United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 4, 2005 Decided November 4, 2005
No. 04-5190
JAMES M. BANNER, JR., ET AL.,
APPELLANTS
v.
UNITED STATES OF AMERICA, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 03cv01587)
John W. Nields, Jr. and Walter Smith argued the cause for
appellants. With them on the briefs were Gary S. Thompson and
Carolyn Lamm.
Joseph A. Rieser, Jr. and Joseph R. Price were on the brief
for amici curiae District of Columbia Affairs Section of the
District of Columbia Bar, et al., in support of appellants.
Michael S. Raab, Attorney, U.S. Department of Justice,
argued the cause for federal appellee. With him on the brief
were Peter D. Keisler, Assistant Attorney General, Kenneth L.
Wainstein, U.S. Attorney, and Mark B. Stern, Attorney.
Jerry W. Kilgore, Attorney General, Attorney General’s
Office of the Commonwealth of Virginia, William E. Thro, State
Solicitor General, and Maureen Riley Matsen, Deputy State
2
Solicitor General, were on the brief of appellee Commonwealth
of Virginia.
J. Joseph Curran, Jr., Attorney General, Attorney General’s
Office of the State of Maryland, and Michael D. Berman,
Deputy Chief of Litigation, were on the brief for appellee State
of Maryland.
Before: CHIEF JUSTICE ROBERTS, Circuit Justice,1 and
ROGERS, Circuit Judge, and EDWARDS, Senior Circuit Judge.2
Opinion for the Court filed PER CURIAM.
PER CURIAM: The local government of the District of
Columbia is prohibited by Congress from imposing a “commu-
ter tax” — from taxing the personal income of those who work
in the District but reside elsewhere. Appellants brought suit in
the district court challenging the restriction as unconstitutional.
They argue that the restriction (1) favors Congress’s constituents
in the states and discriminates against the unrepresented
residents of the District, in violation of the equal protection
component of the Fifth Amendment, and (2) contravenes the
Constitution’s requirement that “all Duties, Imposts and Excises
shall be uniform throughout the United States.” U.S. Const. art.
I, § 8, cl. 1. The district court rejected both arguments and
dismissed the complaint. We affirm.
I.
The Constitution gives Congress exclusive legislative
authority in all matters pertaining to the District of Columbia.
1
Chief Justice Roberts was a member of this court when the case
was briefed and argued and is designated Circuit Justice of this court.
See 28 U.S.C. §§ 42, 43(b).
2
Senior Circuit Judge Edwards was in regular active service at
the time of oral argument.
3
U.S. Const. art. I, § 8, cl. 17. Congress has employed this power
in various ways since the District was first incorporated in 1802.
See Adams v. Clinton, 90 F. Supp. 2d 35, 47 n.19 (D.D.C.)
(three-judge court), aff’d, 531 U.S. 941 (2000). The District
initially contained three separate governments for Georgetown,
Washington, and Alexandria. Id.3 In the 1870s, Congress
unified the District government under a three-person commis-
sion appointed by the President — a system that prevailed until
1967, when it was replaced with a commissioner and council,
also presidentially appointed. See Reorganization Plan No. 3 of
1967, 81 Stat. 948. In 1973, Congress enacted the present form
of government, known as “home rule,” under which a mayor and
council elected by residents of the District exercise certain
executive and legislative powers delegated by Congress. See
District of Columbia Self-Government and Governmental
Reorganization (“Home Rule”) Act, Pub. L. No. 93-198, 87 Stat.
774 (1973).
Since 1973, Congress has remained closely involved in the
management of the District’s finances. In addition to requiring
enactment of annual appropriations acts for District government
expenditures, the Home Rule Act also provides for an annual
federal payment by Congress to the District in compensation for
“the unusual role of the District as the Nation’s Capital.” §
501(a); see also Comm’n on Budget and Fin. Priorities of the
District of Columbia, Financing the Nation’s Capital, at 1-10 to
-12 (1990). This payment amounted to approximately $660
million per year by the mid-1990s. See Banner v. United States,
303 F. Supp. 2d 1, 5 (D.D.C. 2004). In 1997, Congress repealed
the system of federal payments and began directly subsidizing
3
Alexandria and District land west of the Potomac River were
returned to Virginia in 1846 because, in the words of Congress,
“experience [had] shown that [the land] has not been, nor is ever likely
to be, necessary for” the seat of government. Act of July 9, 1846, 9
Stat. 35.
4
certain District operations, including Medicaid, the local courts,
and the prison system. See National Capital Revitalization and
Self-Government Improvement Act of 1997, Pub. L. No. 105-
33, 111 Stat. 712.
