IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
JAMES M. BANNER, JR., et al.
Plaintiffs,
*
*
v.
*
THE UNITED STATES OF AMERICA,
et al.
*
Civil Action No.: 1:03CV01587
*
Defendants.
*
STATE OF MARYLAND’S AMENDED
MOTION TO DISMISS THE COMPLAINT
Intervening Defendant, the State of Maryland, by J. Joseph Curran, Jr., Attorney General of
Maryland, Michael D. Berman, Deputy Chief of Litigation, and Teresa M. Elguezabal, Assistant Attorney
General, for an Amended Motion to Dismiss the Complaint states:
1.
The District is a National treasure and it should be supported by the National treasury.
2.
The concept of “Taxation Without Representation” does not support the District’s position.
3.
Despite the allegations, this case is not about a “Commuter Tax.”
4.
The District is not the only jurisdiction upon which Congress has imposed tax limitations and
immunities.
5.
In order to analyze Plaintiffs’ claim, it is necessary to understand the claim in historical
context.
6.
Congress, sitting as a “state” legislature for the District, has plenary power to legislate for
the District.
7.
Congress delegated some, but not all, of its legislative authority to its subsidiary municipality.
8.
Congress carefully considered the limited delegation of power.
9.
A subordinate municipality has no basis upon which to assert that it is entitled to a wider
delegation of powers by its superior legislature.
10.
Congress had the power to enact the prohibition.
11.
The partial delegation of power to the District does not conflict with the Equal Protection
Clause, the Due Process Clause, the Privileges and Immunities Clause, or the Uniformity Clause.
12.
The Governmental Plaintiffs are not protected by the Constitutional Provisions that they are
relying on.
13.
The challenged portion of the Home Rule Act is not severable.
14.
This amendment corrects typographical and format errors. It contains no substantive change.
Wherefore, the State of Maryland requests that this Court dismiss the Complaint, cause, and action,
with costs.
Dated this 14th day of October, 2003.
Respectfully submitted
J. Joseph Curran, Jr.
Attorney General of Maryland
/s/
MICHAEL D. BERMAN
Deputy Chief of Litigation
TERESA M. ELGUEZABAL
Assistant Attorney General
Office of the Attorney General
200 St. Paul Place
Baltimore, Maryland 21202
(410) 576-6345 (voice)
(410) 576-6955 (facsimile)
2
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 14th day of October, 2003 a copy of the foregoing State of
Maryland’s Amended Motion to Dismiss the Complaint was electronically served on:
John Nields, Esquire
Howrey Simon Arnold & White, LLP
1299 Pennsylvania Avenue, NW
Washington, DC 20004
Carolyn Lamm, Esquire
White & Case, LLP
601 Thirteenth Street, N.W.
Suite 600 South
Washington, D.C. 20005
Walter Smith, Esquire
D.C. Appleseed Center for Law and Justice
733 Fifteenth Street, N.W.
Washington, D.C. 20005
James M. Banner, Jr., Esquire
1847 Ontario Place, NW
Washington, DC 20009-2108
Gary Thompson, Esquire
Gilbert Heintz & Randolph LLP
1100 New York Ave. N.W., Suite 700
Washington, D.C. 20005
Rupa Bhattacharyya, Esquire
Trial Attorney, Federal Programs Branch
Civil Division, U.S. Department of Justice
P.O. Box 883, 20 Massachusetts Ave., N.W.
Washington, D.C. 20044
Lois Williams, Esquire
Washington Lawyers Committee for
Civil Rights & Urban Affairs
11 Dupont Circle, Suite 400
Washington, D.C. 20036
William H. Hurd, Esquire
State Solicitor
900 East Main Street
Richmond, VA 23219
Maureen R. Matsen, Esquire
Deputy State Solicitor
900 East Main Street
Richmond, VA 23219
/s/
Michael D. Berman
3
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
JAMES M. BANNER, JR., et al.
*
Plaintiffs,
v.
*
*
THE UNITED
AMERICA, et al.
STATES
OF
Civil Action No.: 1:03CV01587
*
*
Defendants.
*
ORDER GRANTING STATE OF MARYLAND’S
AMENDED MOTION TO DISMISS THE COMPLAINT
It is, this ___ day of __________________, 2003, by the United States District Court for the District
of Columbia, ORDERED:
1. That the State of Maryland’s Amended Motion to Dismiss the Complaint be, and the same hereby
is, GRANTED;
2. That the Complaint, cause, and action be, and hereby are, DISMISSED, without prejudice, and
with leave to re-plead on or before the ___ day of __________________, 2003; and,
3. That the Clerk of the Court shall provide counsel of record with notice of this Order.
___________________________________
Ellen Segal Huvelle
United States District Judge
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
JAMES M. BANNER, JR., et al.
Plaintiffs,
*
*
v.
*
THE UNITED STATES OF AMERICA,
et al.
*
Civil Action No.: 1:03CV01587
*
Defendants.
*
STATE OF MARYLAND’S
REQUEST FOR HEARING ON ITS AMENDED
MOTION TO DISMISS THE COMPLAINT
Intervening Defendant, the State of Maryland, by J. Joseph Curran, Jr., Attorney General of
Maryland, Michael D. Berman, Deputy Chief of Litigation, and Teresa M. Elguezabal, Assistant Attorney
General, requests a hearing on its Amended Motion to Dismiss the Complaint.
Dated this 14th day of October, 2003.
Respectfully submitted
J. Joseph Curran, Jr.
Attorney General of Maryland
/s/
MICHAEL D. BERMAN
Deputy Chief of Litigation
TERESA M. ELGUEZABAL
Assistant Attorney General
Office of the Attorney General
200 St. Paul Place
Baltimore, Maryland 21202
(410) 576-6345 (voice)
(410) 576-6955 (facsimile)
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 14th day of October, 2003 a copy of the foregoing State of
Maryland’s Request for Hearing on its Amended Motion to Dismiss the Complaint was electronically served
on:
James M. Banner, Jr., Esquire
1847 Ontario Place, NW
Washington, DC 20009-2108
John Nields, Esquire
Howrey Simon Arnold & White, LLP
1299 Pennsylvania Avenue, NW
Washington, DC 20004
Walter Smith, Esquire
D.C. Appleseed Center for Law and Justice
733 Fifteenth Street, N.W.
Washington, D.C. 20005
Rupa Bhattacharyya, Esquire
Trial Attorney, Federal Programs Branch
Civil Division, U.S. Department of Justice
P.O. Box 883, 20 Massachusetts Ave., N.W.
Washington, D.C. 20044
Gary Thompson, Esquire
Gilbert Heintz & Randolph LLP
1100 New York Ave. N.W., Suite 700
Washington, D.C. 20005
William H. Hurd, Esquire
State Solicitor
900 East Main Street
Richmond, VA 23219
Lois Williams, Esquire
Washington Lawyers Committee for
Civil Rights & Urban Affairs
11 Dupont Circle, Suite 400
Washington, D.C. 20036
Maureen R. Matsen, Esquire
Deputy State Solicitor
900 East Main Street
Richmond, VA 23219
Carolyn Lamm, Esquire
White & Case, LLP
601 Thirteenth Street, N.W.
Suite 600 South
Washington, D.C. 20005
/s/
Michael D. Berman
2
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
JAMES M. BANNER, JR., et al.
*
Plaintiffs,
*
v.
*
THE UNITED STATES OF AMERICA,
ET AL.
*
Civil Action No.: 1:03CV01587
*
Defendants.
*
TABLE OF CONTENTS
Page
I.
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A.
The District Is A National Treasure And It Should Be
Supported By The National Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B.
The Complaint. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
C.
The Concept Of “Taxation Without Representation”
Does Not Support The District’s Position. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
D.
Despite The Allegations, This Case Is Not About A “Commuter Tax.” . . . . . . . . . . . . . . 8
E.
The District Is Not The Only Jurisdiction
Upon Which Congress Has Imposed Tax
Limitations And Immunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
II.
IN ORDER TO ANALYZE PLAINTIFFS’ CLAIM, IT IS NECESSARY TO UNDERSTAND THE
CLAIM IN HISTORICAL CONTEXT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
III.
CONGRESS, SITTING AS A “STATE” LEGISLATURE FOR THE DISTRICT, HAS PLENARY
POWER TO LEGISLATE FOR THE DISTRICT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A.
Congress, Sitting as a “State” Legislature
For The District, Has Plenary Power to Legislate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
B.
Congress Delegated Some, But Not All,
of Its Legislative Authority to Its Subsidiary Municipality. . . . . . . . . . . . . . . . . . . . . . . 18
C.
Congress Carefully Considered The Limited Delegation Of Power. . . . . . . . . . . . . . . . . 22
IV.
D.
A Subordinate Municipality Has
No Basis Upon Which to Assert That it Is
Entitled to a Wider Delegation of Powers
by Its Superior Legislature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
E.
Congress Had The Power To Enact The Prohibition. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
THE PARTIAL DELEGATION OF POWER TO THE DISTRICT DOES NOT CONFLICT WITH
THE EQUAL PROTECTION CLAUSE, THE DUE PROCESS CLAUSE, THE PRIVILEGES AND
IMMUNITIES CLAUSE, OR THE UNIFORMITY CLAUSE. . . . . . . . . . . . . . . . . . . . . . . . . . 26
A.
The Governmental Plaintiffs Are Not Protected
By The Constitutional Provisions That They Are Relying On. . . . . . . . . . . . . . . . . . . . . 26
B.
Level of Scrutiny. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
C.
The Four Constitutional Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1.
The Uniformity Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.
The Privileges and Immunities Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.
Equal Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.
Due Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
V.
SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
VI.
CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Respectfully submitted
J. Joseph Curran, Jr.
Attorney General of Maryland
/s/
MICHAEL D. BERMAN
Deputy Chief of Litigation
TERESA M. ELGUEZABAL
Assistant Attorney General
Office of the Attorney General
200 St. Paul Place
Baltimore, Maryland 21202
(410) 576-6324/6435 (voice)
(410) 576-6955 (facsimile)
ii
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 14th day of October, 2003 a copy of the foregoing Table of
Contents was electronically served on:
James M. Banner, Jr., Esquire
1847 Ontario Place, NW
Washington, DC 20009-2108
John Nields, Esquire
Howrey Simon Arnold & White, LLP
1299 Pennsylvania Avenue, NW
Washington, DC 20004
Walter Smith, Esquire
D.C. Appleseed Center for Law and Justice
733 Fifteenth Street, N.W.
Washington, D.C. 20005
Rupa Bhattacharyya, Esquire
Trial Attorney, Federal Programs Branch
Civil Division, U.S. Department of Justice
P.O. Box 883, 20 Massachusetts Ave., N.W.
Washington, D.C. 20044
Gary Thompson, Esquire
Gilbert Heintz & Randolph LLP
1100 New York Ave. N.W., Suite 700
Washington, D.C. 20005
William H. Hurd, Esquire
State Solicitor
900 East Main Street
Richmond, VA 23219
Lois Williams, Esquire
Washington Lawyers Committee for
Civil Rights & Urban Affairs
11 Dupont Circle, Suite 400
Washington, D.C. 20036
Maureen R. Matsen, Esquire
Deputy State Solicitor
900 East Main Street
Richmond, VA 23219
Carolyn Lamm, Esquire
White & Case, LLP
601 Thirteenth Street, N.W.
Suite 600 South
Washington, D.C. 20005
/s/
Michael D. Berman
iii
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
JAMES M. BANNER, JR., et al.
