who earn wages in the district spend little or none of their income in the District. Government leaders in Virginia and Maryland are opposed to the commuter tax, fearing the payments will come out of their budget pockets forcing them to raise taxes.

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inning their argument in congress. Despite this being an issue of regional government dispute, the federal government is involved with the District of Columbia more than it is with Maryland or Virginia in this matter. Because of its unique place in our federalist system, the District and the federal government have a history of close interaction and governing. The federal government is attempting collaboration with the District in order to solve its budget shortcomings, ones that are exacerbated by the fact that higher numbers of residents are moving out of the District. This has created slower economic growth and a smaller tax base from which to collect revenue. The large percentage of individuals working in the District but living elsewhere also creates an additional loss of funds due to services provided to commuters (law enforcement, fire services, road maintenance and repair, etc.). In order to help alleviate this situation, the federal government and the government of the District have proposed several potential plans for dealing with the city's budget shortcomings. The federal government has actually helped create the situation in the District. Its passage of the Home Rule Act in 1973 banned D.C. government from t

Category: Government - S