At issue in this case is one of the terms of the 1973 “home
rule” delegation. The Home Rule Act prohibits the District
Council from imposing “any tax on the whole or any portion of
the personal income, either directly or at the source thereof, of
any individual not a resident of the District.” § 602(a)(5); see
D.C. Official Code § 1-206.02(a)(5) (2001). The provision
prevents the District government from taxing the personal
income of those who work in the District, but reside outside it.
Plaintiffs are several District residents, the Mayor, the
Council of the District of Columbia and its members, and the
District of Columbia itself. Together these individuals and
entities filed suit against the United States challenging the
commuter tax restriction as unconstitutional. They assert that
the restriction discriminates against District residents in favor of
residents from neighboring states, depriving the District of $30
billion annually in taxable non-resident income (or about $1.4
billion in annual tax revenue at present District tax rates).
Compl. ¶¶ 6, 7.4 As a result, they contend, the District’s fiscal
system labors under a “structural imbalance” — a revenue
shortfall of between $470 million and $1.1 billion annually that
4
An individual who resides in one jurisdiction and earns income
in another normally incurs tax liability in both jurisdictions. Most
states, including Maryland and Virginia, offer credits to residents who
pay income tax in other jurisdictions. Thus, a commuter tax would not
necessarily affect the total tax liability of Maryland and Virginia
residents who work in the District. The state governments themselves,
however, would lose revenue roughly in the amount of the District’s
gain, and would presumably have to make up the shortfall by raising
taxes or cutting spending. See Appellants’ Br. at 7 & n.7.
5
would persist “even if the District’s services were managed
efficiently.” Id. ¶ 3 (quoting General Accounting Office,
District of Columbia: Structural Imbalance and Management
Issues 8 (2003)). Plaintiffs claim that this imbalance forces
District residents to bear a higher local tax burden than they
otherwise would. Id. ¶ 7.
The State of Maryland and the Commonwealth of Virginia
intervened in the district court and, along with the federal
defendants, moved to dismiss the complaint. The district court
granted the motion, concluding that “the Constitution and
binding Supreme Court and Circuit precedent establish Con-
gress’ plenary power over the District and its residents and their
unique status within our constitutional framework,” and that the
court “lack[ed] the power to grant the remedy that plaintiffs
seek.” Banner, 303 F. Supp. 2d at 26. Plaintiffs now bring this
appeal. We review de novo the district court’s decision to
dismiss the complaint. See Barr v. Clinton, 370 F.3d 1196, 1201
(D.C. Cir. 2004).
II.
We begin with equal protection.5 Congress has delegated
5
Appellee the Commonwealth of Virginia raises a threshold
challenge to the standing of appellants to invoke the court’s jurisdic-
tion. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94
(1998). The Commonwealth argues that plaintiffs’ injury is neither
sufficiently particularized nor redressible by the relief sought. See
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992). The
district court properly disposed of these contentions. The individual
appellants’ claim that they bear a higher tax burden due to a discrimi-
natory tax “is sufficient to establish standing.” Orr v. Orr, 440 U.S.
268, 273 (1979). As to redressibility, while a favorable ruling would
not automatically remove appellants’ burden, relief is sufficiently
likely: the District Council has passed a resolution stating that, absent
the restriction, it would enact an income tax on non-residents. See
6
to the District the authority to tax the personal income of District
residents; it has withheld such authority to tax non-residents
who work in the District. Appellants argue that this restriction
violates the equal protection component of the Fifth Amend-
ment’s Due Process Clause. See Bolling v. Sharpe, 347 U.S.
497, 498–99 (1954).
The first issue in equal protection analysis is whether the
distinction drawn by Congress demands heightened scrutiny.
See Hedgepeth v. Wash. Metro. Area Transit Auth., 386 F.3d
1148, 1153 (D.C. Cir. 2004). Strict scrutiny — the most
demanding variety — is warranted if the restriction “jeopardizes
exercise of a fundamental right or categorizes on the basis of an
inherently suspect characteristic.” Nordlinger v. Hahn, 505 U.S.
1, 10 (1992). A less exacting, but still heightened, standard
applies to classifications based on sex. See United States v.
Virginia, 518 U.S. 515, 532 (1996). Otherwise, equal protection
“requires only that the classification rationally further a legiti-
mate state interest.” Hahn, 505 U.S. at 10.
Appellants’ most obvious avenue to heightened scrutiny is
blocked. They do not, and could not, argue that District
residents form a “suspect class” for equal protection purposes.
