Norton Proposes Deep D.C. Tax Cut; Plan Aimed at Enticing Middle Class to Stay
Del. Eleanor Holmes Norton (D-D.C.) introduced legislation yesterday that would slash federal income taxes for D.C. residents, a move aimed at stabilizing the city's economy by keeping the middle class from moving away.</br></br>Norton previously had called for elimination of federal income taxes in the city, but she said she scaled back that proposal to increase the prospect of congressional approval. While acknowledging the long odds the bill faces during this election year, Norton said the measure would slow the exodus from the city.</br></br>"This bill has an extraordinary psychological effect on Washingtonians of every race and every background," she said. "We have to get people thinking something good can happen."</br></br>Norton's D.C. Economic Recovery Act would replace the current federal income tax schedule -- with rates of up to 39.6 percent at the highest income levels -- with a flat 15 percent tax rate for D.C. residents. In addition, the bill would more than double a federal deduction known as the personal exemption. That would eliminate federal income taxes for single residents who make up to $15,000 a year, for single heads of households who make up to $25,000 and for married couples filing jointly who make up to $30,000.</br></br>Deductions for mortgage interest and charitable contributions would remain in place, and D.C. residents would pay no capital gains taxes on the sale of investments in the city.