II

105TH CONGRESS

1ST SESSION S. 1070

To provide for a regional education and workforce training system in the

metropolitan Washington area, to improve the school facilities of the

District of Columbia, and to fund such activities in part by an income

tax on nonresident workers in the District of Columbia.

IN THE SENATE OF THE UNITED STATES

JULY 25, 1997

Mr. JEFFORDS introduced the following bill; which was read twice and

referred to the Committee on Finance

A BILL

To provide for a regional education and workforce training

system in the metropolitan Washington area, to improve

the school facilities of the District of Columbia, and

to fund such activities in part by an income tax on

nonresident workers in the District of Columbia.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Metropolitan Washington Education and Workforce

6 Training Improvement Act of 1997’’.
2

•S 1070 IS

1 (b) TABLE OF CONTENTS.—The table of contents of

2 this Act is as follows:

Sec. 1. Short title and table of contents.

Sec. 2. Findings and purpose.

TITLE I—METROPOLITAN WASHINGTON EDUCATION AND

WORKFORCE TRAINING GRANTS

Sec. 101. Definitions.

Sec. 102. Grants.

Sec. 103. Metropolitan Partnership.

Sec. 104. Metropolitan Board.

TITLE II—METROPOLITAN WASHINGTON EDUCATION AND

WORKFORCE TRAINING TAX

Sec. 201. Tax on income of nonresidents.

Sec. 202. Repeal of unincorporated business tax.

Sec. 203. Withholding and returns.

Sec. 204. Credit for State income tax payments.

Sec. 205. Technical amendment.

Sec. 206. Reciprocal tax collection.

Sec. 207. Metropolitan Washington Education and Workforce Training Trust

Fund.

Sec. 208. Effective date.

3 SEC. 2. FINDINGS AND PURPOSE.

4 (a) FINDINGS.—The Congress finds that—

5 (1) the Greater Washington Metropolitan Area

6 has an expanding regional economy but suffers from

7 a serious regional labor market shortage that threat8 ens economic growth;

9 (2) the region’s education and training systems,

10 particularly in the District of Columbia, fail to pro11 vide many youths and adults with the skills nec12 essary to be competitive in the regional labor mar13 ket;

14 (3) the need for a better skilled area workforce

15 makes it imperative that the region’s businesses,
3

•S 1070 IS

1 educational institutions, and governments work to2 gether to provide youth and adults with the edu3 cation and training necessary to meet the needs of

4 the 21st century;

5 (4) the condition of school facilities is a major

6 impediment to improving the quality of education in

7 the District of Columbia and their repair and mod8 ernization is a necessary step in making the Dis9 trict’s public schools a full partner in preparing stu10 dents for the regional labor market;

11 (5) the University of the District of Columbia,

12 as well as other area institutions of post-secondary

13 education, have an important role to play in provid14 ing skills training to meet the needs of the regional

15 labor market;

16 (6) although the present revenues for the Dis17 trict of Columbia public school system provide suffi18 cient operating funds, as with other public school

19 systems in the metropolitan region, there are insuffi20 cient revenues for programs to prepare students to

21 compete in the global economy and or to provide stu22 dents with the skills demanded by the local market:

23 and

24 (7) the Greater Washington Metropolitan Area

25 has an opportunity to set a national example of re-
4

•S 1070 IS

1 gional cooperation in engaging in education reform

2 and workforce training.

3 (b) PURPOSE.—

4 (1) IN GENERAL.—It is the purpose of this Act

5 to foster the development of a regional workforce in6 vestment system that will bring about improvements

7 in education and workforce preparation by—

8 (A) creating a metropolitan partnership

9 through which area businesses, school systems,

10 postsecondary institutions, and governments

11 can cooperate in charting a course for reforms

12 and investments in education and workforce

13 training; and

14 (B) providing the Greater Washington

15 Metropolitan Area with the resources necessary

16 to lead the Nation in improving its capacity to

17 provide for a highly educated and skilled

18 workforce.

19 (2) NONRESIDENT TAX.—The purpose of im20 posing the tax established by title II is to—

21 (A) fund the repair and modernization of

22 District of Columbia public schools; and

23 (B) provide resources to carry out the ac24 tivities of a Washington metropolitan partner25 ship as described in title I.
5

•S 1070 IS

1 TITLE I—METROPOLITAN WASH2 INGTON EDUCATION AND

3 WORKFORCE TRAINING

4 GRANTS

5 SEC. 101. DEFINITIONS.

6 In this title:

7 (1) ELEMENTARY SCHOOL; LOCAL EDU8 CATIONAL AGENCY; SECONDARY SCHOOL.—The

9 terms ‘‘elementary school’’, ‘‘local educational agen10 cy’’, and ‘‘secondary school’’ have the meanings

11 given the terms in section 14101 of the Elementary

12 and Secondary Education Act of 1965 (20 U.S.C.

13 8801).

14 (2) METROPOLITAN REGION.—The term ‘‘met15 ropolitan region’’ means the Washington, D.C. met16 ropolitan area, as defined by the Secretaries.

17 (3) POSTSECONDARY INSTITUTION.—The term

18 ‘‘postsecondary institution’’ has the meaning given

19 the term ‘‘institution of higher education’’ in section

20 481 of the Higher Education Act of 1965 (20

21 U.S.C. 1088).

22 (4) PRINCIPAL.—The term ‘‘principal’’ means

23 an elementary school or secondary school principal.
6

•S 1070 IS

1 (5) SECRETARIES.—The term ‘‘Secretaries’’

2 means the Secretary of Education and the Secretary

3 of Labor, acting jointly.

4 (6) TEACHER.—The term ‘‘teacher’’ means an

5 elementary school or secondary school teacher.