We have squarely held otherwise. See Calloway v. District of
Columbia, 216 F.3d 1, 7 (D.C. Cir. 2000) (“a panel of this court
may not now depart from the en banc court’s conclusion that
D.C. residents do not comprise a suspect class for equal protec-
tion purposes”); United States v. Cohen, 733 F.2d 128, 136 n.12
(D.C. Cir. 1984) (en banc) (rejecting argument that “distinctive
legislative treatment of the District is ‘particularly suspect’ and
District Resolution § 2(12); see also Defenders of Wildlife, 504 U.S.
at 561. Because the individual plaintiffs have standing for each claim,
we need not consider the standing of the institutional plaintiffs before
proceeding to the merits. See Animal Legal Def. Fund, Inc. v.
Glickman, 154 F.3d 426, 429 (D.C. Cir. 1998) (en banc).
7
thus requires more than a rational basis to support it”).
Instead, appellants argue that heightened scrutiny is
required whenever a legislature imposes a tax that favors its
constituents at the expense of persons who are not represented
in the legislature. Br. at 20. They derive this principle from a
line of Supreme Court decisions invalidating state tax laws that
treat non-residents less favorably than residents. See Williams
v. Vermont, 472 U.S. 14 (1985); Metro. Life Ins. Co. v. Ward,
470 U.S. 869 (1985); Austin v. New Hampshire, 420 U.S. 656
(1975); Wheeling Steel Corp. v. Glander, 337 U.S. 562 (1949).
None of these cases, however, applied strict scrutiny. In
Williams and Metropolitan Life — the most recent of appellants’
cases — the Court applied only rational basis review. See 472
U.S. at 22–23; 470 U.S. at 875. Wheeling Steel did not apply
any particular level of scrutiny, likely because it was decided
before the elaboration of equal protection categories of review.
The tax statute in Austin was invalidated only under the Privi-
leges and Immunities Clause of Article IV. See U.S. Const., art.
IV, § 2; Austin, 420 U.S. at 668. That decision therefore neither
prescribes heightened scrutiny for equal protection purposes nor
applies to Congress when it legislates for the District. See Neild
v. District of Columbia, 110 F.2d 246, 249 n.3 (D.C. Cir. 1940)
(Privileges and Immunities Clause is “a limitation upon the
states only and in no way affects the powers of Congress over
the District of Columbia”). If we adhere to the decisions on
which appellants themselves rely, we should consider only
whether the commuter tax restriction “rationally further[s] a
legitimate state interest.” Hahn, 505 U.S. at 10.
Appellants urge that “[r]egardless of the precise standard,
the [Supreme] Court has ultimately struck down all state tax
laws that do not treat unrepresented outsiders equally; whereas,
tax laws discriminating against a State’s own residents — who
are represented — are upheld.” Br. at 27. In Metropolitan Life,
for example, the Court held unconstitutional an Alabama statute
8
that taxed premiums paid to in-state insurance companies at a
lower rate than premiums paid to out-of-state companies. Equal
protection, the Court ruled, does not permit a state “constitu-
tionally [to] favor its own residents by taxing foreign corpora-
tions at a higher rate solely because of their residence.” 470
U.S. at 878. Appellants generalize this holding to cover all “tax
laws discriminating in favor of a legislature’s constituents,”
including cases where Congress legislates in a manner that
discriminates against the unrepresented residents of the District.
Br. at 28.6
Even assuming that Metropolitan Life and similar cases can
fairly be read for this broader principle, appellants’ reasoning
encounters a major difficulty. The Constitution grants Congress
authority “[t]o exercise exclusive Legislation in all Cases
whatsoever, over such District (not exceeding ten Miles square)
as may, by Cession of particular States, and the Acceptance of
Congress, become the Seat of the Government of the United
States.” U.S. Const. art. I, § 8, cl. 17. Congress, when it
6
For this proposition, appellants also lean heavily on a concur-
rence by Justice Brennan in Allied Stores of Ohio, Inc. v. Bowers, 358
U.S. 522 (1959), in which the Court sustained an Ohio law exempting
certain non-resident personal property from taxation. Justice Brennan
sought to distinguish the Ohio law from a similar law treating non-
residents less favorably that the Court had previously struck down. As
the district court recognized, Banner, 303 F. Supp. 2d at 13, a “fair
reading” of the concurrence reveals that the distinction lay not in any
special concern about non-residents’ lack of representation in the
legislature, but in equal protection’s role in “protect[ing] our federal-
ism,” Allied Stores, 358 U.S. at 533. A law favoring non-residents,
the concurrence observed, “clearly presents no state action disruptive
of the federal pattern.” Id. The same concern about discrimination
“disruptive of the federal pattern” does not arise when Congress, “as
a legislature of national character,” Neild, 110 F.2d at 250, exercises
its authority over the District.