Plaintiffs,
*
*
v.
*
THE UNITED STATES OF AMERICA,
et al.
*
Civil Action No.: 1:03CV01587
*
Defendants.
*
MEMORANDUM IN SUPPORT
OF STATE OF MARYLAND’S AMENDED
MOTION TO DISMISS THE COMPLAINT
Intervening Defendant, the State of Maryland, by J. Joseph Curran, Jr., Attorney General of
Maryland, Michael D. Berman, Deputy Chief of Litigation, and Teresa M. Elguezabal, Assistant Attorney
General, states in support of its Amended Motion to Dismiss the Complaint:
I.
INTRODUCTION.
A.
The District Is A National Treasure And It Should Be Supported By The National Treasury.
This case involves the District of Columbia’s challenge to the 1973 Home Rule Act provision that
prevents the District from imposing a nonresident income tax on people who work in the District but live
elsewhere. The District is a national treasure and it should be supported by the national treasury, to the
extent, if any, to which there is a need for support in excess of local revenues. The Federal City belongs to
the United States as a whole1 and, if the combination of local tax revenues plus Federal support is
1
During the home rule discussions, then Vice Presidential designee Gerald R. Ford stated: “I feel
that the Nation’s Capital belongs to every citizen of the United States, whether he [or she] lives in the
District of Columbia or Michigan.” Comm. on District of Columbia, 93rd Cong., 2d Sess., Home Rule for
the District of Columbia 1973-1974 Background and Legislative History of H.R. 9056, H.R. 9682, and
Related Bills Culminating in the District of Columbia Self-Government and Governmental Reorganization
(continued...)
insufficient to meet legitimate needs, the cost should not be imposed on any subset of citizens, but on the
entire nation that benefits from having the District as the seat of the national government.
The District sits on land that was ceded by Maryland to Congress and the United States Government
in 1789.1 In FY 2002, the District’s total taxable real property had an assessed value of $53 billion. In FY
2003, the value was $63 billion.2 Maryland has also ceded property, income, sales, and other taxes arising
on this land, and on its inhabitants and occupants, for more than two centuries. Absent Maryland’s gift, the
taxable value of the land and every tax dollar paid in the District since 1789 would belong to Maryland. In
this action, the District, however, asks for “more.” It asks for the power to impose a tax on Maryland
residents who work in the District. This request should be rejected. As was stated in a recent law review
article:
Certainly, suburban commuters benefit3 from not paying a commuter tax. But such a benefit
results from Maryland and Virginia having given 10 square miles of land to the country in
1
(...continued)
Act, at 3577 (Comm. Print 1973) (hereinafter referred to as “Committee Print”); id. at 1561.
1
The land was “forever ceded and relinquished to the Congress and the Government of the United
States, and full and absolute right and exclusive jurisdiction. . . .” 45 Acts of Md. 1791; 1 D.C. Code Ann.
§1-101.
2
FY 2004 Proposed Budget and Financial Plan, http://cfo.dc.gov/budget/2004/pbfp.shtm. Pursuant
to Fed.R.Evid. 201, this Court may judicially notice facts at any stage of the proceeding. Taking judicial
notice does not convert a Rule 12(b)(6) motion into a Rule 56 motion. E.g., Black v. Arthur, 18 F.Supp.2d
1127, 1131 (D.Or. 1998), aff’d, 201 F.3d 1120 (2000); Gersten v. Rundle, 833 F.Supp. 906, 910 (S.D.Fl.
1993), aff’d, 56 F.3d 1389, cert. denied, 516 U.S. 1118 (1996). This land generates almost $1 billion a year
in property taxes.
3
The District also benefits from commuters. “District business growth is constrained by lack of an
adequate workforce. . . .” Richard Monteilh, Testimony Before H. Approp. District. Subcomm., 2001 WL
2007413, at *2 (Apr. 26, 2001). Of the businesses surveyed in the District, 68% reported difficulty in
finding the employees they need. Id. While the District complains in this action that commuters do not pay
for municipal services, it would grind to a halt without those commuters. That fact, alone, demonstrates the
value conferred by commuters. Furthermore, commuters create jobs for District residents: “Using 1972 data,
Maryland commuters supported 12, 424 D.C. employees. . . .” 1976 Hearings at 185.
2
1789. All fifty states share land that once belonged to the citizens of Maryland. To place the
financial burden of the District of Columbia on the shoulders of suburban commuters is akin
to saying, “Thank you for the land, we assume you will continue to be responsible for its
maintenance.” The District of Columbia is the capital of the entire nation, and all fifty states
should share the cost of resolving its problems.
D. Florenzo, “DCERA: A Solution to the District of Columbia’s People Problem,” 86 Geo. L.J. 181, 194
(1997); accord Commuter Tax: Hearings and Markups of the Subcomm. on the District of Columbia on H.R.
11303 H.R. 10116 (to repeal the prohibition and to impose a nonresident income tax), 95th Cong., 2d Sess.,
at 190 (hereinafter “Repeal”) (Stmt. of Rep. Holt);Commuter Tax: Hearings and Markup Before the
Subcomm. on Fiscal Affairs and the Comm. on the District of Columbia on H.R. 11579 and H.R. 14621, 94th
Cong., 2d Sess., at 173 (1976) (hereinafter “1976 Hearings”) (Stmt. of Montgomery Co. Exec.); 1976
Hearings at 164 (Rep. Holt: “The District is the seat of the United States Government and I feel that its
maintenance is the responsibility of the people of the United States.”). Because the District’s complaints
are based on federal statutes and the United States Constitution, it “should look to the residents of all 50
States to redress the consequences of these restrictions. . . .” Stmt. of Rep. Harris, Repeal at 180; Stmt. of
Rep. Gude, Committee Print at 1123 (“to the extent that there is a deficit in the [District] budget to be made
up by the citizens of the whole country, this is a Federal city and I think it is a Federal responsibility.”).
Maryland supports the legitimate goals of its fellow citizens in the District to have adequate public
services, including, schools, police, roads, etc. No states benefit more from a healthy District than Maryland4
4
Maryland is, and has always been, a responsible regional partner of the District. Stmt. of Rep.
Harris, Repeal at 180 (citing regionalism in transportation, sewage disposal, housing, pollution, health care,
and many other areas). For example, under an agreement with the United States, Prince George’s County,
MD, sheriffs assisted District police in connection with the recent National Football League’s program.
Maryland, Virginia, the District, and the United States are working together to build a new Woodrow Wilson
Bridge. Woodrow Wilson Memorial Authority Act of 1995, P.L. 104-59 (1995), as amended. Many other
(continued...)
3
and Virginia. Maryland, however, differs from the District in its analysis of the problem5 and the solution.6
4
(...continued)
examples of regional cooperation could be given. Similarly, in 1978, Rep. Harris pointed out that Fairfax
County, VA, had contributed in excess of $80 million to Metro and that there was not, at that time, a single
operational line of track in the county. Repeal at 213.
5
Maryland does not mean to imply that the United States has failed to meet its obligations. Instead,
Maryland assumes, as it must, on this Fed.R.Civ.P. 12(b)(1-2, 6) motion that the District has a revenue
shortfall and inadequate funding. The District has repeatedly stated that the source of the problem is the
Constitution and Congress. The District points to, for example, its Constitutionally-fixed borders,
Congressionally-imposed building height limitations, the Congressional limitation on taxing nonresidents,
and its Federally-imposed inability to tax federal property. E.g., Repeal at 129 (10-mile Constitutional limit
permits growth beyond District boundaries); Subcomm. on Fiscal Affairs of the Comm. of the District of
Columbia, 94th Cong., 2d. Sess., Staff Report on Commuter Tax, at 28 (Subcomm. Print 1976) (hereinafter
“Staff Study”) (Constitutional inability to annex). Congress, itself, has noted these same factors. Balanced
Budget Act of 1997 at §11601(c)(1)(A - D), P.L. 105-33. In short, the “major reason for the District’s
limited tax base is the restrictions imposed on it by the Federal Government. . . .” Stmt. of Rep. Harris,
Repeal at 180. Thus, if there is a revenue shortfall, it has been caused by Federal laws. But see Balanced
Budget Act of 1997 at §11301 (District’s historically poor record of determining and collecting tax revenue
due to it); Compl. at ¶40 (District’s inefficiency).
Any revenue shortfall is, however, irrelevant to the decision of this case. This case presents a pure
question of Constitutional law, specifically, does Art. I, § 8, cl. 17 of the United States Constitution
authorize Congressional passage of the legislation that is being challenged in this Complaint? The answer
to that question turns solely on an analysis of Art. I, § 8, cl. 17, and the result would not change if the
District were wealthy. The “structural imbalance,” assuming it exists, is irrelevant.
6
Many solutions to the District’s needs, other than a nonresident income tax, have been proposed.
Suggestions that the District become an “empowerment zone,” for example, have been made. Florenzo,
“DCERA,” 86 Geo.L.J. at 189. It has been suggested by the D.C. Chamber of Commerce that a NonResident Tax Credit Act be passed. R. Monteilh, Testimony, 2001 WL 2007413 at *6. That credit would
provide, to the District, 2% of the federal income tax paid by commuters. Retrocession to Maryland has been
proposed. J. Raskin, “Domination,” 39 Cath.L.Rev. at 438 n.96. And, of course, one suggested solution has
been increased federal funding. 1976 Hearings at 36.
The role of the commuter tax as a causative factor of the alleged problem (and therefore, as part of
the solution) is debatable. Vice-President Mondale and former Mayor Washington participated in a
Presidential task force on the District. The task force “identified 13 major issues of importance to the city.
. . . Not one mention is made of the commuter tax in these 13 major issues.” Repeal at 7. A former Mayor
of the District said that “we could make it without a commuter tax. . . .” Proceedings of the 57th Judicial
(continued...)
4
The plaintiffs err in their analysis of Art. I, § 8, cl. 17, of the United States Constitution. The District’s
Complaint is a misplaced policy argument7 framed in legal terms.
B.
The Complaint.
The plaintiffs - 18 natural persons, the District of Columbia, the Mayor, the Council of the District
of Columbia, and the 13 members of the Council - will be referred to as “the District.” The original
defendants - the United States of America, the U.S. Department of Justice and the Attorney General of the
United States - will be addressed as the “United States.” The intervening defendants will be addressed as
“Maryland” and “Virginia.”
The District alleges that, when Congress enacted home rule, it prohibited the District from taking
a number of actions, including imposing a nonresident income tax (the “Prohibition”). The District alleges
that the Prohibition departs from universal taxation doctrines. Compl. at ¶2.8 It alleges that the Prohibition
6
(...continued)
Conference of the D.C. Circuit, 191 F.R.D. 187, ___ (1998). In fact, the District, itself, as well as the GAO
report cited in the Complaint, point to other causes of the problems complained of, including alleged
inadequate and irregular federal contributions and height restrictions on buildings that were imposed by
home rule. It is unreasonable to present a panoply of asserted constitutional issues when there are other
solutions available.
7
Political questions are not justiciable. Flast v. Cohen, 392 U.S. 83, 95 (1968).
8
The District’s reliance on “universal” taxation doctrines to establish a Constitutional standard is
misplaced. While the District asserts that 41 states authorize nonresident income taxes, Compl. at ¶2, that
assertion tells only half the story. The District is a municipality, Compl. at ¶17, and many states do not
authorize their municipalities to impose such taxes. Baltimore, MD, for example, although it has home rule,
was not given the power to impose commuter taxes. None of Maryland’s home rule counties has that power.
