Congress Votes to Make Washington, DC Adopt Trump’s Tax Cuts (1)

The Senate cleared legislation Thursday to repeal a Washington, DC, tax law that deviates from federal law, but local officials say the Senate’s actions came too late.

The Senate voted on a resolution that decouples Washington from more than a dozen provisions of Republicans’ mega tax law, threatening to upend the city’s filing season and fiscal health. But according to a notice posted by DC Council Chair Phil Mendelson (D), the Senate’s Feb. 12 action was a day past the 30-day congressional review period.

At odds is when the district and Congress say the Home Rule Act’s 30-day review period begins. The city starts counting when the council transmits legislation to Congress—in this case Dec. 30. But Congress starts counting when the second chamber publishes notice of the law it in the record. The Senate did so on Jan 7.

A court has never weighed in on the issue, according to Sharon Eliza Nichols, the spokesperson for Del. Eleanor Holmes Norton (D-D.C.).

The Senate voted 49-47 Thursday along party lines in favor of the resolution (H. J. Res. 142), sending the measure to President Donald Trump’s desk for his expected signature after the House approved it on a party-line vote last week.

Republicans were able to pass the repeal legislation over the objections of Senate Democrats thanks to a filibuster carveout that federal law allows when Congress reviews and potentially overturns local DC law.

The congressional measure targets legislation 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 city council has decided to deny the people of DC the benefits we passed in President Trump’s working families tax cuts. That is absolutely absurd,” Sen. Rick Scott (R-Fla.) said on the Senate floor before a Wednesday evening test vote.

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.

DC is one of several Democratic-led jurisdictions that have moved to sever their codes from parts of last year’s tax law.

The city’s residents were already able to claim those breaks on their federal return. But Republicans are keen on expanding those tax breaks’ popularity before the midterm elections by leveraging federal control over the capital city.

Local officials have previously warned that repeal of the DC law would upend the city’s filing season that began Jan. 26, forcing them to extend deadlines into the fall.

Conformity with federal cuts will cost the city an estimated $658 million over five years, which Democrats have said could hurt the city’s credit rating. The DC Council had hoped to leverage the savings from decoupling to fund expanded credits for children and low-income residents.

“This resolution would literally change the rules in the middle of the game while taxpayers have already started filing returns,” Sen. Angela Alsobrooks (D-Md.) said in a floor speech Wednesday. “It would create confusion for families, businesses, and tax professionals.”