9
legislates for the District, stands in the same relation to District
residents as a state legislature does to residents of its own state.
See Mercury Press v. District of Columbia, 173 F.2d 636, 637
(D.C. Cir. 1948) (Congress legislates for the District “in like
manner as the legislature of a state” (quoting Gibbons v. District
of Columbia, 116 U.S. 404, 407 (1886))). “Not only may
statutes of Congress of otherwise national application be applied
to the District of Columbia, but Congress may also exercise all
the police and regulatory powers which a state legislature or
municipal government would have in legislating for state or
local purposes.” Palmore v. United States, 411 U.S. 389, 397
(1973).
This is true notwithstanding that the Constitution denies
District residents voting representation in Congress. See Adams,
90 F. Supp. 2d at 72. Indeed, appellants’ claim amounts to little
more than a collateral challenge to the District’s lack of repre-
sentation. They argue that because District residents are not
represented in Congress, Congress’s real constituents reside in
the states. Therefore, the argument goes, actions by Congress
that favor those constituents over District residents should be
deemed suspect. The suggestion is that District residents stand
in the same relation to Congress as, say, residents of New York
to New Jersey’s state legislature — just as New York’s residents
are not represented in New Jersey’s legislature, District residents
are not represented in Congress. This argument misses the
special character of the District under the Constitution. Con-
gress is not a foreign sovereign government in relation to the
District, as the New Jersey legislature is to New York; Congress
is the District’s government, see U.S. Const. art. I, § 8, cl. 17,
and the fact that District residents do not have congressional
representation does not alter that constitutional reality.
Given Congress’s control over the District, appellants must
in effect contend that in enacting the commuter tax restriction,
Congress has improperly preferred its role as the national
10
legislature to its role as the local one for the District. But in this,
their dispute lies with the plan of the Constitution and the
judgment of its Framers. The evident purpose of granting
Congress authority over the District was to provide the federal
government a place where it would not be harassed or neglected
by local interests. See The Federalist No. 43 (James Madison);
2 Joseph Story, Commentaries on the Constitution of the United
States § 1219 (5th ed. 1891) (suggesting that Pennsylvania’s
refusal to defend the Continental Congress from an angry crowd
of disbanded but unpaid Revolutionary War soldiers ultimately
led to inclusion of the District Clause). The Framers would
naturally have expected that where tensions between local and
national interests arose, they could be resolved by Congress with
due consideration for the latter. See Cohens v. Virginia, 19 U.S.
(6 Wheat.) 264, 429 (1821) (Marshall, C.J.) (“Congress is not a
local legislature, but exercises this particular power, like all its
other powers, in its high character, as the legislature of the
Union. The American people thought it a necessary power, and
they conferred it for their own benefit.”).
Of course, none of this is to say that Congress can legislate
for the District without regard to other constitutional constraints.
See Palmore, 411 U.S. at 397. For example, a law employing a
suspect classification is hardly immune from close scrutiny
because it applies only to the District. But it is to say that there
is nothing inherently suspect in the prospect that Congress might
give decisive weight to national rather than local considerations
when it legislates for the District. The very point of having a
national capital area subject to congressional rather than state
control was to allow Congress to do just that. Appellants’
structural bias argument does not, therefore, support heightened
scrutiny under the equal protection component of the Fifth
Amendment.
Under rational basis review, the commuter tax restriction
must be sustained “if any state of facts reasonably may be
11
conceived to justify it.” Sullivan v. Stroop, 496 U.S. 478, 485
(1990) (citation omitted). This is not hard to do, and appellants
in effect concede the point by acknowledging that a state could
constitutionally enact a similar restriction. See Banner, 303 F.
Supp. 2d at 15. Congress may have been concerned that a
commuter tax would cause District businesses to relocate to
nearby Maryland and Virginia, where income tax rates are
generally lower. See Allied Stores, 358 U.S. at 528–29 (under
Equal Protection Clause, a state may properly provide incentives
for non-residents to do business within its borders). Or it may
have decided that the enhanced burden of financing the Dis-
trict’s operation should fall on the nation at large, rather than on
the residents of neighboring states. These need not have been
the actual motives behind the restriction, see id. at 528, for their
plausibility alone is enough to sustain it under rational basis
review.