“Since the power to tax is an inherent attribute of sovereignty and since a County is only an agency or
subdivision of the State, it is fundamental that the power of a County (or County Board of Commissioners)
to tax is not inherent but is a delegated power and exists only when and to the extent granted by the State.
The authority of a municipality to tax is similarly a delegated power.” Griffen v. Anne Arundel Co., 25
Md.App. 115, 126, 333 A.2d 612, 619, cert. denied, 275 Md. 749 (1975). Thus, while it cannot be doubted
(continued...)
5
“discriminates against the District primarily in favor of Maryland and Virginia.” Id. at ¶6. The District
claims that this contributes to a “structural imbalance” and costs it between $530 million and $1.4 billion
per year. Id. at ¶7. The District asserts that Congress has singled it out as the sole jurisdiction that is
precluded from imposing a nonresident income tax. Id. at ¶8. As a result, it contends that its citizens pay a
higher tax rate. Id. at ¶16. And, it contends that, even with that higher rate, it is unable to fund services. Id.
at ¶17. It repeatedly asserts that it lacks voting representation in Congress. E.g., id. at ¶¶15, 25, 57, and 65 68. The District alleges that it provides services to nonresidents to enable them to earn income in the
District. Id. at ¶30, 37. It asserts that Federal contributions do not cure its structural imbalance. Id. at ¶¶45 48.
Count I9 asserts that the Prohibition violates the Uniformity Clause, the Privileges and Immunities
Clause, the Equal Protection Clause, and the Due Process Clause of the United States Constitution. The
District seeks a declaration that the Prohibition is unconstitutional and that “any similar Prohibition by
Congress on the authority of the District of Columbia to tax nonresident income that is earned within the
8
(...continued)
that Maryland possesses the power to impose such taxes, and the power to delegate that power, the power
has not been delegated to subordinate governments.
Furthermore, many states execute reciprocity agreements with other states and, in those agreements,
waive the power to impose nonresident taxes. II J. Hellerstein and W. Hellerstein, “State Taxation,” (Warren
Gorham & Lamont 3d ed. 2000), ¶20.10[6]. For example, Maryland and Virginia have reciprocity
agreements with many surrounding jurisdictions. Id. Thus, while Maryland is one of the 41 states that
“authorizes” nonresident income taxes, as alleged in the Complaint, Maryland does not impose those taxes
on the residents of any reciprocal jurisdiction. 1976 Hearings at 176. Maryland does not impose taxes on
District residents who work in Maryland.
9
There is only one count in the Complaint.
6
District of Columbia” is also unconstitutional. Thus, the District seeks a declaration that both current
legislation is, and future10 legislation would be, unconstitutional.
C.
The Concept Of “Taxation Without Representation” Does Not Support The District’s
Position.
Throughout the Complaint, the District refers to taxation without representation. E.g., Compl. ¶¶9
(“profound distrust of any taxation without representation. . . .”), 15, 25, 57, and 65 - 68. Its Complaint,
however, could not be grounded on that principle. Taxation without representation is constitutional, under
certain circumstances. E.g., Shaffer v. Carter, 252 U.S. 37 (1920)(Oklahoma tax on nonresidents); Compl.
at ¶66; cf. Austin v. New Hampshire, 420 U.S. 656 (1975)(prohibiting discriminatory tax). For example,
federal income tax is constitutionally imposed on unrepresented District residents. Breakefield v. D.C., 442
F.2d 1227 (D.C.Cir. 1970), cert. denied, 401 U.S. 909(1971). The rationale is that “those choosing residence
in the District of Columbia have ‘voluntarily relinquished the right of representation, and * * * adopted the
whole body of Congress for * * * (their) legitimate government.’” Id. at 1229 (citation omitted); Adams v.
Clinton, 90 F.Supp.2d 35, 55 (D.D.C.), aff’d, 531U.S. 940 (2000)(no right to vote). Thus, District residents
may be taxed without representation. Loughborough v. Blake, 18 U.S. 317, 320 (1820)(“Representation is
not made the foundation of taxation.”).
10
There is no authority supporting a request to enjoin future legislation under Art. I in these
circumstances. E.g., Frison v. U.S., 1995 WL 686224 (D.C.Cir. 1995)(unpublished)(“The district court
appropriately declined to interfere prospectively with the exercise of legislative power by the United States
Congress. McChord v. Lousiville & Nashville Railroad Co., 183 U.S. 483, 495 (1902)(‘the general rule is
that legislative action cannot be interfered with by injunction.’).”); Associated Gen’l. Contractors of Amer.
v. City of Columbus, 172 F.3d 411, 415-16 (6th Cir. 1999)(“The Supreme Court consistently has held that
‘a court of equity cannot properly interfere with, or in advance restrain, the discretion of a municipal body
while it is in the exercise of powers that are legislative in their character,” citing New Orl. Water Works Co.
v. City of New Orleans, 164 U.S. 471, 478 (1896).).
7
If, however, the District is, in fact, relying on the revolutionary war principle, it is not being
consistent with its own theory. The District, itself, has attempted to circumvent the Home Rule Act and
impose taxation on Maryland residents who are not represented in the District. Bishop v. D.C., 411 A.2d 997
(1980). And, in this case, the District seeks to impose taxation on persons who are not represented in its
legislature, i.e., nonresidents.11 The concept of “taxation without representation” does not support the
District’s position in this case. “There is no constitutional provision which so limits the power of Congress
that taxes can be imposed only upon those who have political representation.” Breakefield, 442 F.2d at 1229
(citation omitted).
D.
Despite The Allegations, This Case Is Not About A “Commuter Tax.”
Occasionally, a nonresident income tax is called a “commuter tax.” That, however, is an inaccurate
description and it is important to identify the “nonresidents” who will, in fact, be taxed. A “commuter tax”
may be loosely defined as a tax levied on people who work, but do not live, in the taxing jurisdiction. Bishop
v. D.C., 401 A.2d 955 (D.C. 1979), reinstated, 411 A.2d 997 (D.C. 1980), cert. denied, 446 U.S. 966 (1980).
In fact, however, because of the system of tax credits described in the Complaint, and in light of
considerations of basic taxpayer fairness, the “commuter tax” falls on all citizens of the state of residence
because it is the non-commuting citizens who must make up the shortfall created by the credit system. Staff
11
Legislators frequently attempt to tax those who are not constituents because such taxes generate
little resistence. D. Schmudde, “Constitutional Limitations on Taxation of Nonresident Citizens,” 199
Mich.St.Det.C.L.L.Rev. 95, 97 (1999). “Legislatures, in search of new revenue sources, and extremely wary
of unruly constituents, have turned their taxing power towards the helpless, the non-constituent.” Id. at 168.
“The ability of taxpayers to avoid nonresident taxation depends on their ability to avoid contact with the
taxing state.” Id. at 110. Where, as here, the Seat of Government clause placed the Federal government in
the District, those who serve that government or who must do business with it have no ability to avoid such
contact. Any effort to impose a nonresident tax in these circumstances should be closely scrutinized.
8
Study at 28 (“The tax credit mechanism transfers the commuter’s tax liability to all the residents of the
States of Maryland and Virginia, effecting a transfer of revenues from Maryland and Virginia to the District.
The incidence of the tax therefore falls upon all Maryland and Virginia residents, not just commuters.”), 31
(“Maryland and Virginia’s most likely reaction to the credit will be the raising of taxes and/or the cutting
of services throughout the state.”).
In short, if the District is able to impose the taxes it is seeking to impose, those taxes will be paid
by all Maryland taxpayers, not just by commuters. 1976 Hearings at 173 ( As Lt. Gov. Lee said: “Thus the
loss would be sustained not by the suburban commuters but by the treasury of the State of Maryland. This
thing is known erroneously as a commuter tax. It is not a commuter tax. It is a tax on the State of
Maryland.”). The nonresident income tax would more accurately be described as a “District Surtax on All
Maryland Taxpayers.” As Lt. Gov. Lee said: “A great majority of the taxpayers who will pick up this tab
are people who rarely, if ever, enter the city of Washington.” 1976 Hearings at 173.
Furthermore, this surtax would, in fact, be double taxation because Maryland taxpayers “also
contribute toward District expenditures through Federal tax dollars which are redistributed to the District
in the form of the [now superseded] Federal payment and Federal grants-in-aid.” Stmt. of Rep. Harris,
Repeal at 179, 182-83; See also Stmt. of Rep. Spellman, Repeal at 195 (“[T]hey would be paying twice.
They would be paying once as taxpayers of the United States supporting the Federal City, and then again,
as neighbors of the District.”). The Supreme Court, resolving a battle between six states over a commuter
tax, described New Hampshire’s unlawful tax as a “beggar-thy-neighbor tax. . . .” Pennsylvania v. New
Jersey, 426 U.S. 660, 662 (1976).
9
E.
The District Is Not The Only Jurisdiction Upon Which Congress Has Imposed Tax
Limitations And Immunities
The District asserts that Congress has singled 12 it out as the sole jurisdiction that is precluded from
imposing a nonresident income tax. Id. at ¶8. It alleges that the Prohibition “discriminates against the
District primarily in favor of Maryland and Virginia.” Id. at ¶6. It points to its inability to tax Federal land
located in D.C. Compl. at ¶47. In fact, however, other than differences related to Art. I, the District is not
treated differently than other jurisdictions.
Maryland cannot tax Congressional representatives who live in Maryland. U.S. v. Maryland, 488
F.Supp. 347, 348 (D.Md. 1980)(upholding Congressionally-created tax immunity “that is narrowly focused
upon Maryland, Virginia, and the District of Columbia.”). And, Maryland is not permitted to tax service
members serving within its borders, under the Soldiers and Sailors Civil Relief Act of 1940, 50 U.S.C.
§§501, 574. Id. at 353-55. Maryland cannot tax the property - or sales on the property - at Andrews Air
Force Base, Ft. Dietrich, Ft. Meade, Aberdeen Proving Grounds, Patuxent Naval Air Station, the National
Oceanic and Air Administration Offices, the two United States Courthouses, or many other Federal facilities
in Maryland.13
While the impact of Federal restrictions may be greater on the District than it is on Maryland, the
District has not been singled out for disparate treatment. Many other jurisdictions are impacted by federally-
12
Of course, the District is “singled out” by Art. I, § 8, cl. 17, in the sense that it is the only
jurisdiction subject to direct control of Congress. For example, Congress does not have the Constitutional
power to legislate for Baltimore. Thus, it is unremarkable that Congress has enacted laws that apply solely
to the District.
13
Rep. Harris pointed out to Congress that Virginia cannot tax the Pentagon and Arlington
Cemetery. Repeal at 185.
10
created tax immunities. In a similar context, it has been written that: “The smooth functioning of our federal
system of government requires that some national body be entrusted with the responsibility of making what
are often difficult decisions as to when to confer tax immunity. . . .” U.S. v. Maryland, 488 F.Supp. at 359.
That is precisely what Congress has done, acting under its express Art. I power.
II.
IN ORDER TO ANALYZE PLAINTIFFS’ CLAIM, IT IS NECESSARY TO UNDERSTAND THE
CLAIM IN HISTORICAL CONTEXT.14
In order to analyze the District’s claim, a brief historical review is important. The “Seat of
Government Clause,” sometimes called “the District Clause,” is found in Art. I, § 8, cl. 17. That Clause
establishes the District, and Congress’ power to legislate for the District.15 The rationale behind the clause
is simple.
