Remember the on-again off-again plan to tax Washington, D.C. residents on their out-of-state municipal bonds?
It’s off again.
Included in its recently approved budget, the D.C. Council voted to ditch the measure altogether.
The original plan was passed in 2011, reportedly conceived in private among some Council members just before a meeting. The law called for an 8.5% tax on out-of-state munis and sparked an uproar by investors who bought the bonds with a good-faith understanding they wouldn’t be taxed.
After considerable back-and-forth over the merits and timing of the law, it became effective as of Jan. 1, 2013 – and scrapped four months later.
Council members said repealing the tax would assist residents who rely on the tax-free income. And it didn’t provide the city a revenue windfall as residents were forgoing munis once the tax became effective, according to a councilman.
“Nobody was buying them,” Ward 2 Councilman Jack Evans told the Washington Examiner. “I’m glad we reversed course.”