Norton Welcomes Senate Ideas But Says Flat Tax is Not Feasible or Desired by D.C. - March 7, 2006
Norton Welcomes Senate Ideas But Says Flat Tax is Not Feasible or Desired by D.C.
March 7, 2006
Washington, DC—In response to many inquiries, Congresswoman Eleanor Holmes Norton (D-DC) today gave the city’s position on the decision of the Senate D.C. Appropriations Subcommittee to hold a hearing tomorrow on a proposal to require a flat tax experiment in the District. Norton said she did not object to the hearing which will hear from non-D.C. witnesses, but that she and Mayor Anthony Williams have indicated unequivocally that they oppose any attempt to impose a flat tax on the District of Columbia. A flat tax system on individuals removes progressive tax rate provisions based on income from highest to lowest, and instead adopts a uniform tax rate and removes taxes on all investment income and exemptions, such as mortgage interest, charitable contributions, the Earned Income Tax Credit, and others.
Norton said, “We have appreciated that Sen. Sam Brownback has continued the long tradition of the Senate Appropriations Committee and its D.C. Subcommittee of working with the city on a home rule basis, and considering our amicable and cooperative relationship with the Chairman, we believe we will continue to work collegially on ideas and proposals. I readily accepted Sen. Brownback’s idea of placing federally funded Marriage Development Accounts (MDAs), which he consulted with me about, in last year’s appropriation bill, I briefed the Mayor and City Council Chair on the merits of the proposal, and testified in favor of the Brownback MDA idea at a subcommittee hearing.” However, she said that a congressionally imposed flat tax would not only violate home rule but also the 16th Amendment to the Constitution that requires a uniform system of federal taxation throughout the United States. The Congresswoman said that the proposal would not even have the salutary benefit that she believes the Senator seeks of reducing the taxes of low income residents because most already pay little or no federal income taxes. “A flat tax gives poor and middle income people nothing they don’t already get through the federal progressive income tax system and would hurt many of them by denying tax benefits that system provides,” she said. A flat tax presents other insurmountable federal and local problems, according to the Congresswoman, from the cost to the U.S Treasury to the acceleration of gentrification and resulting scarcity of affordable housing, D.C.’s most serious problem that already has sent thousands of low and middle income D.C. residents out of the city in search of more affordable housing.
Congresswoman Norton said she has worked with Sen. Brownback and other Republican colleagues on tax legislation in the past and that Sen. Brownback was one of the major contributors to the work that led to the popular D.C.-only $5,000 homebuyer tax credit and business tax credits renewed again last year by both houses and expected soon to be approved retroactively after conference as part of a larger tax package. “I have enjoyed working with Sam on many matters since he went from the House to the Senate and genuinely regard him as a friend,” Norton said. “I welcome Sam’s ideas that are compatible with the democratic will of the people and the elected officials of the District.”
Norton said that apart from policy and constitutional objections, there are many technical and jurisdictional problems with a D.C. flat tax proposal, including the reality that appropriators may not change tax law in either the House or the Senate and the loss to the federal Treasury of a big slice of the almost $3 billion in federal income taxes D.C. residents pay at a time when the federal deficit is “already off the charts.” However, Norton warned that apart from federal and congressional feasibility, today a flat tax would be particularly opposed by D.C. residents because its tax reducing effects on high income taxpayers would take D.C.’s “galloping gentrification to unimaginable levels,” an issue that has already brought new levels of economic and racial polarization to the city. The Congresswoman said that she believes that a second hearing on the flat tax idea may be planned and that many of the objections could be elaborated by experts and city officials.
**NOTE-- The tax system Norton proposed about 10 years ago had almost nothing in common with a traditional flat tax. In fact it was called a progressive flat tax. Its purpose was to reduce tax rates for all D.C. residents, but on a progressive income rate basis in order to stop the flow of residents from the District at its lowest point of insolvency. However, this proposal was very helpful because it led to Norton’s D.C.-only $5,000 homebuyer tax credit, business tax credits, with the help of people who supported the progressive flat tax, including Senator Brownback. The Congresswoman isn’t sure what the Senator has in mind or if he himself, thinks a D.C. flat tax would be possible.