6 SEC. 102. GRANTS.

7 (a) IN GENERAL.—Using funds made available from

8 the Metropolitan Washington Education and Workforce

9 Training Trust Fund, established in section 208, the Sec10 retaries shall make grants to agencies and organizations

11 to assist the agencies and organizations in carrying out

12 the education and workforce training activities described

13 in subsection (c) in the metropolitan region.

14 (b) ELIGIBILITY.—

15 (1) IN GENERAL.—To be eligible to receive a

16 grant under this section, an entity shall be a local

17 educational agency, or a public or private organiza18 tion with demonstrated ability and experience in car19 rying out the education and workforce training ac20 tivities.

21 (2) WORKFORCE TRAINING.—To be eligible to

22 receive a grant under this section to provide services

23 described in subsection (c)(5), an entity shall—

24 (A) be an postsecondary institution, busi25 ness, or another provider of workforce training,
7

•S 1070 IS

1 such as literacy services, in the metropolitan re2 gion; and

3 (B) have demonstrated ability and experi4 ence in providing workforce training.

5 (c) USE OF FUNDS.—An agency or organization that

6 receives a grant under subsection (a) shall use funds made

7 available through the grant to carry out activities in the

8 metropolitan region that consist of—

9 (1) providing professional development activi10 ties, including access to model professional develop11 ment programs, for teachers and principals;

12 (2) developing apprenticeships and other pro13 grams that provide business experience to teachers

14 who are participating in vocational training or tech15 nology training;

16 (3) constructing, renovating, repairing, or im17 proving elementary schools, secondary schools, or

18 other educational facilities for workforce training

19 programs;

20 (4) developing partnerships between businesses,

21 and vocational education or vocational training pro22 viders, to carry out student internship programs;

23 (5) providing youth and adult workforce train24 ing with remedial help such as literacy services;
8

•S 1070 IS

1 (6) establishing model benchmarks to be used

2 in the development of rigorous education and

3 workforce training curricula;

4 (7) providing for both annual and long-term

5 evaluation and assessment of other education and

6 workforce training activities described in this sub7 section, including evaluation and assessment of—

8 (A) the degree to which expenditures of

9 funds made available through the grant result

10 in improvements in the activities;

11 (B) the extent to which the activities suc12 ceed in preparing participants for entry into

13 postsecondary education, further learning, or

14 high-skill, high-wage careers;

15 (C) the effect of benchmarks, performance

16 measures, and other measures of accountability

17 on the delivery of the activities; and

18 (D) the extent to which vocational training

19 enhances the employment and earning potential

20 of participants, reduces income support costs,

21 and increases the level of employment in the

22 metropolitan region;

23 (8) assisting in the development of individual

24 mentoring and parental involvement programs and
9

•S 1070 IS

1 career path records for elementary and secondary

2 school students;

3 (9) establishing—

4 (A) voluntary skill standards for partici5 pants in workforce training; and

6 (B) a methodology to assess the partici7 pants and certify attainment of the standards;

8 (10) assessing the need for, and utilization of,

9 educational technology in the metropolitan region,

10 including assessment of the potential for linkages

11 among—

12 (A) elementary schools or secondary

13 schools;

14 (B) workforce training providers; and

15 (C) businesses;

16 (11) improving educational technology in ele17 mentary schools or secondary schools; or

18 (12) providing resources to extend a school year

19 or school day for any elementary school or secondary

20 school that elects to make such an extension.

21 (d) APPLICATION.—To be eligible to receive a grant

22 under this section, an agency or organization shall submit

23 an application to the Secretaries at such time, in such

24 manner, and containing such information as the Secretar25 ies may require.
10

•S 1070 IS

1 (e) DISTRIBUTION OF FUNDS.—

2 (1) IN GENERAL.—In making grants under sub3 section (a), the Secretaries shall, to the extent prac4 ticable, ensure that the funds made available

5 through the grants are equitably distributed among

6 the jurisdictions in the metropolitan region.

7 (2) SPECIAL RULE FOR THE DISTRICT OF CO8 LUMBIA.—Any grants awarded to District of Colum9 bia public schools under this section shall be ex10 pended in a manner consistent with section

11 2101(b)(1) of Public Law 104–134.

12 (f) MAINTENANCE OF EFFORT.—

13 (1) DEFINITION.—As used in this subsection,

14 the term ‘‘covered activities’’ means education and

15 workforce training activities described in subsection

16 (c) and carried out in the District of Columbia.

17 (2) IN GENERAL.—Except as provided in para18 graphs (3) and (4), no payments shall be made

19 under this title for any fiscal year to an agency or

20 organization for covered activities, unless the Sec21 retaries determine that the fiscal effort per partici22 pant or the aggregate expenditures of the agency or

23 organization for the activities for the fiscal year pre24 ceding the fiscal year for which the determination is

25 made, equaled or exceeded the effort or expenditures
11

•S 1070 IS

1 for the activities for the second fiscal year preceding

2 the fiscal year for which the determination is made.

3 (3) COMPUTATION.—In computing the fiscal ef4 fort or aggregate expenditures pursuant to para5 graph (2), the Secretaries shall exclude capital ex6 penditures, special one-time project costs, similar

7 windfalls, and the cost of pilot programs.

8 (4) DECREASE IN FEDERAL SUPPORT.—If the

9 amount made available for covered activities under

10 this title for a fiscal year is less than the amount

11 made available for the activities under this title the

12 preceding fiscal year, then the fiscal effort per par13 ticipant or the aggregate expenditures of the agency

14 or organization required by paragraph (2) for the

15 preceding fiscal year shall be decreased by the same

16 percentage as the percentage decrease in the amount

17 so made available.

