[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 928 Introduced in Senate (IS)]







105th CONGRESS
  1st Session
                                 S. 928

 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, to be 
                         offset by tax credits.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 17, 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, to be 
                         offset by tax credits.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Metropolitan 
Washington Education and Workforce Training Improvement Act of 1997''.
    (b) Table of Contents.--The table of contents of 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 
                       AND OFFSETTING TAX CREDITS

Sec. 201. Metropolitan Washington education and workforce training tax 
                            and offsetting tax credits.
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.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds that--
            (1) the Greater Washington Metropolitan Area has an 
        expanding regional economy but suffers from a serious regional 
        labor market shortage that threatens economic growth;
            (2) the region's education and training systems, 
        particularly in the District of Columbia, fail to provide many 
        youths and adults with the skills necessary to be competitive 
        in the regional labor market;
            (3) the need for a better skilled area workforce makes it 
        imperative that the region's businesses, educational 
        institutions, and governments work together to provide youth 
        and adults with the education and training necessary to meet 
        the needs of the 21st century;
            (4) the condition of school facilities is a major 
        impediment to improving the quality of education in the 
        District of Columbia and their repair and modernization is a 
        necessary step in making the District's public schools a full 
        partner in preparing students for the regional labor market;
            (5) the University of the District of Columbia, as well as 
        other area institutions of post-secondary education, have an 
        important role to play in providing skills training to meet the 
        needs of the regional labor market;
            (6) although the present revenues for the District of 
        Columbia public school system provide sufficient operating 
        funds, as with other public school systems in the metropolitan 
        region, there are insufficient revenues for programs to prepare 
        students to compete in the global economy and or to provide 
        students with the skills demanded by the local market: and
            (7) the Greater Washington Metropolitan Area has an 
        opportunity to set a national example of regional cooperation 
        in engaging in education reform and workforce training.
    (b) Purpose.--
            (1) In general.--It is the purpose of this Act to foster 
        the development of a regional workforce investment system that 
        will bring about improvements in education and workforce 
        preparation by--
                    (A) creating a metropolitan partnership through 
                which area businesses, school systems, postsecondary 
                institutions, and governments can cooperate in charting 
                a course for reforms and investments in education and 
                workforce training; and
                    (B) providing the Greater Washington Metropolitan 
                Area with the resources necessary to lead the Nation in 
                improving its capacity to provide for a highly educated 
                and skilled workforce.
            (2) Nonresident tax.--The purpose of imposing the tax 
        established by title II is to--
                    (A) fund the repair and modernization of District 
                of Columbia public schools; and
                    (B) provide resources to carry out the activities 
                of a Washington metropolitan partnership as described 
                in title I.

   TITLE I--METROPOLITAN WASHINGTON EDUCATION AND WORKFORCE TRAINING 
                                 GRANTS

SEC. 101. DEFINITIONS.

    In this title:
            (1) Elementary school; local educational agency; secondary 
        school.--The terms ``elementary school'', ``local educational 
        agency'', and ``secondary school'' have the meanings given the 
        terms in section 14101 of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 8801).
            (2) Metropolitan region.--The term ``metropolitan region'' 
        means the Washington, D.C. metropolitan area, as defined by the 
        Secretaries.
            (3) Postsecondary institution.--The term ``postsecondary 
        institution'' has the meaning given the term ``institution of 
        higher education'' in section 481 of the Higher Education Act 
        of 1965 (20 U.S.C. 1088).
            (4) Principal.--The term ``principal'' means an elementary 
        school or secondary school principal.
            (5) Secretaries.--The term ``Secretaries'' means the 
        Secretary of Education and the Secretary of Labor, acting 
        jointly.
            (6) Teacher.--The term ``teacher'' means an elementary 
        school or secondary school teacher.

SEC. 102. GRANTS.