In 1783, Congress, sitting in Philadelphia, was indirectly besieged by unpaid soldiers. It sought help
from Pennsylvania, which refused. The Framers realized that the national government had to be located on
Federal land so that Congress could protect itself and so that no state could obtain undue influence over
Congress. Committee Print at 1606-07 (“the authority of the United States having been this day grossly
insulted by the disorderly and menacing appearance of a body of armed soldiers about the place within
14
Descriptions of the historical governance of the District may be found at: Florenzo, “DCERA,”
86 Geo.L.J. at 184, Committee Print at 1612, 1614 (listing limitations on the delegation of powers), Virginia
v. Reno, 955 F.Supp. 571, 574 n. 6 (E.D.Va.), vacated as moot, 122 F.3d 1060 (4th Cir. 1997), Adams v.
Clinton, 90 F.Supp.2d 27, 33 (D.D.C. 2000)(control board), and in the authorities cited in the text, below.
Suffice it to say that restrictions far greater than the Prohibition on nonresident taxation have been imposed
on the District. If District residents may lawfully be denied the right to elect representatives in Congress,
Adams, 90 F.Supp.2d at 35, then the lesser denial of a right to impose a nonresident income tax cannot be
unconstitutional.
15
Art. I, § 8, cl. 17, provides, in pertinent part: “To exercise exclusive jurisdiction in all cases
whatsoever, over such district (not exceeding ten miles square) as may, by cession of particular states and
the acceptance of Congress, become the seat of the government of the United States. . . .”
11
which Congress were assembled. . . .”); W. Cobb, “Democracy in Search of Utopia: The History, Law, and
Politics of Relocating the National Capital,” 99 Dick.L.Rev. 527, 531 (1995); J. Raskin, “Is There A
Constitutional Right to Vote and Be Represented?,” 48 Am.U.L.Rev. 589, 599 (1999);
J. Raskin,
“Domination, Democracy, and the District,” 39 Cath.L.Rev. 417, 423-24 (1990); Note, “Democracy or
Distrust?,” 111 Harv.L.Rev. 2045, 2046-51 (1998).16 James Madison, who was present at the 1783 incident,
“became the leading spokesman” for “a seat of government under exclusive Federal jurisdiction.”
Committee Print at 1609.
This leads to one basic and significant conclusion: The District exists to protect the national
government and to further national purposes. “The capital district was to be a national commons. . . . A
concern related to the need to insure Congress’ physical safety [from the Pennsylvania mutineers] was that
of protecting it from undue influence by the state in which the federal government was headquartered.” W.
Cobb, “Democracy in Search of Utopia,” 99 Dick.L.Rev. at 528, 531; accord J. Raskin, 48 Am.U.L.Rev.
at 645-46 (listing Federal purposes for clause); Virginia, 955 F.Supp. at 576.
In fact, historically, the Seat of Government Clause reflects an agreement “in which, in exchange
for federal patronage, the citizens of the district would surrender their suffrage.” W. Cobb, “Democracy in
Search of Utopia,” 99 Dick.L.Rev. at 528. “In essence, the District clause was an agreement between the
states that the benefits flowing from government spending at the capital would belong to the entire nation
instead of to just one state, thus avoiding interstate jealousies.” Id. at 533. The clause was “good
16
In light of more than 30 years of debate over the nonresident income tax, many cited resources
contain positions which Maryland does not agree with and citation of an authority does not imply that
Maryland suggests that the resource is fully correct in its analysis or conclusions.
12
government” designed to discourage regional interests from competing17 for the prize of having the nation’s
capital. Id. “In other words, capital residents would exchange federal representation for federal largesse and
proximity to national decisionmakers.” Id. Thus, the Seat of Government clause “set up an implicit compact
among the national government, the states, and the residents of the capital district. The Congress would
receive absolute dominion over the capital district. In exchange, the ceding state(s) would receive the
capital’s economic benefits and the prestige and convenience of being close to Congress.” Id. (emphasis
added).18
As seat of the Federal government, the District is unique. See Firemen’s Ins. Co. of Washington,
D.C. v. Washington, 483 F.2d 1323, 1328 (D.C.Cir. 1973)(District is sui generis); Adams, 90 F.Supp.2d at
46 n. 16 (“truly sui generis”); Florenzo, “DCERA,” 86 Geo.L.J. at 187; J. Raskin, 48 Am.U.L.Rev. at 647,
17
The fear of competition for the Capital is real. There have been attempts to move the Capital out
of the District. W. Cobb, “Democracy in Search of Utopia,” 99 Dick.L.Rev. at 527 et seq. “Washingtonians
reacted swiftly and negatively to the Western proposal to relocate the capital, . . . arguing that their property
values would be significantly reduced by removing the capital.” Id. at 563, 570. Opponents of removal noted
that the Federal Government had erected buildings, built gas and waterworks, bridged the Potomac, graded
streets, paid police, and built prisons. Id. at 572. Thus, the District, which now complains of the impact of
the national capital has historically opposed efforts to reduce the Federal presence.
The modern-day corollary is the District’s opposition to having federal facilities placed in Maryland
and Virginia. Id. at n. 372. When plans were made to build the Pentagon in Virginia, “[t]he Washington
business community objected that federal buildings belonged in the District. . . .” Id. at 590; accord R.
Monteilh, Testimony, 2001 WL 2007413 at *2 (D.C. Chamber of Commerce wants to keep Federal agencies
in the District). In short, while the District now complains of the alleged negative impact of the Federal
government, it has fought, and continues to fight, vigorously to retain and expand those facilities. See
Opinion, “D.C. must find a way to stop loss of jobs,” The Washington Business Journal
http://washington.bizjournals.com/washington/stories/1998/11/editorial1.html?page=1 (“The D.C.
Appleseed Center for Law and Justice is calling on Congress to prevent further erosion in the District’s
traditional job base, federal workers.”).
18
Because Alexandria was disenchanted with the compact, it was retroceded to Virginia. W. Cobb,
“Democracy in Search of Utopia,” 99 Dick.L.Rev. at 557.
13
655 (“the District Clause makes it abundantly clear that the District is not a state under the Constitution. .
. .”); Repeal at 187 (“The District of Columbia has a unique situation, that those who come here have to
come here in order to make the Federal Government function.”), 192. It obtains unique benefits, such as
special federal appropriations, tourism, the Smithsonian, the White House, and the National Gallery, and
it bears unique burdens, such as building height limitations, “exclusive” legislative jurisdiction in Congress,
the Congressional veto, absence of voting representation, restrictions on taxation, and, until modern times,
the lack of the right to vote for President. This unique status is well-illustrated by its “long arm statute.” If
an out-of-state person transacts business in Maryland, that person is subject to long arm jurisdiction, Md.
Cts. & Jud. P. art. §6-103(b) Code Ann.; however, if a person enters the District to do business with the
Federal government, the “government contacts exception” prohibits the exercise of personal jurisdiction.
Hayhurst v. Calabrese, 1993 WL 64561 (D.C. Cir. 1993)(unpublished); Naartex Consulting Corp. v. Watt,
722 F.2d 779, 786-87 (D.C. Cir. 1983), cert. denied, 467 U.S. 1210 (1984). It is simply not fair and
reasonable for the District to assert personal jurisdiction on the same terms as the 50 states, because people
have no choice but to transact federal business in the District. The District is unique.
In order to alleviate the burdens of being the Nation’s Capital, the District receives substantial
Federal funding. Compl. at ¶¶39, 45-47. Under the 1973 Act, when the Mayor prepared the budget, the
Mayor was statutorily required to consider the following pertinent factors under §501(b): “[P]otential
revenues that would be realized if exemptions from District taxes were eliminated” and “relative tax burden
on District residents compared to that of residents in other jurisdictions in the Washington, District of
Columbia, metropolitan area and in other cities of comparable size.” The Mayor was directed “to identify
elements of cost and benefits to the District which result from the unusual role of the District as the Nation’s
14
Capital.” Id. Thus, because of its unique role in assuring the independence of the national government, the
home rule act - the very statute criticized as inadequate in this litigation - created a mechanism to
compensate the District for the burdens imposed on it. When it enacted the Prohibition, Congress recognized
the District’s unique status and provided for regular payments “to cover the proper share of the expenses of
the District government.” Hearing Before the Comm. on the District of Columbia on S. 1435, 93rd Cong.,
1st Sess., 64 (hereinafter “S. 1435”) (citing § 701(a)).
That mechanism has, of course, changed over time. In Title XI of the Balanced Budget Act of 1997,
P.L. 105-33, at §11601(c)(1), the Congress made several findings, including findings that Congressional
building height restrictions, Congressional limitations on the District’s ability to tax income, and the unique
status of the District as the seat of government, play a “significant role in causing the relative tax burden on
District residents to be greater than the burden on residents in other jurisdictions in the Washington, D.C.
metropolitan area. . . .” Congress then, in §11601(c)(2), authorized a “Federal contribution towards the costs
of the operation of the government in the Nation’s capital” of $190,000,000 in FY 1998 and an amount to
be determined for each subsequent year. Congress stated: “In determining the amount appropriated pursuant
to the authorization under this paragraph [11601(c)(2)], Congress shall take into account the findings
described in paragraph (1).”19 Thus, in determining the amount of money to appropriate for the District,
Congress must consider all of the factors described in the District’s lawsuit, including the Prohibition.20
19
In §11601(a) of the Revitalization Act, Congress repealed Title V of the self-government act.
20
The statute, known as the National Capital Revitalization and Self-Government Act of 1997 (the
“Revitalization Act”), made many changes that are significant to the instant analysis. It has been fully
described in C. Palmer, “Waiting For Democracy: Congress, Control Boards, and the Pursuit of SelfDetermination in the District of Columbia,” 19 Hamline J.Pub.L.&Pol’y. 339 (1991)(hereinafter “Waiting
(continued...)
15
One may argue that Congress is not properly responding to the District’s requests and needs. One
may argue that Congress believes that the District’s requests are excessive or unsubstantiated. But, a
mechanism21 exists to compensate the District for the imposition of the Prohibition on nonresident income
20
(...continued)
at __”); The President’s National Capital Revitalization and Self-Government Improvement Plan, 1997 WL
12985 (the statute was to “resolve the city’s cash shortfall. . . .”); District of Columbia Appropriations Bill,
1998, S. Report No. 105-75, 1997 WL 583231 *3, 9-10.
In the Act, “the United States came to the rescue of Washington, D.C. . . .” Waiting at 339. “The
City. . . lost several key elements of its zealously guarded home rule. . . in return for substantial financial
and management assistance from Congress.” Id. at 340. The statute was a “highly technical bailout. . . .” Id.
The Act curbed local powers “beyond recognition.” Id. at 346. In evaluating the propriety of the Prohibition
in the Home Rule Act, it should be noted that the Revitalization Act mandated application of Federal
sentencing guidelines in the District, unlike any state government, id. at 365, transferred significant authority
from the mayor to the control board, id. at 368, and was viewed as a “congressionally-directed coup of the
City government. . . .” Id. at 370. For example, if certain code amendments were not made with 270 days,
the Act provides in §11214, that the Attorney General shall promulgate amendments to the D.C. Code,
transmit them to Congress, and they will go into effect in 30 days after transmission. Congress could not
have imposed similar provisions on state governments.