18 (g) TECHNICAL ASSISTANCE FOR SKILL STANDARDS

19 AND METHODOLOGY.—If the Secretaries make a grant to

20 an agency or organization under this section to establish

21 the standards and methodology described in subsection

22 (c)(7), the National Skill Standards Board established

23 under section 503 of the National Skill Standards Act of

24 1994 (29 U.S.C. 5933) shall provide technical assistance

25 to the agency or organization.
12

•S 1070 IS

1 SEC. 103. METROPOLITAN PARTNERSHIP.

2 (a) ESTABLISHMENT.—There is established in the

3 Department of Labor and the Department of Education

4 a Metropolitan Washington Education and Workforce

5 Training Partnership (referred to in this title as the ‘‘Met6 ropolitan Partnership’’), under the joint control of the

7 Secretary of Labor and the Secretary of Education.

8 (b) ADMINISTRATION.—Notwithstanding the Depart9 ment of Education Organization Act (20 U.S.C. 3401 et

10 seq.), the General Education Provisions Act (20 U.S.C.

11 1221 et seq.), the Act entitled ‘‘An Act To Create a De12 partment of Labor’’, approved March 4, 1913 (29 U.S.C.

13 551 et seq.), and section 169 of the Job Training Partner14 ship Act (29 U.S.C. 1579), the Secretaries shall provide

15 for, and exercise final authority over, the effective and effi16 cient administration of this title and the officers and em17 ployees of the Metropolitan Partnership.

18 (c) RESPONSIBILITIES OF SECRETARIES.—The Sec19 retaries, working through the Metropolitan Partnership,

20 shall approve the applications, and make the grants, de21 scribed in section 102.

22 SEC. 104. METROPOLITAN BOARD.

23 (a) METROPOLITAN BOARD.—

24 (1) COMPOSITION.—There is established, in the

25 Metropolitan Partnership, a Metropolitan Washing26 ton Education and Workforce Training Board (re-
13

•S 1070 IS

1 ferred to in this title as the ‘‘Metropolitan Board’’)

2 that shall be composed of 13 individuals, including—

3 (A) 7 individuals who are representative of

4 business and industry in the metropolitan re5 gion, appointed by the President;

6 (B) 3 individuals who are representative of

7 providers of secondary education, postsecondary

8 education, and workforce training in the metro9 politan region, appointed by the President; and

10 (C) 3 individuals who are representative of

11 local government officers and employees in the

12 metropolitan region, including at least 1 rep13 resentative of a local government in Maryland,

14 1 representative of a local government in Vir15 ginia, and 1 representative of the local govern16 ment of the District of Columbia, appointed by

17 the President.

18 (2) TERMS.—Each member of the Metropolitan

19 Board shall serve for a term of 3 years, except that,

20 as designated by the President—

21 (A) 5 of the members first appointed to

22 the Metropolitan Board shall serve for a term

23 of 2 years;
14

•S 1070 IS

1 (B) 4 of the members first appointed to

2 the Metropolitan Board shall serve for a term

3 of 3 years; and

4 (C) 4 of the members first appointed to

5 the Metropolitan Board shall serve for a term

6 of 4 years.

7 (3) VACANCIES.—Any vacancy in the Metropoli8 tan Board shall not affect the powers of the Metro9 politan Board, but shall be filled in the same man10 ner as the original appointment. Any member ap11 pointed to fill such a vacancy shall serve for the re12 mainder of the term for which the predecessor of

13 such member was appointed.

14 (4) DUTIES AND POWERS OF THE METROPOLI15 TAN BOARD.—The Metropolitan Board shall—

16 (A) provide advice to the Secretary of

17 Labor and the Secretary of Education regard18 ing reviewing and approving applications, and

19 making grants, described in section 102; and

20 (B) prepare and submit to the appropriate

21 committees of Congress an annual report on the

22 activities of the Metropolitan Partnership.

23 (5) CHAIRPERSON.—The position of Chair24 person of the Metropolitan Board shall rotate annu-
15

•S 1070 IS

1 ally among the appointed members described in

2 paragraph (1)(A).

3 (6) MEETINGS.—The Metropolitan Board shall

4 meet at the call of the Chairperson but not less

5 often than 4 times during each calendar year. Seven

6 members of the Metropolitan Board shall constitute

7 a quorum. All decisions of the Metropolitan Board

8 with respect to the exercise of the duties and powers

9 of the Metropolitan Board shall be made by a major10 ity vote of the members of the Metropolitan Board.

11 (7) COMPENSATION AND TRAVEL EXPENSES.—

12 (A) COMPENSATION.—Members of the

13 Metropolitan Board shall serve without com14 pensation. Notwithstanding section 1342 of title

15 31, United States Code, the Secretaries may ac16 cept the voluntary and uncompensated services

17 of members of the Metropolitan Board.

18 (B) EXPENSES.—The members of the Met19 ropolitan Board shall be allowed travel ex20 penses, including per diem in lieu of subsist21 ence, at rates authorized for employees of agen22 cies under subchapter I of chapter 57 of title 5,

23 United States Code, while away from their

24 homes or regular places of business in the per-
16

•S 1070 IS

1 formance of services for the Metropolitan

2 Board.

3 (8) DATE OF APPOINTMENT.—The Metropoli4 tan Board shall be appointed not later than 120

5 days after the date of enactment of this Act.

6 (9) NONTERMINATION OF BOARD.—Section 14

7 of the Federal Advisory Committee Act shall not

8 apply to the Metropolitan Board.

9 (b) DIRECTOR.—

10 (1) IN GENERAL.—There shall be in the Metro11 politan Partnership a Director, who shall be ap12 pointed by the President, by and with the advice and

13 consent of the Senate.

14 (2) COMPENSATION.—The Director shall be

15 compensated at the rate provided for level IV of the

16 Executive Schedule under section 5315 of title 5,

17 United States Code.

18 (3) DUTIES.—The Director shall carry out the

19 administrative duties of the Metropolitan Partner20 ship.