    (a) In General.--Using funds made available from the Metropolitan 
Washington Education and Workforce Training Trust Fund, established in 
section 208, the Secretaries shall make grants to agencies and 
organizations to assist the agencies and organizations in carrying out 
the education and workforce training activities described in subsection 
(c) in the metropolitan region.
    (b) Eligibility.--
            (1) In general.--To be eligible to receive a grant under 
        this section, an entity shall be a local educational agency, or 
        a public or private organization with demonstrated ability and 
        experience in carrying out the education and workforce training 
        activities.
            (2) Workforce training.--To be eligible to receive a grant 
        under this section to provide services described in subsection 
        (c)(5), an entity shall--
                    (A) be a postsecondary institution, business, or 
                another provider of workforce training, such as 
                literacy services, in the metropolitan region; and
                    (B) have demonstrated ability and experience in 
                providing workforce training.
    (c) Use of Funds.--An agency or organization that receives a grant 
under subsection (a) shall use funds made available through the grant 
to carry out activities in the metropolitan region that consist of--
            (1) providing professional development activities, 
        including access to model professional development programs, 
        for teachers and principals;
            (2) developing apprenticeships and other programs that 
        provide business experience to teachers who are participating 
        in vocational training or technology training;
            (3) constructing, renovating, repairing, or improving 
        elementary schools, secondary schools, or other educational 
        facilities for workforce training programs;
            (4) developing partnerships between businesses, and 
        vocational education or vocational training providers, to carry 
        out student internship programs;
            (5) providing youth and adult workforce training with 
        remedial help such as literacy services;
            (6) establishing model benchmarks to be used in the 
        development of rigorous education and workforce training 
        curricula;
            (7) providing for both annual and long-term evaluation and 
        assessment of other education and workforce training activities 
        described in this subsection, including evaluation and 
        assessment of--
                    (A) the degree to which expenditures of funds made 
                available through the grant result in improvements in 
                the activities;
                    (B) the extent to which the activities succeed in 
                preparing participants for entry into postsecondary 
                education, further learning, or high-skill, high-wage 
                careers;
                    (C) the effect of benchmarks, performance measures, 
                and other measures of accountability on the delivery of 
                the activities;
                    (D) the extent to which vocational training 
                enhances the employment and earning potential of 
                participants, reduces income support costs, and 
                increases the level of employment in the metropolitan 
                region;
            (8) assisting in the development of individual mentoring 
        and parental involvement programs and career path records for 
elementary and secondary school students;
            (9) establishing--
                    (A) voluntary skill standards for participants in 
                workforce training; and
                    (B) a methodology to assess the participants and 
                certify attainment of the standards;
            (10) assessing the need for, and utilization of, 
        educational technology in the metropolitan region, including 
        assessment of the potential for linkages among--
                    (A) elementary schools or secondary schools;
                    (B) workforce training providers; and
                    (C) businesses;
            (11) improving educational technology in elementary schools 
        or secondary schools; or
            (12) providing resources to extend a school year or school 
        day for any elementary school or secondary school that elects 
        to make such an extension.
    (d) Application.--To be eligible to receive a grant under this 
section, an agency or organization shall submit an application to the 
Secretaries at such time, in such manner, and containing such 
information as the Secretaries may require.
    (e) Distribution of Funds.--
            (1) In general.--In making grants under subsection (a), the 
        Secretaries shall, to the extent practicable, ensure that the 
        funds made available through the grants are equitably 
        distributed among the jurisdictions in the metropolitan region.
            (2) Special rule for the district of columbia.--Any grants 
        awarded to District of Columbia public schools under this 
        section shall be expended in a manner consistent with section 
        2101(b)(1) of Public Law 104-134.
    (f) Maintenance of Effort.--
            (1) Definition.--As used in this subsection, the term 
        ``covered activities'' means education and workforce training 
        activities described in subsection (c) and carried out in the 
        District of Columbia.
            (2) In general.--Except as provided in paragraphs (3) and 
        (4), no payments shall be made under this title for any fiscal 
        year to an agency or organization for covered activities, 
        unless the Secretaries determine that the fiscal effort per 
        participant or the aggregate expenditures of the agency or 
        organization for the activities for the fiscal year preceding 
        the fiscal year for which the determination is made, equaled or 
        exceeded the effort or expenditures for the activities for the 
        second fiscal year preceding the fiscal year for which the 
        determination is made.
            (3) Computation.--In computing the fiscal effort or 
        aggregate expenditures pursuant to paragraph (2), the 
        Secretaries shall exclude capital expenditures, special one-
        time project costs, similar windfalls, and the cost of pilot 
        programs.
            (4) Decrease in federal support.--If the amount made 
        available for covered activities under this title for a fiscal 
        year is less than the amount made available for the activities 
        under this title the preceding fiscal year, then the fiscal 
        effort per participant or the aggregate expenditures of the 
        agency or organization required by paragraph (2) for the 
        preceding fiscal year shall be decreased by the same percentage 
        as the percentage decrease in the amount so made available.
    (g) Technical Assistance for Skill Standards and Methodology.--If 
the Secretaries make a grant to an agency or organization under this 
section to establish the standards and methodology described in 
subsection (c)(7), the National Skill Standards Board established under 
section 503 of the National Skill Standards Act of 1994 (29 U.S.C. 
5933) shall provide technical assistance to the agency or organization.

SEC. 103. METROPOLITAN PARTNERSHIP.

    (a) Establishment.--There is established in the Department of Labor 
and the Department of Education a Metropolitan Washington Education and 
Workforce Training Partnership (referred to in this title as the 
``Metropolitan Partnership''), under the joint control of the Secretary 
of Labor and the Secretary of Education.
    (b) Administration.--Notwithstanding the Department of Education 
Organization Act (20 U.S.C. 3401 et seq.), the General Education 
Provisions Act (20 U.S.C. 1221 et seq.), the Act entitled ``An Act To 
Create a Department of Labor'', approved March 4, 1913 (29 U.S.C. 551 
et seq.), and section 169 of the Job Training Partnership Act (29 
U.S.C. 1579), the Secretaries shall provide for, and exercise final 
authority over, the effective and efficient administration of this 
title and the officers and employees of the Metropolitan Partnership.
    (c) Responsibilities of Secretaries.--The Secretaries, working 
through the Metropolitan Partnership, shall approve the applications, 
and make the grants, described in section 102.

