US House Votes to Force DC Tax Conformity with Federal Cuts (1)

The US House voted Wednesday to advance legislation that would repeal a local law decoupling Washington, DC, from more than a dozen provisions of Republicans’ mega tax law, the latest GOP rebuttal of the Democratic controlled city.

The House voted 215-210 along party lines in favor of the resolution. A Senate panel earlier in the day approved a similar measure, sending them to the full chamber for possible consideration.

Several Democratic-led states moved to sever their codes from parts of last year’s tax law. But DC’s laws are subject to congressional approval, and possible nullification.

Federal law exempts repeal of DC law from the filibuster in certain circumstances, making it more likely the effort will succeed. But Senate Republicans would likely need to act by the end of next week to preserve that carve-out thanks to limitations posed by statute and the chamber’s schedule, according to Senate aides.

It represents the latest effort by Republicans to override the will of local officials in the nation’s capital, who are predominantly Democrats.

The congressional measures target a law unanimously passed by the DC Council that prohibits taxpayers from deducting overtime and tips when calculating their income taxes owed to the city.

“The DC Council would rather punish their own residents, their own people, than recognize the achievements of President’s Trump’s legislation,” Rep. Brandon Gill (R-Texas) said in a floor speech before the vote. “This is anti-working class, it’s anti-senior citizens, and of course it’s anti-business.”

It also severed city businesses from the federal tax law’s special depreciation allowance for qualified property and full write-offs for domestic research and experimental expenditures.

“To deliberately deprive residents of the opportunity to keep more of their hard-earned dollars is simply unfair and absurd,” Sen. Rick Scott (R-Fla.), the Senate measure’s sponsor, said before the Senate Committee on Homeland Security and Government Affairs voted 7-3 to advance it.

Del. Eleanor Holmes Norton (D-DC) during a House floor debate blasted the measure as “unpredented, undemocratic, and paternalistic.”

A repeal would force local officials to suspend the filing season that began Jan. 26 and extend deadlines into the fall, the District’s chief financial officer warned congressional leaders this week.

“This disapproval resolution would sabotage the District of Columbia’s tax filing season and credit rating,” Norton said in her floor speech Wednesday.

Repealing the city law would also prevent local officials from redirecting the avoided $658 million revenue loss over the next three years from the exemptions to fund expanded credits for children and low-income residents.

“DC should be allowed to set its own budget, just like any of the states we represent,” Sen. Maggie Hassan (D-N.H.) said at the committee meeting.

DC Mayor Muriel Bowser declined to sign the law before it went into effect but joined DC Council Chairman Phil Mendelson in a Feb. 2 letter urging Congress to leave it in place.

Political advocacy groups aligned with Democrats also wrote to senators this week blasting the “anti-democratic overreach,” while local business community leaders warned changes to the code “at this stage in the process” would deter business investment.

Senate Democrats are hoping to recruit enough GOP allies to repel the effort but acknowledge the issue came up quickly with little chance to prepare a rebuttal.

“We’re working to try and stop it,” Sen. Chris Van Hollen (D-Md.) said.

Sen. Thom Tillis (R-N.C.), said he hadn’t decided how he’d vote if it comes to the floor. But he pointed out his opposition to last year’s mega tax law stemmed from its Medicaid cuts rather than the tax provisions.

“I have to look at it,” Tillis said. “You just broke the news to me.”