21 (4) DATE OF APPOINTMENT.—The Director

22 shall be appointed not later than 120 days after the

23 date of enactment of this Act.

24 (c) PERSONNEL.—
17

•S 1070 IS

1 (1) APPOINTMENTS.—The Director may ap2 point and fix the compensation of 2 employees to

3 carry out the functions of the Metropolitan Partner4 ship. Except as otherwise provided by law, such em5 ployees shall be appointed in accordance with the

6 civil service laws and their compensation fixed in ac7 cordance with title 5, United States Code.

8 (2) EXPERTS AND CONSULTANTS.—The Direc9 tor may obtain the services of experts and consult10 ants in accordance with section 3109 of title 5,

11 United States Code, and compensate such experts

12 and consultants for each day (including travel time)

13 at rates not in excess of the rate of pay for level IV

14 of the Executive Schedule under section 5315 of

15 such title. The Director may pay experts and con16 sultants who are serving away from their homes or

17 regular places of business travel expenses and per

18 diem in lieu of subsistence at rates authorized by

19 sections 5702 and 5703 of such title for persons in

20 Government service employed intermittently.

21 (3) DETAIL OF GOVERNMENT EMPLOYEES.—

22 Any Federal Government employee may be detailed

23 to the Metropolitan Partnership without reimburse24 ment, and such detail shall be without interruption

25 or loss of civil service or privilege.
18

•S 1070 IS

1 (4) USE OF VOLUNTARY AND UNCOMPENSATED

2 SERVICES.—Notwithstanding section 1342 of title

3 31, United States Code, the Secretary of Labor and

4 the Secretary of Education are authorized to accept

5 voluntary and uncompensated services in furtherance

6 of the objectives of this title.

7 (5) MONETARY CONTRIBUTIONS.—Notwith8 standing any other provision of law, the Metropoli9 tan Partnership may accept monetary contributions

10 to defray expenses.

11 TITLE II—METROPOLITAN

12 WASHINGTON EDUCATION

13 AND WORKFORCE TRAINING

14 TAX

15 SEC. 201. TAX ON INCOME OF NONRESIDENTS.

16 (a) DEFINITION.—

17 (1) IN GENERAL.—Title III of the District of

18 Columbia Income and Franchise Tax Act of 1947

19 (D.C. Code, secs. 47–1803.1—47–1803.2) is amend20 ed by adding at the end thereof the following new

21 section:

22 ‘‘SEC. 4. GROSS INCOME AND EXCLUSION THERE23 FROM IN THE CASE OF NONRESIDENTS.—(a) In the case

24 of nonresidents, the words ‘gross income’ shall include—
19

•S 1070 IS

1 ‘‘(1) gains, profits, and income derived from

2 salaries, wages, or compensation for personal serv3 ices performed within the District of whatever kind

4 and in whatever form paid, including salaries, wages,

5 and compensation paid by the United States to its

6 officers and employees, or income derived from any

7 trade or business carried on within the District with8 in the meaning of title X of this article or sales or

9 dealings in property located within the District,

10 whether real or personal, including capital assets as

11 defined in this article, growing out of the ownership,

12 or sale of, or interest in, such property; and

13 ‘‘(2) income derived from rent, on such prop14 erty located within the District, or transactions of

15 any trade or business carried on within the District

16 within the meaning of title X of this article for gain

17 or profit, or gains or profits.

18 ‘‘(b) In the case of nonresidents, the words ‘gross in19 come’ shall not include any of the income described in sub20 section (b) of section 2 of this title.’’.

21 (2) CONFORMING AMENDMENT.—Section 2 of

22 such title III (D.C. Code, sec. 47–1803.2) is amend23 ed by striking out ‘‘.—(a) The’’ and inserting in lieu

24 thereof ‘‘IN THE CASE OF RESIDENTS.—(a) In the

25 case of residents, the’’.
20

•S 1070 IS

1 (b) INCOME TAX ON NONRESIDENTS.—

2 (1) IN GENERAL.—The District of Columbia In3 come and Franchise Tax Act of 1947 (D.C. Code,

4 secs. 47–1801.1—47–1816.3) is amended by adding

5 at the end thereof the following new title:

6 ‘‘TITLE XVII—INCOME TAX ON NONRESIDENTS

7 ‘‘SEC. 1. INCOME TAX ON NONRESIDENTS.—(a) For

8 each taxable year, there is imposed on the taxable income

9 of each nonresident an income tax determined at a rate

10 equal to one-third of the rate applicable in the case of a

11 resident under title VI of this article.

12 ‘‘(b) In computing the net income of a nonresident

13 for purposes of this title, such nonresident shall be allowed

14 a deduction equal to that portion of the deductions which

15 would be allowed under any paragraph of section 3(a) of

16 title III of this article to the nonresident if such non17 resident were a resident which bears the same ratio to the

18 sum of such deductions as the income of such nonresident

19 subject to tax under this title bears to the gross income

20 of such nonresident from all sources.

21 ‘‘(c) In computing taxable income for purposes of this

22 title, there shall be allowed to nonresidents as credits

23 against net income the personal exemptions allowed to

24 residents under section 2 of title VI.
21

•S 1070 IS

1 ‘‘SEC. 2. LIMITATION ON AUTHORITY OF THE COUN2 CIL TO REVISE TAX ON NONRESIDENTS.—The Council of

3 the District of Columbia may not—

4 ‘‘(1) amend or otherwise revise this title so as

5 to impose any additional or greater tax on the whole

6 or any portion of the personal income of any non7 resident unless at the same time it also amends or

8 revises title VI of this article so as to impose the

9 same proportion of additional or greater tax on the

10 whole or portion of the personal income of any resi11 dent as was imposed on the whole or portion of the

12 personal income of a nonresident; or

13 ‘‘(2) provide any deductions or personal exemp14 tions to residents which are not also available, in ac15 cordance with section 1 of this title, in the case of

16 nonresidents.