SEC. 104. METROPOLITAN BOARD.

    (a) Metropolitan Board.--
            (1) Composition.--There is established, in the Metropolitan 
        Partnership, a Metropolitan Washington Education and Workforce 
        Training Board (referred to in this title as the ``Metropolitan 
        Board'') that shall be composed of 13 individuals, including--
                    (A) 7 individuals who are representative of 
                business and industry in the metropolitan region, 
                appointed by the President;
                    (B) 3 individuals who are representative of 
                providers of secondary education, postsecondary 
                education, and workforce training in the metropolitan 
                region, appointed by the President; and
                    (C) 3 individuals who are representative of local 
                government officers and employees in the metropolitan 
                region, including at least 1 representative of a local 
                government in Maryland, 1 representative of a local 
                government in Virginia, and 1 representative of the 
                local government of the District of Columbia, appointed 
                by the President.
            (2) Terms.--Each member of the Metropolitan Board shall 
        serve for a term of 3 years, except that, as designated by the 
        President--
                    (A) 5 of the members first appointed to the 
                Metropolitan Board shall serve for a term of 2 years;
                    (B) 4 of the members first appointed to the 
                Metropolitan Board shall serve for a term of 3 years; 
                and
                    (C) 4 of the members first appointed to the 
                Metropolitan Board shall serve for a term of 4 years.
            (3) Vacancies.--Any vacancy in the Metropolitan Board shall 
        not affect the powers of the Metropolitan Board, but shall be 
        filled in the same manner as the original appointment. Any 
        member appointed to fill such a vacancy shall serve for the 
        remainder of the term for which the predecessor of such member 
        was appointed.
            (4) Duties and powers of the metropolitan board.--The 
        Metropolitan Board shall--
                    (A) provide advice to the Secretary of Labor and 
                the Secretary of Education regarding reviewing and 
                approving applications, and making grants, described in 
                section 102; and
                    (B) prepare and submit to the appropriate 
                committees of Congress an annual report on the 
                activities of the Metropolitan Partnership.
            (5) Chairperson.--The position of Chairperson of the 
        Metropolitan Board shall rotate annually among the appointed 
        members described in paragraph (1)(A).
            (6) Meetings.--The Metropolitan Board shall meet at the 
        call of the Chairperson but not less often than 4 times during 
        each calendar year. Seven members of the Metropolitan Board 
        shall constitute a quorum. All decisions of the Metropolitan 
        Board with respect to the exercise of the duties and powers of 
        the Metropolitan Board shall be made by a majority vote of the 
        members of the Metropolitan Board.
            (7) Compensation and travel expenses.--
                    (A) Compensation.--Members of the Metropolitan 
                Board shall serve without compensation. Notwithstanding 
                section 1342 of title 31, United States Code, the 
                Secretaries may accept the voluntary and uncompensated 
                services of members of the Metropolitan Board.
                    (B) Expenses.--The members of the Metropolitan 
                Board shall be allowed travel expenses, including per 
                diem in lieu of subsistence, at rates authorized for 
                employees of agencies under subchapter I of chapter 57 
                of title 5, United States Code, while away from their 
                homes or regular places of business in the performance 
                of services for the Metropolitan Board.
            (8) Date of appointment.--The Metropolitan Board shall be 
        appointed not later than 120 days after the date of enactment 
        of this Act.
            (9) Nontermination of board.--Section 14 of the Federal 
        Advisory Committee Act shall not apply to the Metropolitan 
        Board.
    (b) Director.--
            (1) In general.--There shall be in the Metropolitan 
        Partnership a Director, who shall be appointed by the 
        President, by and with the advice and consent of the Senate.
            (2) Compensation.--The Director shall be compensated at the 
        rate provided for level IV of the Executive Schedule under 
        section 5315 of title 5, United States Code.
            (3) Duties.--The Director shall carry out the 
        administrative duties of the Metropolitan Partnership.
            (4) Date of appointment.--The Director shall be appointed 
        not later than 120 days after the date of enactment of this 
        Act.
    (c) Personnel.--
            (1) Appointments.--The Director may appoint and fix the 
        compensation of 2 employees to carry out the functions of the 
        Metropolitan Partnership. Except as otherwise provided by law, 
        such employees shall be appointed in accordance with the civil 
        service laws and their compensation fixed in accordance with 
        title 5, United States Code.
            (2) Experts and consultants.--The Director may obtain the 
        services of experts and consultants in accordance with section 
        3109 of title 5, United States Code, and compensate such 
        experts and consultants for each day (including travel time) at 
        rates not in excess of the rate of pay for level IV of the 
        Executive Schedule under section 5315 of such title. The 
        Director may pay experts and consultants who are serving away 
        from their homes or regular places of business travel expenses 
        and per diem in lieu of subsistence at rates authorized by 
        sections 5702 and 5703 of such title for persons in Government 
        service employed intermittently.
            (3) Detail of government employees.--Any Federal Government 
        employee may be detailed to the Metropolitan Partnership 
        without reimbursement, and such detail shall be without 
        interruption or loss of civil service or privilege.
            (4) Use of voluntary and uncompensated services.--
        Notwithstanding section 1342 of title 31, United States Code, 
        the Secretary of Labor and the Secretary of Education are 
        authorized to accept voluntary and uncompensated services in 
        furtherance of the objectives of this title.
            (5) Monetary contributions.--Notwithstanding any other 
        provision of law, the Metropolitan Partnership may accept 
        monetary contributions to defray expenses.

