Court Opinion

ID: 9719449
Source: CourtListenerOpinion
Date Created: 2023-08-26 07:53:15.646225+00
Date Added: 2024-06-11T18:24:07.123550
License: Public Domain

KELLY, Associate Judge:
The arguments advanced by the government in the en banc rehearing of this case do not persuade this court to disturb the *998division’s holding in Bishop v. District of Columbia, D.C.App., 401 A.2d 955 (1979), that Section 605 of the Revenue Act of 19751 was an impermissible exercise of the District of Columbia Council’s authority under § 602(a)(5) of the Home Rule Act.2
Section 605 of the Revenue Act of 1975 repealed the professional exemption to D.C. Code 1973, § 47-1574 (the unincorporated business tax provision) and thereby imposed a tax on nonresident unincorporated professionals and personal service businesses. The division concluded that this repeal circumvented the intention of Congress, as stated in the Home Rule Act, that: “The Council shall have no authority to (5) impose any tax on the whole or any portion of the personal income ... of any individual not a resident of the District . . . .” D.C.Code 1978 Supp., § 1-147(a)(5). The division thus held that the resulting tax on unincorporated professionals was not a franchise or gross receipts tax but, rather a tax levied upon the personal income of “individuals who are professionals and are not protected by the corporate veil . . . .” Supra at 961.
We here underscore the division opinion’s holding with several instructive comments from the legislative history of the Home Rule Act that were drawn to our attention on rehearing en banc; we also emphasize the limits of that holding.
During the Senate hearings on the Home Rule Act, in response to the query whether “the [Senate] Committee [on the District of Columbia] has eliminated anything in regard to a commuter tax,” the Committee Chairman, Senator Thomas Eagleton, responded, “Yes. There is a specific prohibition as to the imposition of a commuter tax, a reciprocal income tax, or any other tax on nonresidents of the District of Columbia.” 117 Cong.Rec. 42498 (1971) (emphasis added).
Senator Charles Mathias elucidated the rationale for enacting the prohibition found in § 602(a)(5) of the Act: “The increased Federal payment [to the District] also compensates for the Congress’ refusal to permit the District to levy taxes on the income of nonresidents.” Id. at 42502.
Senator Eagleton clearly distinguished the permissible franchise tax from the impermissible commuter tax in the October 12, 1971, debates on S. 2652:
For example ... of utmost significance . . the present mayor-commissioner and council have jurisdiction over taxes — to wit, the real property tax. They can raise it or lower it. As to all other taxes, including franchise taxes, sales taxes, local taxes, that jurisdiction is in Congress. We transfer the jurisdiction of taxation to the elected city council and to the elected mayor — holding back, as I said before, the commuter tax. [117 Cong.Rec., supra at 35747; (emphasis added).]
The remarks of Representative Breckenridge of Kentucky, are particularly revealing on the question of congressional intent: “I am concerned about the phrase, ‘personal income tax.’ I take it what we are driving at here is precluding any tax which is based on a percentage of income regardless of whether it is technically considered personal income . . . Congressman Gude of Maryland (the House of Representatives proponent of the amendment enacted as § 602(a)(5)) answered: “The thrust of this amendment, the interpretation would be that that would be included under this amendment. That was the intent when the amendment was offered in the Senate.” 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 Act, ch. II (Dec. 31, 1974) 1126. H.R. Rep. No. 83-92, 92d Cong., 1st Sess. (1971).
*999The government cites Palmore v. United States, 411 U.S. 389, 395, 93 S.Ct. 1670, 1675, 36 L.Ed.2d 342 (1973) for the proposition that we must presume Congress “legislated with care” when it enacted § 602(a), arguing that “had [Congress] intended to prohibit the Home Rule Government from taking the action in question, it would have said so expressly, and not left the matter to mere implication.” District of Columbia Petition for Rehearing En Banc at 7. We agree, and reiterate our conclusion that Congress expressly and specifically withheld the District of Columbia Council’s authority to impose a tax on the income of nonresidents. By enacting § 605 of the Revenue Act of 1975, which repealed the professional exemption contained in § 47-1574, the Council circumvented this express congressional prohibition. Section 605 is therefore invalid.
The government also contends that the division opinion “places other existing and proposed taxing measures of the District Government under a cloud.” District of Columbia Petition for Rehearing En Banc at 2. This contention betrays a misunderstanding of our judicial role. We did not, and as a nonlegislative body could not, intend to instruct the District of Columbia Council as to the relative propriety of alternative schemes for raising tax revenues. We are limited to deciding the case before us. The division’s discussion of a gross receipts tax, Bishop v. District of Columbia, supra at 966 et seq., was employed as an illustrative device, to contrast the features of a gross receipts tax with those of a net income tax. This discussion, therefore, should not be read to either prescribe or proscribe the District of Columbia Council’s adoption or continued imposition of a gross receipts tax, or of any taxing measure other than the one before the division at that time.
The division opinion, vacated June 11, 1979, is hereby reinstated and, with this elaboration, constitutes the en banc opinion of the court.

So ordered.

. The Revenue Act was enacted on October 21, 1975, as D.C.Law No. 1-23.

. District of Columbia Self-Government and Governmental Reorganization Act, Pub.L. No. 93-198, 87 Stat. 774 (1973) (codified at D.C. Code 1978 Supp., §§ 1-121 to -171r).