17 ‘‘SEC. 3. DISPOSITION OF REVENUES.—The District

18 of Columbia shall allocate the revenues received under this

19 title as follows:

20 ‘‘(1) One-third of the revenues shall be trans21 ferred to the District of Columbia Financial Respon22 sibility and Management Assistance Authority for

23 the purpose of funding the repair and modernization

24 of public schools in the District of Columbia.
22

•S 1070 IS

1 ‘‘(2) Two-thirds of the revenues shall be trans2 ferred to the Metropolitan Washington Education

3 and Workforce Training Trust Fund established by

4 section 208 of the Metropolitan Washington Edu5 cation and Workforce Training Improvement Act of

6 1997.’’.

7 (2) PHASE-IN OF TAX.—The income tax im8 posed by title XVII of the District of Columbia In9 come and Franchise Tax Act of 1947 (as added by

10 paragraph (1) of this subsection) shall be phased in

11 as follows:

12 (A) In the calendar year beginning after

13 the date of enactment of this Act, the rate shall

be 1 14 ⁄2 of the rate imposed and revenues received

15 shall be expended as provided in section 3(1) of

16 title XVII.

17 (B) In the calendar year beginning after

18 the calendar year referred to in subparagraph

19 (A), the rate shall be the full rate imposed and

revenues received shall be expended 1 20 ⁄3 as provided in section 3(1) and 2 21 ⁄3 as provided in sec22 tion 3(2) of title XVII.

23 (3) EXISTING TAX ON NONRESIDENTS.—Title

24 VI of such Act is amended—
23

•S 1070 IS

1 (A) in the title heading, by striking out

2 ‘‘AND NONRESIDENTS’’; and

3 (B) in section 1 (D.C. Code, sec. 47–

4 1806.1)—

5 (i) by striking out ‘‘every resident’’

6 and inserting in lieu thereof ‘‘an individ7 ual’’, and

8 (ii) by inserting ‘‘in the case of resi9 dents and by section 1(c) of title XVII in

10 the case of nonresidents’’ immediately

11 after ‘‘this title’’.

12 SEC. 202. REPEAL OF UNINCORPORATED BUSINESS TAX.

13 (a) IN GENERAL.—Title VIII of the District of Co14 lumbia Income and Franchise Tax Act of 1947 (D.C.

15 Code, secs. 47–1808.1—47–1808.7) is amended—

16 (1) in the title heading, by striking out ‘‘TAX

17 ON’’ and inserting in lieu thereof ‘‘NET INCOME

18 OF’’; and

19 (2) by repealing sections 2 through 6 and in20 serting in lieu thereof the following:

21 ‘‘SEC. 2. NET INCOME OF UNINCORPORATED BUSI22 NESSES.—(a) An unincorporated business as such shall

23 not be subject to tax under this article. Individuals carry24 ing on a trade or business as an unincorporated business

25 shall be liable in their individual capacity, under title VI
24

•S 1070 IS

1 of this article in the case of residents and under title XVII

2 of this article in the case of nonresidents, for tax with

3 respect to their distributive share, whether distributed or

4 not, of the net income of such unincorporated business de5 rived from sources within the District within the meaning

6 of title X of this article. If an individual entitled to a dis7 tributive share of such net income of an unincorporated

8 business computes his income tax under this article upon

9 the basis of a period different from that upon the basis

10 of which the net income of the unincorporated business

11 is computed, then his distributive share of the net income

12 of the unincorporated business for any accounting period

13 of the unincorporated business ending within the taxable

14 year upon the basis of which such individual’s income tax

15 is computed shall be included in computing such tax.

16 ‘‘(b) If the deductions which are allowed or allowable

17 to an unincorporated business under section 3(a) of title

18 III of this article exceed the gross income of such unincor19 porated business derived from sources within the District

20 within the meaning of title X of this article, the distribu21 tive shares of such excess deductions shall be allowed as

22 deductions to the individuals entitled thereto in determin23 ing their individual tax liability under title VI of this arti24 cle in the case of residents and under title XVII of this

25 article in the case of nonresidents, except that in the case
25

•S 1070 IS

1 of a nonresident such excess deductions shall be allowed

2 to the nonresident only to the extent provided in section

3 1(b) of such title XVII. If an individual entitled to a dis4 tributive share of the excess deductions of an unincor5 porated business computes his income tax under this arti6 cle upon the basis of a period different from that upon

7 the basis of which the net income of the unincorporated

8 business is computed, then his distributive share of the

9 excess deductions of the unincorporated business for any

10 accounting period of the unincorporated business ending

11 within the taxable year upon the basis of which such indi12 vidual’s income tax is computed shall be included in com13 puting such tax.

14 ‘‘(c) In computing the net income or the excess de15 ductions of an unincorporated business for purposes of

16 this title, the full amount of the deductions described in

17 section 3(a) of title III of this article shall be allowed to

18 such unincorporated business notwithstanding that a non19 resident may be entitled to a distributive share of such

20 net income or excess deductions.’’.

21 (b) CONFORMING AMENDMENTS.—

22 (1)(A) Section 1 of title III of such Act (D.C.