TITLE II--METROPOLITAN WASHINGTON EDUCATION AND WORKFORCE TRAINING TAX 
                       AND OFFSETTING TAX CREDITS

SEC. 201. TAX ON INCOME OF NONRESIDENTS.

    (a) Definition.--
            (1) In general.--Title III of the District of Columbia 
        Income and Franchise Tax Act of 1947 (D.C. Code, secs. 47-
        1803.1--47-1803.2) is amended by adding at the end thereof the 
        following new section:
    ``Sec. 4. Gross Income and Exclusion Therefrom in the Case of 
Nonresidents.--(a) In the case of nonresidents, the words `gross 
income' shall include--
            ``(1) gains, profits, and income derived from salaries, 
        wages, or compensation for personal services performed within 
        the District of whatever kind and in whatever form paid, 
        including salaries, wages, and compensation paid by the United 
        States to its officers and employees, or income derived from 
        any trade or business carried on within the District within the 
        meaning of title X of this article or sales or dealings in 
        property located within the District, whether real or personal, 
        including capital assets as defined in this article, growing 
        out of the ownership, or sale of, or interest in, such 
        property; and
            ``(2) income derived from rent, on such property located 
        within the District, or transactions of any trade or business 
        carried on within the District within the meaning of title X of 
        this article for gain or profit, or gains or profits.
    ``(b) In the case of nonresidents, the words `gross income' shall 
not include any of the income described in subsection (b) of section 2 
of this title.''.
            (2) Conforming amendment.--Section 2 of such title III 
        (D.C. Code, sec. 47-1803.2) is amended by striking out ``.--(a) 
        The'' and inserting in lieu thereof ``in the Case of 
        Residents.--(a) In the case of residents, the''.
    (b) Income Tax on Nonresidents.--
            (1) In general.--The District of Columbia Income and 
        Franchise Tax Act of 1947 (D.C. Code, secs. 47-1801.1--47-
        1816.3) is amended by adding at the end thereof the following 
        new title:

                ``Title XVII--Income Tax on Nonresidents

    ``Sec. 1. Income Tax on Nonresidents.--(a) For each taxable year, 
there is imposed on the taxable income of each nonresident an income 
tax determined at a rate equal to one-third of the rate applicable in 
the case of a resident under title VI of this article.
    ``(b) In computing the net income of a nonresident for purposes of 
this title, such nonresident shall be allowed a deduction equal to that 
portion of the deductions which would be allowed under any paragraph of 
section 3(a) of title III of this article to the nonresident if such 
nonresident were a resident which bears the same ratio to the sum of 
such deductions as the income of such nonresident subject to tax under 
this title bears to the gross income of such nonresident from all 
sources.
    ``(c) In computing taxable income for purposes of this title, there 
shall be allowed to nonresidents as credits against net income the 
personal exemptions allowed to residents under section 2 of title VI.
    ``Sec. 2. Limitation on Authority of the Council To Revise Tax on 
Nonresidents.--The Council of the District of Columbia may not--
            ``(1) amend or otherwise revise this title so as to impose 
        any additional or greater tax on the whole or any portion of 
        the personal income of any nonresident unless at the same time 
        it also amends or revises title VI of this article so as to 
        impose the same proportion of additional or greater tax on the 
        whole or portion of the personal income of any resident as was 
        imposed on the whole or portion of the personal income of a 
        nonresident; or
            ``(2) provide any deductions or personal exemptions to 
        residents which are not also available, in accordance with 
        section 1 of this title, in the case of nonresidents.
    ``Sec. 3. Disposition of Revenues.--The District of Columbia shall 
allocate the revenues received under this title as follows:
            ``(1) One-third of the revenues shall be transferred to the 
        District of Columbia Financial Responsibility and Management 
        Assistance Authority for the purpose of funding the repair and 
        modernization of public schools in the District of Columbia.
            ``(2) Two-thirds of the revenues shall be transferred to 
        the Metropolitan Washington Education and Workforce Training 
        Trust Fund established by section 208 of the Metropolitan 
        Washington Education and Workforce Training Improvement Act of 
        1997.''.
            (2) Phase-in of tax.--The income tax imposed by title XVII 
        of the District of Columbia Income and Franchise Tax Act of 
        1947 (as added by paragraph (1) of this subsection) shall be 
        phased in as follows:
                    (A) In the calendar year beginning after the date 
                of enactment of this Act, the rate shall be \1/2\ of 
                the rate imposed and revenues received shall be 
                expended as provided in section 3(1) of title XVII.
                    (B) In the calendar year beginning after the 
                calendar year referred to in subparagraph (A), the rate 
                shall be the full rate imposed and revenues received 
                shall be expended \1/3\ as provided in section 3(1) and 
                \2/3\ as provided in section 3(2) of title XVII.
            (3) Federal tax credit.--
                    (A) In general.--Subpart A of part IV of subchapter 
                A of chapter 1 of the Internal Revenue Code of 1986 
                (relating to nonrefundable personal credits) is amended 
                by inserting after section 25 the following:

``SEC. 25A. DISTRICT OF COLUMBIA NONRESIDENT INCOME TAX CREDIT.

