Bill to Seek Taxes From Fannie Mae; Exemption Unfair, D.C. Official Says
D.C. Council member John Ray (D-At Large) said yesterday that he will introduce legislation requiring mortgage giant Fannie Mae to pay $300 million annually in District income taxes, a move that could wipe out the city's budget deficit.</br></br>Ray said he decided to push the measure after a series of articles about Fannie Mae in The Washington Post prompted a flood of reaction from D.C. residents, who were outraged that the most profitable company in the city pays no local income taxes. Ray said that the articles and the public reaction caused council members to reconsider the matter and that D.C. Council Chairman David A. Clarke (D) asked him to introduce the bill.</br></br>Until now, the council's focus amid the city's worst budget crisis ever has been on cutting costs, including slashing social services, reducing government employment and transferring control of the Lorton Correctional Complex to the federal government. The prospect of taxing Fannie Mae raises the possibility that part of the solution to the city's problems may lie in additional tax dollars.</br></br>Fannie Mae, which employs 2,252 people in the District, has threatened to leave the city if any new tax is imposed because the company would be at a competitive disadvantage with its chief rival, the McLean-based Federal Home Loan Mortgage Corp. (Freddie Mac). Ray said his bill would diminish Fannie Mae's incentive to move by recommending that Congress give Virginia the right to tax Freddie Mac.</br></br>Fannie Mae has formidable political clout in Congress and lobbied hard to prevent the D.C. Council from publicly debating and voting on the tax issue last year. "Fannie Mae believes our congressional charter serves American home buyers by preventing individual jurisdictions from raising the cost of home ownership through the imposition of local taxes," company spokesman David Jeffers said yesterday.