23 Code, sec. 47–1803.1) is amended by inserting ‘‘or

24 unincorporated business, as the case may be,’’ imme25 diately after ‘‘taxpayer’’.
26

•S 1070 IS

1 (B) Paragraph (11) of section 3(a) of such title

2 (D.C. Code, sec. 47–1803.3(a)(11)) is amended to

3 read as follows:

4 ‘‘(11) REASONABLE ALLOWANCE FOR SALARY.—A

5 reasonable allowance for salaries or other compensation

6 for personal services actually rendered. Nothing in this

7 paragraph shall be construed to exempt any salary or

8 other compensation for personal services from taxation as

9 part of the taxable income of the person receiving such

10 salary or other compensation.’’.

11 (C) Such section 3(a) (D.C. Code, sec. 47–

12 1803.3(a)) is further amended by adding at the end

13 thereof the following new paragraph:

14 ‘‘(15) EXCESS DEDUCTIONS OF AN UNINCORPORATED

15 BUSINESS.—In the case of an individual, the distributive

16 share of any excess deductions for an unincorporated busi17 ness to which the individual is entitled under section 2(b)

18 of title VIII of this article.’’.

19 (D) Paragraph (5) of section 3(b) of such title

20 (D.C. Code, sec. 47–1803.3(b)(5)) is repealed.

21 (2)(A) Paragraph (f) of such section (D.C.

22 Code, sec. 47–1805.2(6)) is amended—

23 (i) in the first sentence, by striking out

24 ‘‘having a gross income of more than $12,000,
27

•S 1070 IS

1 regardless of whether or not it has a net in2 come’’; and

3 (ii) in the second sentence, by striking out

4 ‘‘the taxpayer or taxpayers liable for payment

5 of the tax’’ and inserting in lieu thereof ‘‘the in6 dividual or individuals who would be entitled to

7 share in the net income of the unincorporated

8 business, if distributed, and shall include the

9 name and address of each such individual and

10 the amount of the distributive share of each

11 such individual in the net income of the unin12 corporated business or, if the allowable deduc13 tions of the unincorporated business exceed its

14 gross income, the allocation among such indi15 viduals of such excess allowable deductions’’.

16 (B) Paragraph (g) of such section (D.C. Code,

17 sec. 47–1805.2(7)) is amended by striking out

18 ‘‘other than partnerships subject to the taxes im19 posed by title VIII of this article on unincorporated

20 businesses, engaged in any trade or business, or’’

21 and inserting in lieu thereof ‘‘not required to file a

22 return under paragraph (f), which is’’.

23 (3) Section 1 of title VI of such Act (D.C.

24 Code, sec. 47–1806.1) is amended by striking out

25 ‘‘and that portion of the entire net income of every
28

•S 1070 IS

1 nonresident which is subject to tax under title VIII

2 of this article’’.

3 (4) Section 1 of title X of such Act (D.C. Code,

4 sec. 47–1810.1) is amended by striking ‘‘and (2) a

5 franchise tax upon every corporation and unincor6 porated business’’ and inserting ‘‘(2) an income tax

7 on certain income of nonresidents which is derived

8 from sources within the District, and (3) a franchise

9 tax upon every corporation’’.

10 (5)(A) Section 8(a) of title XII of such Act

11 (D.C. Code, sec. 47–1812.8(a)) is amended by strik12 ing out ‘‘or unincorporated business’’ each place it

13 appears.

14 (B) Section 14 of such title (D.C. Code, sec.

15 47–1812.14–1) is amended—

16 (i) in the section caption, by striking out

17 ‘‘AND UNINCORPORATED BUSINESSES’’;

18 (ii) in the first sentence of subsection (a),

19 by striking out ‘‘and unincorporated business’’;

20 and

21 (iii) in subsection (b)—

22 (I) in the subsection caption, by strik23 ing out ‘‘OR UNINCORPORATED BUSI24 NESS’’, and
29

•S 1070 IS

1 (II) in paragraph (1), by striking out

2 ‘‘or an unincorporated business’’.

3 (6) The first sentence of section 1(a) of title

4 XIV of such Act (D.C. Code, sec. 47–1814.1(a)) is

5 amended by striking out ‘‘which is excluded from the

6 imposition of the District of Columbia tax on unin7 corporated businesses under the definition set forth

8 in section 1 of title VIII of this article’’.

9 SEC. 203. WITHHOLDING AND RETURNS.

10 (a) WITHHOLDING.—

11 (1) Section 8(b)(1) of title XII of the District

12 of Columbia Income and Franchise Tax Act of 1947

13 (D.C. Code, sec. 47–1812.8(b)(1)) is amended by in14 serting before the first sentence the following:

15 ‘‘Every employer making payment of wages to a

16 nonresident shall deduct and withhold a tax upon

17 such wages in accordance with regulations which the

18 Council of the District of Columbia shall promul19 gate.’’.

20 (2) Section 8(i)(1) of such title (D.C. Code, sec.

21 47–1812.8(i)(1)) is amended to read as follows:

22 ‘‘(1)(A) Every person residing or domiciled in the

23 District at the times prescribed in paragraph (4) of this

24 subsection shall, at such times, make a declaration of his

25 estimated tax for the taxable year if—
30

•S 1070 IS

1 ‘‘(i) the gross income for the taxable year can

2 reasonably be expected to consist of wages and of

3 not more than $1,000 from sources other than such

4 wages, and can reasonably be expected to exceed the

5 total amount of the personal exemptions to which he

6 is entitled under this article plus $5,000; or

7 ‘‘(ii) the gross income can reasonably be ex8 pected to include more than $1,000 which is not

9 subject to the withholding provisions of this article,

10 and can reasonably be expected to exceed the per11 sonal exemptions to which he is entitled under this

12 article, plus $500.

13 ‘‘(B) Every person not residing or domiciled in the

14 District at the times prescribed in paragraph (4) of this

15 subsection shall, at such times, make a declaration of his

16 estimated tax for the taxable year if such person can rea17 sonably be expected to have more than $4,500 in taxable

18 income, as determined under section 1 of title XVII of

19 this article, for the taxable year which is not subject to

20 withholding under the regulations promulgated by the

21 Council of the District of Columbia pursuant to the first

22 sentence of subsection (b).