    ``There shall be allowed as a credit against the tax imposed by 
this chapter for--
            ``(1) the taxable year beginning after the date of 
        enactment of the Metropolitan Washington Education and 
        Workforce Training Improvement Act of 1997 an amount equal to 
        100 percent of the taxes imposed under section 1 of title XVII 
        of the District of Columbia Income and Franchise Tax Act of 
        1947 (D.C. Code, sec. 47-1801.1); and
            ``(2) each taxable year after the year referred to in 
        paragraph (1) an amount equal to \1/3\ of the taxes imposed 
        under section 1 of title XVII of the District of Columbia 
        Income and Franchise Tax Act of 1947 (D.C. Code, sec. 47-
        1801.1).''.
                    (B) Denial of double benefit.--Section 164(c) of 
                the Internal Revenue Code of 1986 (relating to 
                deduction denied in case of certain taxes) is amended 
                by adding at the end the following:
            ``(3) Taxes taken into account in determining the credit 
        allowed under section 25A.''.
                    (C) Conforming amendment.--The table of sections 
                for subpart A of part IV of subchapter A of chapter 1 
                of the Internal Revenue Code of 1986 is amended by 
                inserting after the item relating to section 25 the 
                following:

                              ``Sec. 25A. District of Columbia 
                                        nonresident income tax 
                                        credit.''.
                    (D) Effective date.--The amendments made by this 
                paragraph apply to taxable years beginning in the 
                calendar year referred to in paragraph (2)(A).
            (4) Existing tax on nonresidents.--Title VI of such Act is 
        amended--
                    (A) in the title heading, by striking out ``and 
                Nonresidents''; and
                    (B) in section 1 (D.C. Code, sec. 47-1806.1)--
                            (i) by striking out ``every resident'' and 
                        inserting in lieu thereof ``an individual'', 
                        and
                            (ii) by inserting ``in the case of 
                        residents and by section 1(c) of title XVII in 
                        the case of nonresidents'' immediately after 
                        ``this title''.

SEC. 202. REPEAL OF UNINCORPORATED BUSINESS TAX.