In §11601(b)(1)(A), the Revitalization Act terminated the annual Federal payment; however, the
Federal Government assumed control over many vital city functions, such as courts and prisons, pension
benefits, and administration of Medicaid payments. Id. at 345-46.“Millions of dollars were injected into the
City’s lagging budget.” Id. The District’s $4.8 billion pension shortfall was transferred to the United States.
Id. at n. 88; Revitalization Act at §11002(a)(2). President Clinton stated that the purpose of the
Revitalization Act was to “remove from the District of Columbia the burdens that are normally borne by a
state. . . .” Id. at 363 (citation omitted).
In short, in the Revitalization Act, Congress identified the Federal causes of the District’s problems,
re-emphasized its direct control of the District, and acted to address the financial issues of which the District
now complains.
21
The Revitalization Act was intended to “address funding mechanisms” and “provide mechanisms”
for resolving the District’s problems. Waiting at 396 n. 3, quoting Findings in H.R. 1963, 105th Cong.
(1997). The President stated that “the Act provides sufficient funding to implement” the Revitalization Act.
Statement by the President, 1997 WL 727883 (Nov. 19, 1997).
16
taxes, the District has used (or is free to use) that mechanism, and its requests for compensation have been
before Congress.22
III.
CONGRESS, SITTING AS A “STATE” LEGISLATURE FOR THE DISTRICT, HAS PLENARY
POWER TO LEGISLATE FOR THE DISTRICT.
A.
Congress, Sitting as a “State” Legislature For The District, Has Plenary Power to Legislate
For The District.
Under Art. I, § 8, cl. 17, Congress may “exercise all the police and regulatory powers which a state
legislature or municipal government would have in legislating” for the District “so long as it does not
contravene any provision of the Constitution.” Palmore v. U.S., 411 U.S. 389, 397 (1973). Congress has
more power in legislating for the District than it has in enacting laws for the nation as a whole. Id. at 398.
Thus, it has been recognized, since at least 1805, that: “The District is constitutionally distinct from the
States.” Id. at 395; see Adams, 90 F.Supp.2d at 48. In short, “the District of Columbia is a separate political
community in a certain sense, and in that sense may be called a state; but the sovereign power of this
qualified state is not lodged in the corporation of the District of Columbia, but in the government of the
United States. Its supreme legislative body is congress.” Metro. R. Co. v. D.C., 132 U.S. 1, 9 (1889). Thus,
while the District “may, in a sense, be called a state, it is such in a very qualified sense.” Id.
The delegation of municipal powers does not confer sovereignty. Id. The District government has
been described as a semisovereign jurisdiction that is “an executive agency of the Federal Government. .
. .” P. Schrag, “The Future of Dist. of Columbia Home Rule,” 39 Cath.L.Rev. 311, 337, 340 (1990); see
Stmt. of Rep Harris, Repeal at 181; Committee Print at 1442 (suggesting creation of “municipal government
22
Congress appropriated multiple millions of dollars to revitalize Pennsylvania Avenue. Repeal at
7. The federal contribution is designed to recognize the “unique fiscal problems relating in part to [the
District’s] relationship to the Federal Government. . . .” 1976 Hearings at 636.
17
similar to that provided in all other cities. . . .”); Committee Print at 1487 (granting of home rule is
analogous “with the granting of home rule to municipalities by states.”); see Adams, 90 F.Supp.2d at 47
(noting that Congress had no constitutional obligation to create a city council). In fact, in the Complaint at
¶17, the District describes itself as a “municipal corporation.”
Congress’ power under the Art. I, Seat of Government Clause, is sweeping. For example, while it
may not constitutionally create Art. I courts under its broad bankruptcy power, N. Pipeline Constr. Co. v.
Marathon Pipe Line Co., 458 U.S. 50 (1982), it may do precisely that in the District under the Seat of
Government Clause, Palmore, 411 U.S. at 398, 410; see Amer. Fed. of Gov’t. Employees, 619 A.2d 77, 84
n. 7 (D.C. 1993). The “Seat of Government” power includes legislative, executive, and judicial powers. Id.;
Adams, 90 F.Supp.2d at 49 (“It is Congress that is the ultimate executive authority for the District.”).
When Congress enacts local legislation for the District, “it is ‘acting as a State legislative body.’”
AFGE, 619 A.2d at 81; accord Firemen’s, 483 F.2d at 1327 (“Congress, in legislating for the District, has
all the powers of a state legislature.”); accord Loughborough, 18 U.S. at 318 (Congress acts as State
legislature); Gibbons, 116 U.S. at 408 (“Congress, like any state legislature. . . .”). In fact, under Palmore,
Congress has “‘plenary’ power to legislate for the District. . . .” Id. at 82, 83-84, 88 (emphasis in original);
accord Adams, 90 F.Supp.2d at 34 (“Congress is clearly the constitutionally-designated ultimate ‘legislature’
for the District.”), 49 (Congress is the “ultimate legislature” for the District; the city council is not); accord
J. Raskin, “Domination,” 39 Cath.L.Rev. at 419-20 (“[T]he United States Constitution’s [plenary power
under the] district clause has also been interpreted to give Congress the authority to treat District residents
differently than the residents of the other fifty states from the standpoint of federal legislation.”).
18
B.
Congress Delegated Some, But Not All, of Its Legislative Authority to Its Subsidiary
Municipality.
It is well-settled that Congress may delegate power to the District, “subject. . . to the power of
Congress at any time to revise, alter, or revoke the authority granted.” AFGE, 619 A.2d at 84 n. 7. And,
while Congress delegated “much” of its Art. I, § 8, cl. 17 power to the District, id. at 84, it did not delegate
all of it. As Sen. Eagleton stated in the discussion on the Conference Report on December 19, 1973: “This
bill does not give the District of Columbia what I would call true home rule. The citizens do not have the
power of the purse.” Committee Print at 3114. Similarly, Sen. Mathias quoted Romeo and Juliet: “No, ‘tis
not so deep as a well nor so wide as a church door; but ‘tis enough, ‘twill serve.” Id. at 3115; Background
at 1416-18 (the Chief Judge of the D.C. Court of Appeals wrote that home rule created a “municipal charter”
with “limited” delegated authority); see also District Charter Preamble, Legislative Power Section.23 Thus,
while there has been a “broad” delegation of power to the District, the City Council has no inherent
legislative authority. Firemen’s, 483 F.2d at 1327. And the United States Court of Appeals for the District
23
Many of the District representatives at the time were satisfied with the limited delegation in light
of the alternative. Mr. John A. Nevius, Chair of the District Council, stated: “Moreover, if the 93d Congress
is not prepared to delegate all authority over local matters I, for one, say let’s get as much as we possibly
can and not hold out for all or nothing.” S. 1435 at 95. He wrote: “I believe that we must continually test
the political waters on the reciprocal or similar income tax, and forego it only if it is the Achilles heel of
home rule.” Id. Apparently, it was, because Sen. Eagleton noted: “What is involved here is a pragmatic
consideration of just how far we can go in a given bill in terms of getting it ultimately passed.” S. 1435 at
96. Mayor Washington concurred: “My belief is that whether or not you get a perfect bill that it is important
to get a bill.” Id. at 97. In short, while the District requested that it receive the same powers as a state, id.
at 111-12, and while it requested the power to impose a commuter tax, id. at 98, 101, it did not receive those
powers. Recognizing this, Sen. Kennedy proposed “that any restrictions on the District’s ability to raise
revenue from local sources be fully recognized and accounted for in the computation of the Federal financial
commitment to the District.” Id. at 113. The federal payment was viewed as “representing an equilibrium
or balancing the benefits and costs resulting from the federal presence.” Id. at 114; 1976 Hearings at 196
(federal payment to meet District’s unique needs).
19
of Columbia has stated that a Congressional delegation of police power may be limited by a specific
Congressional enactment. Id. at 1328.24 Surely, where Congress had no constitutional obligation to create
a city government for the District, Adams, 90 F.Supp.2d at 47, it cannot be faulted for creating a government
of limited powers.
These principles have been repeatedly recognized. Thus, in Filippo v. Real Est. Comm’n. of the
District of Columbia, 223 A.2d 268, 270 (1966), the Court noted that “Congress exercises sovereign power
over the District of Columbia.” The court stated that Congressional power is plenary and equal to that of a
state legislature. Id. at 271. It noted that the then-commissioner form of local government possessed only
delegated, not inherent, power. Id. And, it squarely stated that Congress “can preclude regulation” on a
subject by the local government. Id. at 272.25
Congress’ general power to create tax immunities is well-established. Carson v. Roane-Anderson
Co., 342 U.S. 232 (1952)(power to create immunities is based on necessary and proper clause); N. R.
Passenger Corp. v. New Castle Co., 633 F.Supp. 354 (D.Del. 1986)(Amtrak). Congress may, of course,
24
In fact, it would likely be unconstitutional for Congress to delegate all of its power to the District.
See Committee Print at 8.
25
The lead “commuter tax” decision, Shaffer, 252 U.S. at 37, upheld an Oklahoma nonresident tax.
It specifically rested its decision on the “fundamental principles” that “the states have general dominion, and,
saving as restricted by particular provision of the federal Constitution, complete dominion over all persons,
property, and business within their borders.” Id. at 224. The Court emphasized the “rights of the several
states,” id. at 51, as the basis of its holding. “[S]tates have full power to tax. . . .” Id. This is “an incident of
sovereignty. . . .” Id. (citation omitted).
Diligent research has not disclosed any authority that provides that a municipality automatically
acquires the inherent power to impose a nonresident income tax when it receives home rule. New York City,
for example, was delegated special authorization by the state to adopt a commuter tax. City of N.Y. v. State
of N.Y., 94 N.Y.2d 577, 582, 730 N.E.2d 920, 924 (2000). California explicitly prohibited municipal income
taxes by home rule cities. Weekes v. City of Oakland, 21 Cal.3d 386, 390, 579 P.2d 449, 450 (1978).
20
“confer immunity by statute where it does not exist constitutionally.” U.S. v. Maryland, 488 F.Supp. at 359.
“Wise and flexible adjustment of intergovernmental tax immunity calls for political and economic
considerations of the greatest difficulty and delicacy. Such complex problems are ones which Congress is
best qualified to resolve.” Id. Therefore, Congress has the power to exempt property from tax in the District.
Gibbons v. D.C., 116 U.S. 404 (1886). In that case, Congress had exempted church grounds and buildings
from tax and the issue presented was whether certain appurtenant grounds were also exempt. The Court held
that Congress, under the Seat of Government clause, was acting as a local legislature and could levy taxes
and create exemptions just like a state legislature. Id. at 406. Thus, Congress’ plenary power permitted it
to exempt certain classes of property from taxes. Id.
In Marijuana Policy Project v. U.S., 304 F.3d 82 (D.C. Cir. 2002), the Court addressed one
Congressional exemption from the power delegated. Through a rider to an appropriations act, Congress
prohibited the District from enacting any law reducing the penalties associated with marijuana. This Court’s
decision holding that prohibition to be unconstitutional was reversed. The Court of Appeals noted that the
Seat of Government clause is broad and that the home rule act “lists certain matters that are not rightful
subjects” of the Council’s legislative power, including the prohibition against a “commuter tax.” Id. at 83.