23 ‘‘(C) Under this article, a declaration of estimated

24 tax shall be considered a return of income.’’.
31

•S 1070 IS

1 (b) FEDERAL WITHHOLDING.—Section 5516(a) of

2 title 5, United States Code, is amended to read as follows:

3 ‘‘(a)(1) The Secretary of the Treasury, under regula4 tions prescribed by the President, shall enter into an

5 agreement with the District of Columbia Financial Re6 sponsibility and Management Assistance Authority, which

7 agreement shall provide that the head of each agency of

8 the United States shall comply with the requirements of

9 the District of Columbia Income and Franchise Tax Act

10 of 1947 in the case of employees of the agency who are

11 subject to income taxes imposed by such Act and whose

12 regular place of employment is within the District of Co13 lumbia. The agreement may not apply to pay for service

14 as a member of the Armed Forces.

15 ‘‘(2) For purposes of this section—

16 ‘‘(A) the term ‘agency’ means—

17 ‘‘(i) any executive agency, including any

18 independent establishment or wholly owned in19 strumentality of the Federal Government;

20 ‘‘(ii) the Administrative Office of the Unit21 ed States Courts;

22 ‘‘(iii) the General Accounting Office;

23 ‘‘(iv) the Library of Congress;

24 ‘‘(v) the Botanic Garden;

25 ‘‘(vi) the Government Printing Office; and
32

•S 1070 IS

1 ‘‘(vii) the Office of the Architect of the

2 Capitol; and

3 ‘‘(B) the term ‘employee’ means any employee

4 and any officer of the United States and includes

5 the President and Vice President and any justice or

6 judge of the United States.’’.

7 SEC. 204. CREDIT FOR STATE INCOME TAX PAYMENTS.

8 Section 5(a) of title VI of the District of Columbia

9 Income and Franchise Tax Act of 1947 (D.C. Code, sec.

10 47–1806.4(a)), as amended by section 3(b)(3)(B) of this

11 Act, is further amended—

12 (1) by inserting ‘‘(1)’’ immediately before

13 ‘‘The’’ in the first sentence; and

14 (2) by adding at the end thereof the following

15 new paragraph:

16 ‘‘(2) If any income of a resident which is subject to

17 taxation under this title is also subject to an income tax

18 under the laws of another State, the income tax payable

19 on such income to such other State shall be allowed as

20 a credit to the resident against the tax imposed by this

21 title, except that (A) the credit allowed under this para22 graph may not exceed the amount of tax which would be

23 payable under this title on such income, and (B) no credit

24 shall be allowed under this paragraph if the other State

25 allows a credit against the income tax imposed by such
33

•S 1070 IS

1 State for the tax paid under this title. Proof of payment

2 of income tax to another State shall be required before

3 credit for such tax is allowed under this paragraph.’’.

4 SEC. 205. TECHNICAL AMENDMENT.

5 The table of contents for the District of Columbia

6 Revenue Act of 1947 (article I of which constitutes the

7 District of Columbia Income and Franchise Tax Act of

8 1947) is amended as follows:

9 (1)(A) In the item relating to section 2 of title

10 III of article I, insert ‘‘in the case of residents’’ im11 mediately before the period.

12 (B) Immediately after the item relating to sec13 tion 3(b) of such title, insert the following:

‘‘Sec. 4. Gross income and exclusion therefrom in the case of nonresidents.’’.

14 (2) In the item relating to the title heading for

15 title VI of article I, striking out ‘‘AND NON16 RESIDENTS’’.

17 (3)(A) In the item relating to the title heading

18 for title VIII of article I, strike out ‘‘TAX ON’’ and

19 insert in lieu thereof ‘‘NET INCOME OF’’.

20 (B) Strike out the items relating to sections 2

21 through 6 of such title VIII and insert in lieu there22 of the following:

‘‘Sec. 2. Net income of unincorporated businesses.’’.
34

•S 1070 IS

1 (4)(A) In the item relating to subsection 14 of

2 title XII of article I, strike out ‘‘and unincorporated

3 businesses’’.

4 (B) In the item relating to subsection (b) of

5 such section, strike out ‘‘or unincorporated busi6 ness’’.

7 (5) Immediately after the item relating to title

8 XVI of article I, insert the following new item:

‘‘TITLE XVII—INCOME TAX ON NONRESIDENTS

‘‘Sec. 1. Income tax on nonresidents.

‘‘Sec. 2. Limitation on authority of the Council to revise tax on nonresidents.’’.

9 SEC. 206. RECIPROCAL TAX COLLECTION.

10 (a) IN GENERAL.—Any State, territory, or posses11 sion, by and through its lawfully authorized officials, shall

12 have the right to sue in the Superior Court of the District

13 of Columbia to recover any tax lawfully due and owing

14 to it when the reciprocal right is accorded to the District

15 by such State, territory, or possession, whether such right

16 is granted by statutory authority or as a matter of comity.

17 (b) PROOF.—The certificate of the Secretary of State

18 or other authorized official of any State, territory, or pos19 session, or subdivision thereof, to the effect that the offi20 cial instituting the suit for collection of taxes in the Supe21 rior Court of the District of Columbia has the authority

22 to institute such suit and collect such taxes shall be con23 clusive proof of that authority.
35

•S 1070 IS

1 (c) DEFINITION.—For the purposes of this section,

2 the term ‘‘taxes’’ includes—

3 (1) any and all tax assessments lawfully made,

4 whether they be based upon a return or other disclo5 sure of the taxpayer, or upon the information and

6 belief of the taxing authority, or otherwise;

7 (2) any and all penalties lawfully imposed pur8 suant to a taxing statute, ordinance, or regulation;

9 and

10 (3) interest charges lawfully added to the tax li11 ability which constitutes the subject of the suit.

