WILLIAM SHAWN: Trump Can Transform DC Into Island Of Prosperity

The D.C City Council played redistribution politics recently with a sneak attack $300 million yearly retroactive tax increase on overtaxed D.C. residents and businesses. It “decoupled” the President’s Big Beautiful Bill’s federal tax deductions and credits on tips and overtime pay, among other important tax relief, to buy votes with a $1,000-per child monthly handout called a “tax credit.”

The House voted to overturn this latest example of exploitive economics. The Senate will soon act. Unless a permanent fix is found, more D.C. Council mischief is inevitable. Nothing will otherwise stop an exodus of industrious D.C. residents and businesses fleeing to neighboring lower-tax states and Florida.

America’s capital should never be held hostage to the pathologies of other declining socialist cities. President Donald Trump, with Congress’ help, can correct an historic injustice and simultaneously transform Washington into an island of prosperity and excellence. Repealing federal taxation of D.C. residents’ and businesses’ income will attract the best and brightest and revitalize America’s capital. Revitalization will cure D.C.’s ailing commercial real estate market hit by right sizing the federal bureaucracy and offloading surplus federal buildings and real estate.

Besides reviving a broad base of restaurants, hotels, and other businesses, a federal tax-free D.C. would be a magnet for world-class companies and technologies. The increase in real estate property values and resultant tax revenue should force lower D.C. personal and business income taxes typical of prosperous world cities like an earlier Hong Kong. The underserved would be well served.

Fairness and the law support making D.C. a federal tax-free haven. Like American citizens in Puerto Rico, the Virgin Islands, Samoa, and Guam, D.C. residents have no Congressional voting representation. Unlike fellow Americans living in Puerto Rico, the Virgin Islands, Samoa, and Guam, however, D.C. residents must pay federal income taxes, a shocking injustice. Together with D.C.’s crippling marginal personal income tax rates, District residents are among the most heavily taxed U.S. citizens yet have no voice in Congress.

Why haven’t District leaders challenged the obvious unfairness of taxation without representation? Actually, they have, but not against federal taxation. Instead, they have unsuccessfully demanded representation, with two Senate and at least one House seat. Adding guaranteed Democrat seats has been a losing proposition. For some 50 years, D.C. residents have thus suffered taxation and still no representation. Given D.C. leaders’ financially dependent voter base, there was no political risk for D.C. politicians to sacrifice those who pay federal income taxes.