It then “observed” that “Congress delegated some, but not all, of its Article I ‘exclusive’ legislative authority
over the District of Columbia to the D.C. Council.” Id. at 84. The Court noted that, because Congress could
reserve the exclusive authority to legislate over marijuana, it could certainly retain the lesser authority to
legislate over penalties. The Court also emphasized that it did not want to place Congress in the “all or
nothing” position of having to consider repeal of home rule. Id. at 87. In short, the Court clearly and
unequivocally sustained a Congressional limitation on the legislative power delegated to the District. While
21
any of the 50 states may pass a statute reducing the penalties associated with marijuana, the District, because
of its unique status and Congress’ broad Art. I powers, cannot.26
C.
Congress Carefully Considered The Limited Delegation Of Power.
The questions of how much power to delegate to the District and whether to prohibit a commuter
tax were “of paramount importance” in Congress’ home rule deliberations. Committee Print at 8-9. The
reason27 for Congress’ enactment of the Prohibition has been simply stated:
Senator Charles Mathias elucidated the rationale for enacting the prohibition found in
§602(a)(5) of the Act: “The increased28 Federal payment (to the District) also compensates
for the Congress’ refusal to permit the District to levy taxes on the income of nonresidents.”
[citation omitted].
Bishop v. D.C., 411 A.2d at 998; accord Background at 1210. Just as Congress was permitted to decide,
through the Soldiers and Sailors Civil Relief Act, that service personnel should not be burdened with
nonresident taxes; and, just as it decided that members of Congress living in the Washington Metropolitan
area should “enjoy the benefits of the parks, schools, sanitary services, etc., of a state, such as Maryland,
without contributing their fair share to the financing of those services,” and that members of Congress would
be exempt from “the substantial burdens of seriate taxation by the states in which they may be required to
26
The areas that are, or have been, exempted from local control in the District are too numerous to
list. See J. Raskin, 48 Am.U.L.Rev. at 668-69 (abortion services, adoption by gay couples, etc.); J. Raskin,
“Domination,” 39 Cath.L.Rev. at 426-27 (control over hours that swimming pools are open); P. Schrag,
“The Future,” 39 Cath.L.Rev. at 314, 328, 343 (citing 75 riders imposing restrictions, including a restriction
on meters in taxis). There is no constitutional principle preventing Congress from withholding “state”
powers, such as these, from the District.
27
Under Art. I, § 8, cl. 18, Congress may do anything “necessary and proper” to carry out its duties.
See U.S. v. Maryland, 488 F.Supp. at 356 (standard under “necessary and proper” clause).
28
The Federal payment increased from $25 million to $187.5 million in 12 years preceding home
rule. Committee Print at 3577.
22
be present,” U.S. v. Maryland, 488 F.Supp. at 356-57, it has also decided that nonresident income taxes
should not be imposed on persons who, for example, commute into the District to work for, or provide
services to, the Federal Government.
To obtain even limited home rule for the District required major legislative battles and much
compromise. Five times between 1949 and 1960, home rule bills died in Congress. J. Raskin, 48
Am.U.L.Rev. at 601; see Repeal at 2. As Congressman Diggs stated, the successful home rule bill was a
“reasonable and rational accommodation of the interests of all Americans in their Nation’s Capital. . . .”
Committee Print at 3031; Background at 1507-21 (history of home rule bills after WWII).
Congressman Diggs expressly pointed to the Prohibition as one of the “key provisions” of the statute.
Committee Print at 3031. Former Gov. Dalton of Virginia stated: “We feel that one of the major reasons
that the home rule bill was passed was the fact that this prohibition of taxing nonresidents was written into
that. . . .” Repeal at 220, 226. In short, the “home rule bill passed with the [Prohibition] provision in it, and
the distinct understanding that a commuter tax would not be imposed.” Stmt. of Rep. Harris, Repeal at 327.
The Prohibition was a “linchpin” in the bill. Id. Rep. Gude stated that the Prohibition was “no surprise to
anyone” because it had “long been debated for many years. . . .” Committee Print at 1123. It was pointed
out that states frequently deny similar powers to municipalities. Id.; S. 1435 at 93 (Sen. Mathias). And,
it was acknowledged by the Committee on Self Government of the D.C. Republican Party that a bill without
the Prohibition would stir up “a hotbed of controversy.” S. 1435 at 108.
The Prohibition has survived repeated efforts to repeal it. E.g., Staff Study at 1 (proposed a number
of times). The 95th Congress, 2d Sess., rebuffed an identical request. Repeal at 119. In 1978, Rep. Steers
pointed out that the issue had been “thrashed out so many times that there is little to say that is not
23
redundant.” Repeal at 176. Rep. Holt pointed to six efforts to pass a nonresident income tax. Repeal at 190;
accord Bishop, 411 A.2d at 1002 (90th, 91st, 92nd, and 93rd Congresses considered and rejected commuter tax
and those are “the true reasons for commuter tax concerns at the time of the passage of Home Rule.”). In
summary, not only when the home rule bill was passed, but on several other occasions, Congress considered
the Prohibition and determined that it was an integral part of the federal policy toward the District. Congress
carefully considered the Prohibition and made an informed policy choice. See 1976 Hearings at 624 (The
1976 commuter tax hearings made that bill “one of the most well-studied pieces of District legislation since
the Home Rule Act,” including 41 witnesses and 534 pages of testimony.).
D.
A Subordinate Municipality Has No Basis Upon Which to Assert That it Is Entitled to a
Wider Delegation of Powers by Its Superior Legislature.
“All municipal governments are but agencies of the superior power of the state or government by
which they are constituted, and are invested with only such subordinate powers of local legislation and
control as the superior legislature sees fit to confer upon them.” Metro R. Co., 132 U.S. at 8. Municipalities
are creatures of the sovereign that created them. Hunter v. City of Pitts., 207 U.S. 161, 178-79 (1907). They
have no privileges under the Constitution that may be asserted against the sovereign that created them.
Williams v. Mayor of Balt., 289 U.S. 36, 40 (1933). A subordinate municipality cannot sue its superior
legislature and assert that it is entitled to a wider delegation of powers.29
29
As a matter of policy, there are competing philosophies regarding the manner and level of
delegation of power to municipal governments, with some having what is called grants of power charters
and others having limitation of power home rule. In re Application of Lincoln Electric System , et al v.
Nebraska Public Service Commision, et al, 265 Neb. 70, 82, 655 N.W. 2d 363, 373 (2003), cert. denied, 123
S.Ct. 2620 (2003).
In Arnwine v. Union County Bd. of Education, et al., 2002 WL 869960 (Tenn.Ct.App. 2002), the
(continued...)
24
E.
Congress Had The Power To Enact The Prohibition.
The Prohibition is no more than an informed, Congressional decision not to delegate certain taxing
power to the District. It was a considered decision of Congress, reaffirmed multiple times. Just as a state,
in the exercise of its plenary powers, may choose not to delegate to municipal or county government the
power to impose a nonresident income tax, Congress, acting as the “state” legislature for the District, may
exercise that same restraint as part of its “exclusive” Constitutional power to legislate for the District.
Similarly, Congress has the power to grant tax immunities. Where it has chosen to immunize a
subject from taxation, in order to further a federal purpose, that decision is subject to only the most minimal
scrutiny because the legislature possesses great freedom in classification. Austin, 420 U.S. at 661.
In view of the District’s unique status and purely national purpose, Congressional deliberation and
debate on this issue, the plenary power under Art. I, the limited delegation of power to the District, the
history of more significant disabilities being constitutionally imposed on the District, such as no right to
29
(...continued)
court explained the rationale behind the limitation of power home rule: “[L]ocal governments have never
possessed the inherent right to autonomous self-government, and all local governmental authority has always
been interpreted as a matter of constitutional entitlement or legislative delegation of authority.’ Civil Serv.
Merit Bd. v. Burson 816 S.W. 2d 725, 727, 727 (Tenn. 1991).”
Given the limitations in the Home Rule Act and its legislative history, the District of Columbia’s
home rule power is a limitation of power “charter.” Even as early as 1908, it was determined that the
District of Columbia commissioners had limited power. United States of America ex rel. Columbia Heights
Realty Co. v. Macfarland, 32 App.D.C. 53 (1908) (District’s commissioners are ministerial officers who
may, in the discretion of Congress, be delegated the power to make local rules; municipal unit has “such
powers only as are expressly conferred, or may be fairly and reasonably implied as necessary to carry into
effect such as have been expressly granted.”).
In short, given the alternatives of a limited charter or a grant of power charter, Congress has
historically and consistently chosen the former policy alternative.
25
representation, see Adams, 90 F.Supp.2d at 35, Congress’ power to confer tax immunity for federal purposes
and to exempt property from tax, e.g., Gibbons, 116 U.S. at 404, the importance of the Prohibition in
securing the passage of the home rule bill, and the federal subsidies paid to the District, the Prohibition does
not go beyond Congressional power. Because the Prohibition was enacted under Congress’ Art. I powers,
it is valid unless it directly contravenes another Constitutional right, which it does not.
IV.
THE PARTIAL DELEGATION OF POWER TO THE DISTRICT DOES NOT CONFLICT WITH
THE EQUAL PROTECTION CLAUSE, THE DUE PROCESS CLAUSE, THE PRIVILEGES AND
IMMUNITIES CLAUSE, OR THE UNIFORMITY CLAUSE.
A.
The Governmental Plaintiffs Are Not Protected By The Constitutional Provisions That They
Are Relying On.
The District of Columbia, the Mayor, the City Council, and the Council members in their official
capacities (the “Governmental Plaintiffs”), assert that the Prohibition violates their rights under the
Uniformity, Privileges and Immunities, Equal Protection, and Due Process Clauses. The short answer to this
allegation is that they are not protected by those clauses. Williams, 289 U.S. at 401; City of Newark v. New
Jersey, 262 U.S. 192, 196 (1923)(city cannot invoke protection of the Fourteenth Amendment against its
own state); City of New Orleans v. New Orleans W. Works Co., 142 U.S. 79, 89-91 (1891)(city cannot attack
constitutionality of state legislation); Harris v. Angelina Co. Texas, 31 F.3d 331, 339 (5th Cir. 1994)(“[S]tate
subdivisions, such as counties and municipalities, cannot assert constitutional claims in federal court against
their creator, the state itself, or other state political subdivisions. [citations omitted]. One rationale for these
cases is that political subdivisions lack Fourteenth Amendment or other constitutional rights against the
creating state.”); S. Macomb Disp. Auth. v. Township, 790 F.2d 500, 503-04 (6th Cir. 1986)(municipality
cannot invoke Fourteenth Amendment against the State); Appling Co. v. Municipal Elec. Authority of GA.,
26
621 F.2d 1301, 1307-08 (5th Cir. 1980)(county has no standing to assert due process and equal protection
claims against state), cert. denied, 449 U.S. 1015 (1980).
The Governmental Plaintiffs have failed to state a claim upon which relief may be granted because
none of the cited constitutional provisions (the Uniformity, Equal Protection, Due Process, or Privileges and
Immunities Clauses) protect them. Fed.R.Civ.P. 12(b)(6). In the discussion below, Maryland will continue
to refer to the “District,” as that word was previously defined, without prejudice to its position that all claims
of the Governmental Plaintiffs should be dismissed.
B.
Level of Scrutiny.
The District alleges that strict scrutiny is appropriate because its residents lack voting representation,
Compl. at ¶8. It asserts that, because the Prohibition is a departure from the “universal” rule of taxing
income at its source and because the only purpose of the Prohibition is to benefit citizens and areas that are
represented, id. at ¶¶70-71, the statute cannot withstand either strict scrutiny or a rational relationship
analysis.
