[Congressional Record Volume 152, Number 46 (Tuesday, April 25, 2006)]
[Extensions of Remarks]
[Page E592]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




THE INTRODUCTION OF THE DISTRICT OF COLUMBIA TAX INCENTIVES IMPROVEMENT 
                              ACT OF 2006

                                 ______
                                 

                       HON. ELEANOR HOLMES NORTON

                      of the district of columbia

                    in the house of representatives

                        Tuesday, April 25, 2006

  Ms. NORTON. Mr. Speaker, today I am pleased to introduce the District 
of Columbia Tax Incentives Improvement Act of 2006. The legislation 
builds on and adds to federal tax incentives I first got through 
Congress in 1997 in order to help produce residential and business 
stability and growth. These tax credits have surpassed the city's 
highest hopes with a renewed and replenished residential and business 
tax base to show for it. However, this bill is necessary if this growth 
is to continue to make up for the fact that the District is not a 
state.
  Studies and investigation by experts widely agree that the D.C. 
credits have been very successful and have been the single most 
important factor both in stemming residential flight and in stimulating 
commercial development in the applicable neighborhoods. However the 
changes are appropriate to: reduce but target the credits to poor 
neighborhoods not yet reached; increase the efficiency of the 
incentives; achieve increased leverage from city and other federal 
resources; and provide more incentive to purchase homes given the large 
increase in housing prices in the District.
  The legislation would extend the life of the D.C. Enterprise Zone 
(EZ) Benefits to 2009 to put the District on par with the other cities 
that have empowerment zones and will allow the city to fully realize 
and assess the effectiveness of the incentives and eliminate the 
continuing uncertainty that has plagued the program. There was a 
disruption of economic activity and planning by the business sector 
when Congress did not immediately renew those provisions that expired 
at the end of 2003. The District is experiencing this setback again as 
H.R. 4297, the Tax Reconciliation Act of 2005, has not yet been passed 
and the District tax provisions are extended in that bill.
  The improved EZ incentives will target the areas of greatest need; 
align the Zone boundaries with areas designated for concentrated 
investment by the Mayor's Great Streets Initiative; and more 
effectively connect the unemployed with job opportunities by limiting 
the Employment Credit to those businesses that employ persons residing 
in those census tracts that have unemployment rates twice that of the 
national average.
  The legislation also asks for a triple tax exemption for District 
bonds which would allow the District to issue bonds at lower interest 
rates and put D.C. on par with other ``stateless'' jurisdictions, 
including Puerto Rico, Guam and the Virgin Islands, with no loss of 
revenue to the federal treasury. Currently, bonds issued by the 
District are exempt from federal and District taxes, but subject to 
taxation by state and local governments for bondholders located outside 
the District.
  With the first-time homebuyer tax credit, this bill raises the $5,000 
credit for a first-time homebuyer in the District to $10,000 to help 
meet sharply increased home prices that are driving many lower middle 
and middle income taxpayers from the city. Senator Trent Lott raised 
the amount in the Senate bill several years ago, but that bill did not 
pass the House. The homebuyer credit and the economic development 
occurring in the District have been almost entirely responsible for 
significantly stemming taxpayer, residential and business flight, 
bringing both in significant numbers to the District. However, the 
improvements in my bill are essential if the District is to achieve the 
100,000 new residents necessary to sustain its stability that the 
former D.C. control board said was necessary.

  The federal tax incentives provided under the Enterprise Zone and 
homebuyer credit programs will be critical to the continuation of the 
District's essential fiscal partnership with the federal government, 
which seeks to diversify the D.C. economy, reverse the continuing rise 
in the unemployment rate in significant portions of the city, 
strengthen and diversify the District's narrow tax base, and address 
its structural fiscal imbalance.
  The D.C. Enterprise Zone tax incentives and the homebuyer credit 
alone cannot solve these problems. But by extending and improving these 
measures, Congress can continue to make a low-cost, efficient and 
effective contribution to the District's economic well being.

                          ____________________