    (a) In General.--Title VIII of the District of Columbia Income and 
Franchise Tax Act of 1947 (D.C. Code, secs. 47-1808.1--47-1808.7) is 
amended--
            (1) in the title heading, by striking out ``Tax on'' and 
        inserting in lieu thereof ``Net Income of''; and
            (2) by repealing sections 2 through 6 and inserting in lieu 
        thereof the following:
    ``Sec. 2. Net Income of Unincorporated Businesses.--(a) An 
unincorporated business as such shall not be subject to tax under this 
article. Individuals carrying on a trade or business as an 
unincorporated business shall be liable in their individual capacity, 
under title VI of this article in the case of residents and under title 
XVII of this article in the case of nonresidents, for tax with respect 
to their distributive share, whether distributed or not, of the net 
income of such unincorporated business derived from sources within the 
District within the meaning of title X of this article. If an 
individual entitled to a distributive share of such net income of an 
unincorporated business computes his income tax under this article upon 
the basis of a period different from that upon the basis of which the 
net income of the unincorporated business is computed, then his 
distributive share of the net income of the unincorporated business for 
any accounting period of the unincorporated business ending within the 
taxable year upon the basis of which such individual's income tax is 
computed shall be included in computing such tax.
    ``(b) If the deductions which are allowed or allowable to an 
unincorporated business under section 3(a) of title III of this article 
exceed the gross income of such unincorporated business derived from 
sources within the District within the meaning of title X of this 
article, the distributive shares of such excess deductions shall be 
allowed as deductions to the individuals entitled thereto in 
determining their individual tax liability under title VI of this 
article in the case of residents and under title XVII of this article 
in the case of nonresidents, except that in the case of a nonresident 
such excess deductions shall be allowed to the nonresident only to the 
extent provided in section 1(b) of such title XVII. If an individual 
entitled to a distributive share of the excess deductions of an 
unincorporated business computes his income tax under this article upon 
the basis of a period different from that upon the basis of which the 
net income of the unincorporated business is computed, then his 
distributive share of the excess deductions of the unincorporated 
business for any accounting period of the unincorporated business 
ending within the taxable year upon the basis of which such 
individual's income tax is computed shall be included in computing such 
tax.
    ``(c) In computing the net income or the excess deductions of an 
unincorporated business for purposes of this title, the full amount of 
the deductions described in section 3(a) of title III of this article 
shall be allowed to such unincorporated business notwithstanding that a 
nonresident may be entitled to a distributive share of such net income 
or excess deductions.''.
    (b) Conforming Amendments.--
            (1)(A) Section 1 of title III of such Act (D.C. Code, sec. 
        47-1803.1) is amended by inserting ``or unincorporated 
        business, as the case may be,'' immediately after ``taxpayer''.
            (B) Paragraph (11) of section 3(a) of such title (D.C. 
        Code, sec. 47-1803.3(a)(11)) is amended to read as follows:
    ``(11) Reasonable allowance for salary.--A reasonable allowance for 
salaries or other compensation for personal services actually rendered. 
Nothing in this paragraph shall be construed to exempt any salary or 
other compensation for personal services from taxation as part of the 
taxable income of the person receiving such salary or other 
compensation.''.
            (C) Such section 3(a) (D.C. Code, sec. 47-1803.3(a)) is 
        further amended by adding at the end thereof the following new 
        paragraph:
    ``(15) Excess deductions of an unincorporated business.--In the 
case of an individual, the distributive share of any excess deductions 
for an unincorporated business to which the individual is entitled 
under section 2(b) of title VIII of this article.''.
            (D) Paragraph (5) of section 3(b) of such title (D.C. Code, 
        sec. 47-1803.3(b)(5)) is repealed.
            (2)(A) Paragraph (f) of such section (D.C. Code, sec. 47-
        1805.2(6)) is amended--
                    (i) in the first sentence, by striking out ``having 
                a gross income of more than $12,000, regardless of 
                whether or not it has a net income''; and
                    (ii) in the second sentence, by striking out ``the 
                taxpayer or taxpayers liable for payment of the tax'' 
                and inserting in lieu thereof ``the individual or 
                individuals who would be entitled to share in the net 
                income of the unincorporated business, if distributed, 
                and shall include the name and address of each such 
                individual and the amount of the distributive share of 
                each such individual in the net income of the 
                unincorporated business or, if the allowable deductions 
                of the unincorporated business exceed its gross income, 
                the allocation among such individuals of such excess 
                allowable deductions''.
            (B) Paragraph (g) of such section (D.C. Code, sec. 47-
        1805.2(7)) is amended by striking out ``other than partnerships 
        subject to the taxes imposed by title VIII of this article on 
        unincorporated businesses, engaged in any trade or business, 
        or'' and inserting in lieu thereof ``not required to file a 
        return under paragraph (f), which is''.
            (3) Section 1 of title VI of such Act (D.C. Code, sec. 47-
        1806.1) is amended by striking out ``and that portion of the 
        entire net income of every nonresident which is subject to tax 
        under title VIII of this article''.
            (4) Section 1 of title X of such Act (D.C. Code, sec. 47-
        1810.1) is amended by striking ``and (2) a franchise tax upon 
        every corporation and unincorporated business'' and inserting 
        ``(2) an income tax on certain income of nonresidents which is 
        derived from sources within the District, and (3) a franchise 
        tax upon every corporation''.
            (5)(A) Section 8(a) of title XII of such Act (D.C. Code, 
        sec. 47-1812.8(a)) is amended by striking out ``or 
        unincorporated business'' each place it appears.
            (B) Section 14 of such title (D.C. Code, sec. 47-1812.14-1) 
        is amended--
                    (i) in the section caption, by striking out ``and 
                Unincorporated Businesses'';
                    (ii) in the first sentence of subsection (a), by 
                striking out ``and unincorporated business''; and
                    (iii) in subsection (b)--
                            (I) in the subsection caption, by striking 
                        out ``or Unincorporated Business'', and
                            (II) in paragraph (1), by striking out ``or 
                        an unincorporated business''.
            (6) The first sentence of section 1(a) of title XIV of such 
        Act (D.C. Code, sec. 47-1814.1(a)) is amended by striking out 
        ``which is excluded from the imposition of the District of 
        Columbia tax on unincorporated businesses under the definition 
        set forth in section 1 of title VIII of this article''.

SEC. 203. WITHHOLDING AND RETURNS.