Here, however, Congress was acting under its express Art. I, § 8, cl. 17, powers. “[W]here Congress
has determined that an express tax exemption is necessary to further the exercise of one of its constitutional
functions, that determination is to be afforded great deference by the courts.” U.S. v. Maryland, 488 F.Supp.
at 352, 356, 358-59.
Similarly, in a commuter tax case, the Supreme Court wrote: “In resolving challenges to state tax
measures this Court has made it clear that ‘in taxation, even more than in other fields, legislatures possess
the greatest freedom in classification.” Austin, 420 U.S. at 661 (citation omitted); Griffin, 25 Md.App. at
131, 333 A.2d at 621. “Our review of tax classifications has generally been concomitantly narrow, to fit the
27
broad discretion vested in state legislatures.” Id. at 662. And the Court noted that, “[w]hen a tax measure
is challenged as an undue burden on an activity granted special constitutional recognition, . . . the
appropriate degree of inquiry is that necessary to protect the competing constitutional value from erosion.”
Id.
Where a competing constitutional value does not limit Congress, e.g., the contract clause, AFGE,
619 A.2d at 81, that value cannot provide a basis to invoke strict scrutiny. Thus, when Congress acts as a
local legislature it “may not contravene limitations applicable to Congress, acting as Congress,” however,
Congress is not “itself subject to constitutional limitations on state legislatures.” Id. at 84; see
Loughborough, 18 U.S. at 318. As this Court held in Adams, 90 F.Supp.2d at 65, the clauses of Art. I that
apply to congressional voting do not apply to the District. Therefore, because the clauses on which the
District relied were inapposite to the challenged events, they did not support a higher level of scrutiny. The
Supreme Court’s summary affirmance of Adams, 531 U.S. at 940, makes it clear that the District cannot
maintain that there is any infirmity based on the inability to vote or have representation in Congress. This
case, therefore, involves neither the deprivation of fundamental rights nor a suspect class.
C.
The Four Constitutional Provisions.
The District relies on the Uniformity, Privileges and Immunities, Equal Protection, and Due Process
clauses. Compl. at ¶¶56 - 71. Even though all four are combined in a single count, it is necessary to examine
each separately.
1.
The Uniformity Clause.
The Uniformity Clause provides that: “The Congress shall have the Power To lay and collect Taxes.
. . but all Duties, Imposts and Excises shall be uniform throughout the United States.” Const. Art. I, §8, cl.
28
1. The District makes three pertinent allegations. First, it is alleged that, under this provision “Congress may
not impose income taxes at one rate for one state or area, and at a different rate for another state or area.”
Compl. at ¶59. Second, citing United States v. Ptasynksi, 462 U.S. 74, 81 (1983), it is alleged that
geographic distinctions will be closely scrutinized. Compl. at ¶64. Third, it is alleged that District residents
are taxed at a higher than necessary rate. The allegations are grounded on the District’s lack of
representation. Id. at ¶¶65 - 69.
There is no allegation in the Complaint that Congress has “laid” a tax on the District. Instead, it is
alleged that, because of the Prohibition against a District-imposed nonresident income tax, the District,
itself, must impose higher taxes to fund its operation. Compl. at ¶¶5, 7, 11, 17, 40, 43, 50. Thus, on their
face, the claims are not within the language of Art. I, §8, cl. 1.
Assuming, however, that the claims are within the prohibition against Congressional imposition of
non-uniform taxes, the next step would be to analyze that lack of uniformity in the context of the Seat of
Government clause, which confers plenary power on Congress to act as a State legislature for the District.
Maryland’s General Assembly may impose taxes that no other state legislature imposes without running
afoul of Art. I, §8, cl. 1. The District’s contention must be that Congress, when acting as its state legislature,
possesses less power than an equivalent state legislature. Such a contention, however, would be contrary to
Art. I, § 8, cl. 17.30
30
Under the Revitalization Act, the District receives favorable tax treatment. This raised some
concerns. As stated in the “Written Testimony of the Joint Committee on Taxation Staff Regarding
President Clinton’s Tax Proposals for the District of Columbia,” 100 DER-L-1, *10, 1997: “The provision
of special tax treatment to certain business activities conducted in the District of Columbia as contemplated
in the Administration proposals raises a potential constitutional issue.” After reviewing Ptasynksi, the report
concluded that: “Explicit geographic distinctions in Federal tax statutes are not necessarily invalid under the
(continued...)
29
No statute has ever been struck down by the Supreme Court under the Uniformity Clause. Thompson
Multimedia, Inc. v. U.S., 219 F.Supp.2d 1322, 1326 (CIT 2002). Under Ptasynksi, 462 U.S. at 84, where
Congress defines the subject of a tax in nongeographic terms, the Uniformity Clause is satisfied. If
geographic terms are used, the tax may be invalidated only if it results in “actual geographic discrimination.”
Id. at 85. Congress has wide latitude under the clause and may consider geographically isolated problems,
such as the increased cost of oil drilling in Alaska. Id. at 84. The Supreme Court expressly noted that “[i]t
is recognized that Congress’ power to tax is virtually without limitation. . . .” Id. at 79. The Uniformity
Clause was intended to address concerns “that the national government would use its power over
commerce31 to the disadvantage of particular States.” Id. at 80.
A tax may be uniform even if it does not fall equally or proportionally on each State. Id. at 82. Thus,
Congress could tax persons who immigrated through ports, but not by land. Id. And, it could enact a statute
that applied solely and only to railroads in the northeast and midwest. Id. at 83. Or, it could legislate
regarding the topic of oil drilling in Alaska. It could impose a tax on tobacco, even though tobacco is not
grown in some states. The Uniformity Clause does not deny Congress the power to take into consideration
the “differences that exist between different parts of the country, and to fashion legislation to resolve
geographically isolated problems.” Id. at 83-84. In short:
30
(...continued)
Uniformity Clause.” It stated that Congress can fashion legislation “to address ‘geographically isolated
problems.’” Id. at * 11 (citation omitted). Staff Study concluded that the favorable tax treatment of the
District would be tied to high poverty rates and was therefore likely permissible under the Uniformity
Clause.
31
The Prohibition is based on the Seat of Government, not the Commerce, clause.
30
We cannot say that when Congress uses geographic terms to identify the same subject, the
classification is invalidated. The Uniformity Clause gives Congress wide latitude in deciding
what to tax and does not prohibit it from considering geographically isolated problems.
Id. at 85.32 In explaining its refusal to strike down the “exempt Alaskan oil” provision, the Supreme
Court gave great deference to Congressional deliberation in creating the law:
In this case, we hold that the classification is constitutional. As discussed above, Congress
considered the windfall profit tax a necessary component of its program to encourage the
exploration and production of oil. . . .
Congress clearly viewed “exempt Alaskan oil” as a unique class of oil that, consistent with
the scheme of the Act, merited favorable treatment. It had before it ample evidence of the
disproportionate costs and difficulties–the fragile ecology, the harsh environment, and the
remote location–associated with extracting oil from that region. We cannot fault its
determination based on neutral factors, . . .
***
Where, as here, Congress has exercised its considered judgment with respect to an
enormously complex problem we are reluctant to disturb its determination.
Ptasynksi, 462 U.S. at 85-86.
Here, after extensive deliberation, Congress acted under the Seat of Government clause to enact the
Home Rule Act of 1973 for the District. The Prohibition was contained in that statute. The Prohibition and
the Home Rule Act were passed under a Constitutional provision that is, by its terms, geographically limited.
To assert that Congressional action under a Constitutional provision that is geographically limited
constitutes geographic discrimination is tautological.
The Prohibition operates to protect all nonresidents against the District making detrimental policy
decisions that concerned Congress. While, from the District’s perspective, the Prohibition may appear
32
Where Congress uses geographic terms, the classification will be examined closely. Ptasynksi,
462 U.S. at 85.
31
geographically limited, it is, in fact, applicable to all nonresidents who earn income in the District. Whether
that nonresident is a New Yorker or a Californian, Congress did no more than say that the District cannot
tax his or her local income. The actual tax complained of is a District, not a Congressional tax. The
Prohibition is not described in geographic terms (except as compelled by Art. I, § 8, cl. 17) and it is therefore
permissible; however, even if it were deemed to contain such terms, there is no actual geographic
discrimination. Congress simply considered the geographically unique problems of the District in relation
to the rest of the nation, in light of the purposes of the District, and enacted a Prohibition that applies to the
widest possible geographical area that could be the subject of legislation passed under the geographicallylimited District clause. The Prohibition is within Congress’ “wide latitude” to consider “geographically
isolated problems,” i.e., governance of the District under the exclusive jurisdiction provision of the
Constitution.
2.
The Privileges and Immunities Clauses.
It is not clear which Privileges and Immunities Clause is being invoked by the District. In Adams,
90 F.Supp.2d at 68 n.65, the plaintiffs relied on the Fourteenth Amendment, §1, and not on Article IV, §2.
The latter, referred to as the comity clause, prohibits distinctions between citizens of a state and citizens of
another state if they are unreasonable and it is “a specialized type of equal protection provision which
guarantees that all classifications which burden persons because they are not citizens of the state must
reasonably relate to legitimate state or local purposes.” R. Rotunda & J. Nowak, Treatise on Constitutional
Law (3d ed.), 524. The Fourteenth Amendment clause “protects very few rights.” Id. It protects those rights
which are peculiar to being a citizen of the federal government. Id. “Therefore, the clause refers only to
uniquely federal rights such as the right to petition Congress, the right to vote in federal elections, the right
32
to interstate travel or commerce, the right to enter federal lands, or the rights of a citizen while in the custody
of federal officers.” Id. In Adams, 90 F.Supp.2d at 68, this Court assumed (without deciding) that the
Fourteenth Amendment Privileges and Immunities clause was incorporated into the Fifth Amendment.
In Adams, plaintiffs asserted that the right to vote was a privilege of national citizenship that was
being denied. Here, the asserted privilege of national citizenship that is being denied is the right not “to be
subjected to inter-jurisdictional discriminatory tax legislation imposed by a sovereign in whose legislature
the citizen has no representation.” Compl. at ¶68. It is important to recognize, however, that the second half
of that asserted privilege - the right to representation - has been conclusively held not to exist. Adams, 90
F.Supp.2d at 35. Thus, that right cannot be a privilege of national citizenship.
The Complaint reverses standard privilege and immunities analysis. Austin, 420 U.S. at 656,
presented a far more typical situation. There, Maine residents employed in New Hampshire were subjected
to a discriminatory commuter tax. The out-of-state residents sued the taxing state under the Privileges and
Immunities clause of Art. IV. The Court wrote that the comity clause was needed because of “the practice
of some States denying to outlanders the treatment that its citizens demanded for themselves. . . .” Id. at 660.
In short, the clause prevented a factual situation that is precisely the opposite of the one presented by the
District. It was intended, for example, to protect a Maryland citizen who was going into the District, not
to protect the District against its own government, the Congress.
