Senate votes to overturn DC tax decoupling, as locals push back
Published in Political News
WASHINGTON — The Senate passed a joint resolution on Thursday blocking changes to the District of Columbia’s tax code, which will now head to President Donald Trump’s desk.
District officials warned it could cause delays during tax season and devastate the city’s budget, and suggested Congress had missed its window to intervene in the local actions.
It is rare for Congress to use its power to nullify local laws in D.C., with just four other examples in recent decades, according to the Congressional Research Service: in 1979, 1981, 1991 and 2023.
“We are seeing sort of an unprecedented level of micromanagement under this administration, and Congress seems to be following this administration in its bullying of D.C.,” said Stasha Rhodes, a senior adviser at D.C. Vote, an advocacy group that pushes for equality for D.C. residents.
The disapproval resolution would reverse a decision by the D.C. Council to reject some of Trump’s signature tax policies, such as “no tax on tips.” The House narrowly passed the measure last week along party lines, and the final tally in the Senate was 49-47.
In pleas to congressional leaders, local officials cited projections that the District is poised to lose hundreds of millions in revenue over the next five years if it conformed to the federal code. By decoupling, the District was able to put resources toward a local child tax credit and an expanded earned income tax credit, they said.
“It could lead to confusion among taxpayers, higher error rates, delayed refunds, significant new administrative costs,” Rhodes said of the move by Congress.
Other states have chosen to decouple their own tax codes from the federal one, but unlike them, D.C. has only limited control. Under what’s known as the Home Rule Act of 1973, Congress retains the right to squash legislation passed by the D.C. Council during a review period.
In the past, local officials and Congress have disagreed over how to count the 30 days in that review period. That appeared to be the case again on Thursday, as D.C. Council Chairman Phil Mendelson posted a notice that the review period had ended and that the tax decoupling was now law.
When asked about the discrepancy on Thursday afternoon, Sen. Rick Scott, R-Fla., brushed it off.
“I guess he can go to court. I’m pretty comfortable we did everything on time,” said Scott, who sponsored the disapproval resolution in the Senate.
Republicans have accused D.C. leaders of acting out their dislike of Trump by denying tax breaks to local families. Unless Congress intervened, the council’s decoupling decision would “crush” local residents and businesses, Scott said.
“President Trump and Republicans have done all we can to make things better, affordable and lower cost … I urge my colleagues to all do our constitutional duty to the people of D.C.,” he said Wednesday on the floor.
Resolutions of disapproval are not subject to the filibuster and need only a simple majority to advance through the full Senate, unlike other bills the House has passed regarding D.C. but the Senate has yet to take up.
In a letter to House and Senate leaders, D.C. Chief Financial Officer Glen Lee said congressional interference in the Council’s actions would potentially require the District to suspend its tax filing season, which has already begun, for several months to redo instructions and forms.
“This isn’t oversight or governance. It’s administrative and fiscal sabotage of DC,” Del. Eleanor Holmes Norton said on X Monday.
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