12 (d) AUTHORIZATION OF SUIT.—The Corporation

13 Council or any of his assistants is authorized to bring suit

14 in the name of the District of Columbia in the courts of

15 States, territories, and possessions, and subdivisions

16 thereof, to collect taxes lawfully due the District. The Dis17 trict of Columbia Financial Responsibility and Manage18 ment Assistance Authority is authorized to procure profes19 sional and other services, at such rates as may be usual

20 and customary for such services in the jurisdiction con21 cerned, when he deems it necessary for the prosecution

22 of any suit authorized by this section.
36

•S 1070 IS

1 SEC. 207. METROPOLITAN WASHINGTON EDUCATION AND

2 WORKFORCE TRAINING TRUST FUND.

3 (a) ESTABLISHMENT.—There is established in the

4 Treasury of the United States a trust fund, to be known

5 as the Metropolitan Washington Education and Workforce

6 Training Trust Fund (hereafter in this section referred

7 to as the ‘‘Trust Fund’’), consisting of such amounts as

8 are transferred to the Trust Fund under subsection (b)(1)

9 of this section and any interest earned on investment of

10 amounts in the Trust Fund under subsection (c)(2) of this

11 section.

12 (b) TRANSFER OF AMOUNTS EQUIVALENT TO CER13 TAIN TARIFFS.—

14 (1) IN GENERAL.—The District of Columbia Fi15 nancial Responsibility and Management Assistance

16 Authority shall transfer to the Trust Fund an

amount equal to 2 17 ⁄3 of the revenues received by the

18 District of Columbia from the tax imposed by title

19 XVII of the District of Columbia Income and Fran20 chise Tax Act of 1947 (as added by section 201 of

21 this Act).

22 (2) EFFECTIVE DATE.—The transfers required

23 by paragraph (1) shall begin at the end of the first

24 quarter of the calendar year beginning after the cal25 endar year referred to in section 201(b)(2)(A).
37

•S 1070 IS

1 (3) TRANSFERS BASED ON ESTIMATES.—The

2 amounts required to be transferred to the Trust

3 Fund under paragraph (1) shall be transferred at

4 least quarterly from the District of Columbia to the

5 Trust Fund on the basis of estimates made by the

6 District of Columbia Financial Responsibility and

7 Management Assistance Authority. Proper adjust8 ment shall be made in amounts subsequently trans9 ferred to the extent prior estimates were in excess

10 of or less than the amounts required to be trans11 ferred.

12 (c) INVESTMENT OF TRUST FUND.—

13 (1) IN GENERAL.—It shall be the duty of the

14 Secretary of the Treasury to invest such portion of

15 the Trust Fund as is not, in the Secretary’s judg16 ment, required to meet current withdrawals. Such

17 investments may be made only in interest-bearing

18 obligations of the United States or in obligations

19 guaranteed as to both principal and interest by the

20 United States. For such purpose, such obligations

21 may be acquired—

22 (A) on original issue at the issue price, or

23 (B) by purchase of outstanding obligations

24 at the market price.
38

•S 1070 IS

1 The purposes for which obligations of the United

2 States may be issued under chapter 31 of title 31,

3 of the United States Code, are hereby extended to

4 authorize the issuance at par of special obligations

5 exclusively to the Trust Fund. Such special obliga6 tions shall bear interest at a rate equal to the aver7 age rate of interest, computed as to the end of the

8 calendar month next preceding the date of such

9 issue, borne by all marketable interest-bearing obli10 gations of the United States then forming a part of

11 the Public Debt; except that where such average rate

12 is not a multiple of one-eighth of 1 percent, the rate

13 of interest of such special obligations shall be the

14 multiple of one-eighth of 1 percent next lower than

15 such average rate. Such special obligations shall be

16 issued only if the Secretary of the Treasury deter17 mines that the purchase of other interest-bearing ob18 ligations of the United States, or of obligations

19 guaranteed as to both principal and interest by the

20 United States on original issue or at the market

21 price, is not in the public interest.

22 (2) SALE OF OBLIGATION.—Any obligation ac23 quired by the Trust Fund (except special obligations

24 issued exclusively to the Trust Fund) may be sold by

25 the Secretary of the Treasury at the market price,
39

•S 1070 IS

1 and such special obligations may be redeemed at par

2 plus accrued interest.

3 (3) CREDITS TO TRUST FUND.—The interest

4 on, and the proceeds from the sale or redemption of,

5 any obligations held in the Trust Fund shall be

6 credited to and form a part of the Trust Fund.

7 (d) OBLIGATIONS FROM TRUST FUND.—The Sec8 retary of Labor and the Secretary of Education are au9 thorized to obligate such sums as are available in the

10 Trust Fund (including any amounts not obligated in pre11 vious fiscal years) for grants as provided in section 101

12 of this Act.

13 (e) REPORT TO CONGRESS.—It shall be the duty of

14 the Secretary of the Treasury to hold the Trust Fund,

15 and (after consultation with the Secretary of Labor or the

16 regional authority, as appropriate) to report to the Con17 gress each year on the financial condition and the results

18 of the operations of the Trust Fund during the preceding

19 fiscal year and on its expected condition and operations

20 during the next fiscal year. Such report shall be printed

21 as both a House and Senate document of the session of

22 the Congress to which the report is made.

23 SEC. 208. EFFECTIVE DATE.

24 The amendments made by this title and this title

25 shall take effect at the beginning of the calendar year be-
40

•S 1070 IS

1 ginning after the date of enactment of this Act, and shall

2 apply with respect to taxable years beginning on or after

3 such date.

Æ