Igoe v. Pataki, 182 Misc.2d 298, 696 N.Y.S.2d 355 (1999), aff’d, 94 N.Y.2d 577, 730 N.E.2d 920
(2000), is similar. In that case, citizens from outside New York challenged New York’s commuter tax, on
privileges and immunities grounds, because it was imposed only on non-City residents who were also nonState residents. The court applied Privileges and Immunities analysis to the “outlanders’” claims against the
33
taxing entity. The court stated that the clause prevented discriminatory treatment of nonresidents. It did not
say that the clause created rights of the residents against their sovereign. The court noted that: “In the course
of the approximately 130 years separating Ward and Lunding, courts have repeatedly found that the
Privileges and Immunities Clause specifically prohibits unduly burdensome taxation on nonresidents.” Id.
at 301-02, 696 N.Y.S.2d at 358-59. The emphasis, of course, is on the protection of nonresidents:
The State bases its argument on the fact that New York State resident commuters bear a
greater tax burden than nonresident commuters in terms of fiscal support provided to New
York City. This may be true. But the mere fact that the Legislature has already taxed its
citizens to a certain degree does not lead to the conclusion that it may subsequently tax
nonresidents in an attempt to equalize the burden. [citation omitted]. Should the Court hold
otherwise, each state could regularly tax nonresidents for the given reason that the
nonresidents utilize the state’s resources. Plainly, each state’s residents pay more to their
state’s treasury in taxes than nonresidents do. Such is the nature of state taxation. However,
this mechanism does not justify a state’s impingement on the rights of nonresidents who seek
to obtain employment. [citation omitted]. Under the State’s reasoning, a state would be
permitted to impose taxes on its residents and then cite such taxation as reason to impose a
separate tax solely on nonresidents. The Privileges and Immunities Clause does not permit,
and this Court will not condone, such a practice.
Id. at 304, 696 N.Y.S.2d at 360. In short, the clause typically protects the rights of nonresident citizens to
be exempt from taxes that are more onerous than those imposed by the taxing state on its own citizens. City
of N.Y., 94 N.Y.2d at 596, 730 N.E.2d at 929. At is core, the privileges and immunities clause is designed
to protect a citizen from State A who ventures into State B. Toomer v. Witsell, 334 U.S. 385, 395 (1948).
In Madden v. Kentucky,309 U.S. 83 (1940), however, Kentucky imposed a tax on bank deposits in
Kentucky that was five times less than the tax on deposits in other states. The Kentucky taxpayer/estate
asserted, among other things, a violation of the privileges and immunities clause. The Court noted that the
burden is on one who is attacking a tax classification to negate every conceivable basis which might support
it. The Court identified the privilege at issue as the right to carry on business in another state, a right
34
“appertaining to national citizenship.” Id. at 90. It held that the right to deposit money in out-of-state banks
is not a privilege of national citizenship. Id. at 92-93. Noting that states have plenary power of taxation, the
Court will limit that power only when there is an “emphatic requirement[] of the Constitution. . . .” Id. at
93. Thus, the clause was used in a Kentucky citizen’s challenge of a Kentucky statute discriminating against
out-of-state transactions. The statute was held to be constitutional.
Here, the District has not asserted that it is being subjected to discriminatory taxes when its citizens
enter a neighboring state. Instead, it has sued the United States, asserting that its privilege to not be subjected
to discriminatory inter-jurisdictional taxation is at issue. As noted in the Uniformity Clause discussion,
however, the District has no such right. As in Madden, no right of national citizenship has been asserted.
3.
Equal Protection.
The Equal Protection claim parallels the Privileges and Immunities claim. Compl. ¶68. It is based
on the alleged “inter-jurisdictional discriminatory tax legislation imposed by a sovereign in whose
legislature the citizen has no representation.” Id.
In U.S. v. Cohen, 733 F.2d 128 (D.C.Cir. 1984), the Court rejected an equal protection and due
process challenge to a Congressional statute imposing a unique civil commitment procedure on the District.
It held that strict scrutiny was inapposite. It pointed out that, “even if one accepts the thesis that the class
in question is residents of the District of Columbia, the mere lack of the ballot does not establish political
powerlessness, or, if it does, political powerlessness alone is not enough for ‘suspect class’ status.” Id. at
136. It also described the notion that the District is “politically powerless” as “fanciful.” Id. It squarely
stated that distinctive legislative treatment of the District is not suspect. Id. at 44 n. 12.
35
Similarly, a non-profit organization sued to obtain tax exempt status in Regan v. Taxation With
Representation of Washington,461 U.S. 540 (1983). It relied in part on the equal protection component of
the Fifth Amendment. The Supreme Court stated that statutory classifications are valid if they bear a
rational relationship to a legitimate governmental purpose. It pointed out that a higher level of scrutiny is
applicable if a statute interferes with a fundamental right or employs a suspect classification. Id. at 547. It
stated: “Legislatures have especially broad latitude in creating classifications and distinctions in tax
statutes.” Id. The rationale is that, traditionally, classification is the technique used to fit tax programs to
local needs. Id. Even though the organization asserted a fundamental, First Amendment right, the Court held
that strict scrutiny was an error and that Congressional selection of particular entities for this type of benefit
was “a matter of policy and discretion not open to judicial review unless in circumstances which we here
are not able to find.” Id. at 549; accord Midan Ltd. Partnership v. District of Columbia, 692 A.2d 1340
(D.C. 1997)(where litigant cannot show suspect class or violation of fundamental right in taxation notice
claim, test is rational relationship, not strict scrutiny).
Here, as previously noted, Adams, 90 F.Supp.2d at 65-66, disposes of any claim related to the lack
of a right to vote in Congress. Because no such right exists, the absence of it cannot show that the District
is being deprived of a fundamental right or is a member of a suspect class. Thus, the standard to be applied
to the discriminatory taxation claim is the rational relationship test. It was and is not irrational for Congress
to decide to enact the Prohibition. The rationale for that decision has been described, above. Where, as here,
Congress carefully considered all of the arguments and acted under its express Art. I powers, and where, as
here, the claims involve taxation, a matter where legislatures have broad discretion, the Equal Protection
36
claim should fail. Statutes adjusting the burdens of economic life have a presumption of validity, AFGE,
619 A.2d at 90, and a party challenging them has the burden of proving that they are irrational and arbitrary.
4.
Due Process.
Presumably, the District relies on the due process clause of the Fifth, not the Fourteenth,
Amendment. To the extent to which the District relies on that clause to incorporate the other Constitutional
rights discussed, above, that discussion is incorporated herein. This Court has stated that the procedural
component of the Due Process clause does not impose a limit on Congress’ legislative power. Adams, 90
F.Supp.2d at 71 n. 72.
To make a substantive due process claim, a plaintiff must both overcome a presumption of
constitutionality and also “establish that the legislature acted in an arbitrary and irrational way.” AFGE, 619
A.2d at 89. For reasons stated above, the District cannot carry this burden in light of the Congressional
record.
V.
SEVERABILITY.
Here, the District seeks a ruling that the Prohibition, a “linchpin” of the Home Rule Act, see
discussion, above, is unconstitutional. The statute does not contain a severability clause. McClough v. U.S.,
520 A.2d 285, 289 (D.C. 1987).
The District of Columbia courts have held two provisions of the act to be unconstitutional and
severable. McClough v. U.S., 520 A.2d at 285; Gary v. U.S., 499 A.2d 815 (1985), cert. denied, 475 U.S.
1470 (1986). The holdings in those cases, however do not dictate the same result here, where the Prohibition
is such a significant part of the Home Rule Act and where the legislative history reveals that the Prohibition
was part of the whole Congressional scheme–that Congress would not have passed Home Rule without it.
37
The court in McClough noted the standard on severability, as well as its “elusive” nature:
Generally, courts sever invalid provisions unless it is “evident” that, but for those provisions,
the legislature would not have enacted the remaining provisions. Id. at 821; Chadha, supra,
462-U.S. at 931-32, 103 S.Ct. at 2773-74; Buckley v. Valeo, 424 U.S. 1, 108-09, 96 S.Ct.
612, 677-78, 46 L.Ed. 2d 659 (1976). This type of inquiry is elusive because Congress might
well have considered many other alternatives, and because the court must determine how
many provisions are part of “the law.” Nonetheless, there is a presumption of severability
whenever the remaining provisions, standing alone, are “fully operative as a law.” Champlin
Refining Co. v. Corporation Commission, 286 U.S. 210, 234, 52 S. Ct. 559, 565, 76 L.Ed.
1062 (1932)
McClough, 520 A. 2d at 285. The controls imposed by Congress, including the limitations on taxation,
“were viewed by Congress as the central mechanisms insuring appropriate federal oversight.” Id. at 290. If
one of the central mechanisms is unconstitutional, it cannot be severed from the statute.
VI.
CONCLUSION.33
If it chose to do so, Congress could abolish the District government. It can, therefore, also limit the
powers delegated to that entity. To the extent to which the District is treated differently by Congress, that
treatment is intrinsic to the Constitution, as the direct result of the concerns raised by the 1783 mutiny. As
33
Maryland is unable to address the GAO report, on which the District so heavily relies to support
its “structural imbalance” argument, in this Rule 12(b)(6) motion. As stated in note 6, above, that argument
is irrelevant.
At this juncture, Maryland does no more than note that the GAO report is subject to challenge on
many bases, including methodological issues and the many debatable assumptions that are made. See
Repeal at 102 (citing OMB study), 123 (citing Urban Institute report), 177 (citing COG report), 202 (taxes
paid by commuters are more than twice as much as the cost of services provided to those commuters); Staff
Study at 23 (citing Maryland study).
38
Maryland stated to Congress in 1976: “It seems incongruous to us to eliminate the financial plight of one
government at the expense of another government. . . .” 1976 Hearings at 177.34
Wherefore, the State of Maryland requests that this Court grant its Motion to Dismiss the Complaint.
Respectfully submitted
J. Joseph Curran, Jr.
Attorney General of Maryland
/s/
MICHAEL D. BERMAN
Deputy Chief of Litigation
TERESA M. ELGUEZABAL
Assistant Attorney General
Office of the Attorney General
200 St. Paul Place
Baltimore, Maryland 21202
(410) 576-6345 (voice)
(410) 576-6955 (facsimile)
34
The District has requested a trial by jury. The entire pool of jurors - residents of the District - has
a direct financial interest in the outcome of this case. To the extent, if any, that this is a venue issue that must
be raised initially, Maryland raises it. The issue is, however, more appropriately left to a later date.
39
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 14th day of October, 2003 a copy of the foregoing Memorandum
in Support of State of Maryland’s Motion to Dismiss the Complaint was electronically served on:
M. Banner, Jr., Esquire
1847 Ontario Place, NW
Washington, DC 20009-2108
John Nields, Esquire
Howrey Simon Arnold & White, LLP
1299 Pennsylvania Avenue, NW
Washington, DC 20004
Walter Smith, Esquire
D.C. Appleseed Center for Law and Justice
733 Fifteenth Street, N.W.
Washington, D.C. 20005
Rupa Bhattacharyya, Esquire
Trial Attorney, Federal Programs Branch
Civil Division, U.S. Department of Justice
P.O. Box 883, 20 Massachusetts Ave., N.W.
Washington, D.C. 20044
Gary Thompson, Esquire
Gilbert Heintz & Randolph LLP
1100 New York Ave. N.W., Suite 700
Washington, D.C. 20005
William H. Hurd, Esquire
State Solicitor
900 East Main Street
Richmond, VA 23219
Lois Williams, Esquire
Washington Lawyers Committee for
Civil Rights & Urban Affairs
11 Dupont Circle, Suite 400
Washington, D.C. 20036
Maureen R. Matsen, Esquire
Deputy State Solicitor
900 East Main Street
Richmond, VA 23219
Carolyn Lamm, Esquire
White & Case, LLP
601 Thirteenth Street, N.W.
Suite 600 South
Washington, D.C. 20005
/s/
Michael D. Berman
40