For more than two decades, activists in Washington, D.C. have
sought to convert the federal district into a state with full
voting rights, including two Senators and a Member of the House of
Representatives, in addition to the three votes in the Electoral
College they received by constitutional amendment in 1961.
Recent efforts have focused on the more limited--but more
constitutionally questionable--goal of securing voting
representation in the House for the District, without full
statehood. The campaign took on a new visibility after the 2000
elections, when the District's license plates started to display
the slogan "Taxation without Representation."
However, the "taxation without representation" campaign presents
Republicans with a unique political opportunity as well, one that
could have beneficial effects over the long term for both D.C.
residents and political conservatives.
Why Didn't We Think of This
The obvious play on the famous Revolutionary War slogan was
designed to call attention to the fact that D.C. residents pay
federal income taxes but have no voting representation in Congress.
The intent is to rectify this by making D.C. a state and giving it
representation. But the slogan also, perhaps unintentionally,
suggests another solution: Exempt D.C. residents from federal
The solution has so many advantages it is surprising it hasn't
been implemented already, and it has recently been taken up by Rep.
Louie Gohmert (R-TX). For one thing, the logic is unassailable:
Though they have ready access to the government in ways that
citizens of faraway states do not, D.C. residents have no direct
voting representation and can reasonably claim that no one they
vote for votes on the legislation that taxes them. There is also
precedent for the idea--residents of Puerto Rico and Guam are U.S.
citizens who do not vote in federal elections, and they pay no
federal income taxes.
The economic benefit is also obvious. D.C., especially the
portion east of the Anacostia River and devoid of major federal
installations, is economically moribund, with all the economic
blight common to centers of urban poverty. As in other urban areas,
people who work in "the District" often live in the suburbs,
seeking both a higher quality of life and lower local taxes.
Just as the incentives and tax breaks of "Operation Bootstrap"
in 1947 revitalized and diversified the economy of Puerto Rico, an
income tax exemption for people residing in D.C. would attract
prosperous new residents to the district--residents who would have
the incentives and wherewithal to pressure the bungling local
government to clean up its act. They would also bring financial
resources; in the absence of federal taxes the District government
could "split the difference" with its residents, charging higher
taxes than any state but still leaving residents with more money in
their pockets than they would have living anywhere else in the
The fiscal impact to the federal government would be quite
small. In 2006 (the latest year for which figures are available),
D.C. residents accounted for 0.32 percent--less than a third of a
penny of every dollar--of total federal income tax revenue.
Obviously, certain safeguards would have to be put in place to
ensure that those taking advantage of the tax exemption actually
live in the District. Similar measures are in place for Puerto
Rico, but enforcement is made easier by the fact that Puerto Rico
is not within easy commuting distance of any state. The proximity
of D.C. to Virginia and Maryland, together with the large number of
cross-border commuters, would require careful attention to ensure
that the tax exemption is not abused.
At a minimum, eligibility for the tax exemption would have to
require that D.C. residents not be registered to vote in any state,
that they have their primary residence--a concept that would
require careful definition--within the District, and, as in the
case of Puerto Rico, apply the exemption only to income earned from
sources in the District. Puerto Ricans who are employees of the
federal government or members of the military do pay tax on income
from those sources; applying the same rule to District residents
would provide a needed boost to private businesses within the
Furthermore, the political dynamics put this idea directly in
the conservatives' sweet spot. Conservatives could hardly be
charged with indifference to the plight of nonvoting District
residents, and liberals would be faced with a stark choice: Either
defend the taxation of District residents (including the large
percentage who are poor) or accede to a policy that will
demonstrate, once and for all, the economic benefits of lower
D.C. residents complain that they are forced to pay federal
income tax despite not having a voting representative in Congress.
But the remedy for this problem is not a constitutionally dubious
plan to make the District into a quasi-state by adding a Member of
Congress to represent it (cynically trying to buy off Republican
votes in the process). Rather, simply exempting D.C. residents from
federal taxes would help revitalize the District--and do so in a
way consistent with what the Founders had in mind for the "federal
Robert A. Book, Ph.D., is Senior Research
Fellow in Health Economics in the Center for Data Analysis at The