    (a) Withholding.--
            (1) Section 8(b)(1) of title XII of the District of 
        Columbia Income and Franchise Tax Act of 1947 (D.C. Code, sec. 
47-1812.8(b)(1)) is amended by inserting before the first sentence the 
following: ``Every employer making payment of wages to a nonresident 
shall deduct and withhold a tax upon such wages in accordance with 
regulations which the Council of the District of Columbia shall 
promulgate.''.
            (2) Section 8(i)(1) of such title (D.C. Code, sec. 47-
        1812.8(i)(1)) is amended to read as follows:
    ``(1)(A) Every person residing or domiciled in the District at the 
times prescribed in paragraph (4) of this subsection shall, at such 
times, make a declaration of his estimated tax for the taxable year 
if--
            ``(i) the gross income for the taxable year can reasonably 
        be expected to consist of wages and of not more than $1,000 
        from sources other than such wages, and can reasonably be 
        expected to exceed the total amount of the personal exemptions 
        to which he is entitled under this article plus $5,000; or
            ``(ii) the gross income can reasonably be expected to 
        include more than $1,000 which is not subject to the 
        withholding provisions of this article, and can reasonably be 
        expected to exceed the personal exemptions to which he is 
        entitled under this article, plus $500.
    ``(B) Every person not residing or domiciled in the District at the 
times prescribed in paragraph (4) of this subsection shall, at such 
times, make a declaration of his estimated tax for the taxable year if 
such person can reasonably be expected to have more than $4,500 in 
taxable income, as determined under section 1 of title XVII of this 
article, for the taxable year which is not subject to withholding under 
the regulations promulgated by the Council of the District of Columbia 
pursuant to the first sentence of subsection (b).
    ``(C) Under this article, a declaration of estimated tax shall be 
considered a return of income.''.
    (b) Federal Withholding.--Section 5516(a) of title 5, United States 
Code, is amended to read as follows:
    ``(a)(1) The Secretary of the Treasury, under regulations 
prescribed by the President, shall enter into an agreement with the 
District of Columbia Financial Responsibility and Management Assistance 
Authority, which agreement shall provide that the head of each agency 
of the United States shall comply with the requirements of the District 
of Columbia Income and Franchise Tax Act of 1947 in the case of 
employees of the agency who are subject to income taxes imposed by such 
Act and whose regular place of employment is within the District of 
Columbia. The agreement may not apply to pay for service as a member of 
the Armed Forces.
    ``(2) For purposes of this section--
            ``(A) the term `agency' means--
                    ``(i) any executive agency, including any 
                independent establishment or wholly owned 
                instrumentality of the Federal Government;
                    ``(ii) the Administrative Office of the United 
                States Courts;
                    ``(iii) the General Accounting Office;
                    ``(iv) the Library of Congress;
                    ``(v) the Botanic Garden;
                    ``(vi) the Government Printing Office; and
                    ``(vii) the Office of the Architect of the Capitol; 
                and
            ``(B) the term `employee' means any employee and any 
        officer of the United States and includes the President and 
        Vice President and any justice or judge of the United 
        States.''.

SEC. 204. CREDIT FOR STATE INCOME TAX PAYMENTS.

    Section 5(a) of title VI of the District of Columbia Income and 
Franchise Tax Act of 1947 (D.C. Code, sec. 47-1806.4(a)), as amended by 
section 3(b)(3)(B) of this Act, is further amended--
            (1) by inserting ``(1)'' immediately before ``The'' in the 
        first sentence; and
            (2) by adding at the end thereof the following new 
        paragraph:
    ``(2) If any income of a resident which is subject to taxation 
under this title is also subject to an income tax under the laws of 
another State, the income tax payable on such income to such other 
State shall be allowed as a credit to the resident against the tax 
imposed by this title, except that (A) the credit allowed under this 
paragraph may not exceed the amount of tax which would be payable under 
this title on such income, and (B) no credit shall be allowed under 
this paragraph if the other State allows a credit against the income 
tax imposed by such State for the tax paid under this title. Proof of 
payment of income tax to another State shall be required before credit 
for such tax is allowed under this paragraph.''.

SEC. 205. TECHNICAL AMENDMENT.

    The table of contents for the District of Columbia Revenue Act of 
1947 (article I of which constitutes the District of Columbia Income 
and Franchise Tax Act of 1947) is amended as follows:
            (1)(A) In the item relating to section 2 of title III of 
        article I, insert ``in the case of residents'' immediately 
        before the period.
            (B) Immediately after the item relating to section 3(b) of 
        such title, insert the following:

``Sec. 4. Gross income and exclusion therefrom in the case of 
                            nonresidents.''.
            (2) In the item relating to the title heading for title VI 
        of article I, striking out ``And Nonresidents''.
            (3)(A) In the item relating to the title heading for title 
        VIII of article I, strike out ``Tax on'' and insert in lieu 
        thereof ``Net Income of''.
            (B) Strike out the items relating to sections 2 through 6 
        of such title VIII and insert in lieu thereof the following:

``Sec. 2. Net income of unincorporated businesses.''.
            (4)(A) In the item relating to subsection 14 of title XII 
        of article I, strike out ``and unincorporated businesses''.
            (B) In the item relating to subsection (b) of such section, 
        strike out ``or unincorporated business''.
            (5) Immediately after the item relating to title 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.''.

SEC. 206. RECIPROCAL TAX COLLECTION.

    (a) In General.--Any State, territory, or possession, by and 
through its lawfully authorized officials, shall have the right to sue 
in the Superior Court of the District of Columbia to recover any tax 
lawfully due and owing to it when the reciprocal right is accorded to 
the District by such State, territory, or possession, whether such 
right is granted by statutory authority or as a matter of comity.
    (b) Proof.--The certificate of the Secretary of State or other 
authorized official of any State, territory, or possession, or 
subdivision thereof, to the effect that the official instituting the 
suit for collection of taxes in the Superior Court of the District of 
Columbia has the authority to institute such suit and collect such 
taxes shall be conclusive proof of that authority.
    (c) Definition.--For the purposes of this section, the term 
``taxes'' includes--
            (1) any and all tax assessments lawfully made, whether they 
        be based upon a return or other disclosure of the taxpayer, or 
        upon the information and belief of the taxing authority, or 
        otherwise;
            (2) any and all penalties lawfully imposed pursuant to a 
        taxing statute, ordinance, or regulation; and
            (3) interest charges lawfully added to the tax liability 
        which constitutes the subject of the suit.
    (d) Authorization of Suit.--The Corporation Council or any of his 
assistants is authorized to bring suit in the name of the District of 
Columbia in the courts of States, territories, and possessions, and 
subdivisions thereof, to collect taxes lawfully due the District. The 
District of Columbia Financial Responsibility and Management Assistance 
Authority is authorized to procure professional and other services, at 
such rates as may be usual and customary for such services in the 
jurisdiction concerned, when he deems it necessary for the prosecution 
of any suit authorized by this section.

SEC. 207. METROPOLITAN WASHINGTON EDUCATION AND WORKFORCE TRAINING 
              TRUST FUND.

    (a) Establishment.--There is established in the Treasury of the 
United States a trust fund, to be known as the Metropolitan Washington 
Education and Workforce Training Trust Fund (hereafter in this section 
referred to as the ``Trust Fund''), consisting of such amounts as are 
transferred to the Trust Fund under subsection (b)(1) of this section 
and any interest earned on investment of amounts in the Trust Fund 
under subsection (c)(2) of this section.
    (b) Transfer of Amounts Equivalent to Certain Tariffs.--
            (1) In general.--The District of Columbia Financial 
        Responsibility and Management Assistance Authority shall 
        transfer to the Trust Fund an amount equal to \2/3\ of the 
        revenues received by the District of Columbia from the tax 
        imposed by title XVII of the District of Columbia Income and 
        Franchise Tax Act of 1947 (as added by section 201 of this 
        Act).
            (2) Effective date.--The transfers required by paragraph 
        (1) shall begin at the end of the first quarter of the calendar 
        year beginning after the calendar year referred to in section 
        201(b)(2)(A).
            (3) Transfers based on estimates.--The amounts required to 
        be transferred to the Trust Fund under paragraph (1) shall be 
        transferred at least quarterly from the District of Columbia to 
        the Trust Fund on the basis of estimates made by the District 
        of Columbia Financial Responsibility and Management Assistance 
        Authority. Proper adjustment shall be made in amounts 
        subsequently transferred to the extent prior estimates were in 
        excess of or less than the amounts required to be transferred.
    (c) Investment of Trust Fund.--
            (1) In general.--It shall be the duty of the Secretary of 
        the Treasury to invest such portion of the Trust Fund as is 
        not, in the Secretary's judgment, required to meet current 
        withdrawals. Such investments may be made only in interest-
        bearing obligations of the United States or in obligations 
        guaranteed as to both principal and interest by the United 
        States. For such purpose, such obligations may be acquired--
                    (A) on original issue at the issue price, or
                    (B) by purchase of outstanding obligations at the 
                market price.
        The purposes for which obligations of the United States may be 
        issued under chapter 31 of title 31, of the United States Code, 
        are hereby extended to authorize the issuance at par of special 
        obligations exclusively to the Trust Fund. Such special 
        obligations shall bear interest at a rate equal to the average 
        rate of interest, computed as to the end of the calendar month 
        next preceding the date of such issue, borne by all marketable 
        interest-bearing obligations of the United States then forming 
        a part of the Public Debt; except that where such average rate 
        is not a multiple of one-eighth of 1 percent, the rate of 
        interest of such special obligations shall be the multiple of 
        one-eighth of 1 percent next lower than such average rate. Such 
        special obligations shall be issued only if the Secretary of 
        the Treasury determines that the purchase of other interest-
        bearing obligations of the United States, or of obligations 
        guaranteed as to both principal and interest by the United 
        States on original issue or at the market price, is not in the 
        public interest.
            (2) Sale of obligation.--Any obligation acquired by the 
        Trust Fund (except special obligations issued exclusively to 
        the Trust Fund) may be sold by the Secretary of the Treasury at 
        the market price, and such special obligations may be redeemed 
        at par plus accrued interest.
            (3) Credits to trust fund.--The interest on, and the 
        proceeds from the sale or redemption of, any obligations held 
        in the Trust Fund shall be credited to and form a part of the 
        Trust Fund.
    (d) Obligations From Trust Fund.--The Secretary of Labor and the 
Secretary of Education are authorized to obligate such sums as are 
available in the Trust Fund (including any amounts not obligated in 
previous fiscal years) for grants as provided in section 101 of this 
Act.
    (e) Report to Congress.--It shall be the duty of the Secretary of 
the Treasury to hold the Trust Fund, and (after consultation with the 
Secretary of Labor or the regional authority, as appropriate) to report 
to the Congress each year on the financial condition and the results of 
the operations of the Trust Fund during the preceding fiscal year and 
on its expected condition and operations during the next fiscal year. 
Such report shall be printed as both a House and Senate document of the 
session of the Congress to which the report is made.

SEC. 208. EFFECTIVE DATE.

    The amendments made by this title and this title shall take effect 
at the beginning of the calendar year beginning after the date of 
enactment of this Act, and shall apply with respect to taxable years 
beginning on or after such date.
                                 <all>