III.
The Constitution gives Congress the “Power To lay and
collect Taxes,” but requires that “all Duties, Imposts and Excises
shall be uniform throughout the United States.” U.S. Const. art.
I, § 8, cl. 1. Appellants argue that the commuter tax restriction
violates the uniformity requirement because Congress has
prohibited a non-resident income tax only in the District, and
nowhere else, and has done so “to benefit other portions of the
country — most particularly, Maryland and Virginia.” Br. at 36.
The Uniformity Clause is not exactly well-trodden constitu-
tional terrain. The Supreme Court has observed that the records
of the Constitutional Convention shed only scattered light on its
meaning and scope, see United States v. Ptasynski, 462 U.S. 74,
80–81 & n.10 (1983), and even until the turn of the last century
it was not settled that the clause referred only to geographical
uniformity. See Knowlton v. Moore, 178 U.S. 41 (1900)
(settling the matter). Nevertheless, its purpose has been divined
from the Framers’ concern that Congress “would use its power
12
over commerce to the disadvantage of particular States.”
Ptasynski, 462 U.S. at 81; see also Knowlton, 178 U.S. at
103–05.
A special problem arises in applying the Uniformity Clause
not to Congress’s interstate commerce power, but to its authority
over the District and other territories that it governs directly. In
such instances it has been understood that Congress may impose
local taxes without running afoul of the Clause. See Mercury
Press, 173 F.2d at 637 (“It has long been established that
Congress may constitutionally impose excises in the territories
which it governs directly, without making such excises generally
applicable to the country at large.”). This makes sense. If, in
governing the District, Congress can “exercise all the police and
regulatory powers which a state legislature or municipal
government would have in legislating for state or local pur-
poses,” Palmore, 411 U.S. at 397, it undoubtedly has the
authority to enact taxes for the District alone, just as a state
could. See Gibbons, 116 U.S. at 407–08 (Congress has power
“to levy taxes for District purposes only, in like manner as the
legislature of a State may tax the people of a State for State
purposes”). The taxes Congress may assess in the District could
hardly be “uniform throughout the United States,” and still
function as the equivalent of state taxes. Given Congress’s
authority under the District Clause, the Uniformity Clause
would appear to have little relevance to Congress’s local
taxation of the District.
The Supreme Court has, however, applied the Uniformity
Clause in a related context. In Binns v. United States, 194 U.S.
486 (1904), the Court considered a challenge to a
congressionally-enacted license tax for the territory of Alaska.
The basis for the challenge was the fact that revenues from the
tax were paid to the federal treasury rather than to a treasurer for
the Alaskan territory. The Court observed that the tax’s
“constitutionality would be clear” if it were paid directly to a
13
local treasurer, id. at 492, but nevertheless saw no problem in
having the revenues instead paid to the federal treasury, pro-
vided that the tax’s purpose was to raise revenue for Alaska and
“the total revenues derived from Alaska are inadequate to the
expenses of the Territory.” Id. at 494–95.
The Court in Binns seems to have understood a local tax on
a territory to pose no Uniformity Clause problem as long as it
does not cloak a kind of mercantilist policy toward the territory.
Thus the Court advised — in dictum never since revisited by the
Court — that its ruling “must not be extended to any case, if one
should arise, in which it is apparent that Congress is, by some
special system of license taxes, seeking to obtain from a territory
of the United States revenue for the benefit of the nation.” Id.
at 496.
The commuter tax restriction at issue here, of course, does
not fit within the letter of this cautionary dictum from Binns. It
is not a “system of license taxes,” but a limitation on Congress’s
delegation of taxing authority to the local District government.
It does not generate surplus tax revenue beyond the needs of the
District “for the benefit of the nation.” Far from it: the restric-
tion itself, which exempts certain income from taxation, raises
no revenue at all.
Appellants argue, however, for a broader reading of Binns.
According to them, Binns stands for the proposition that “when
Congress purports to act as a local legislature but in fact acts in
part for a national purpose, its action is subject to the limitations
of the Uniformity Clause.” Br. at 40. Here, they contend,
“Congress has enacted a Prohibition on taxes in the District in
order to produce revenues not for the District — but for other
parts of the Nation.” Id. at 38. In doing so, Congress has
“preferr[ed] the States at the expense of the District,” id. at 37,
because the restriction leaves more income to be taxed by the
states and less for the District.
14
There is good reason, however, not to read Binns so
expansively. Appellants’ reading is inconsistent with Con-
gress’s constitutional authority over the District. If congressio-
nal legislation for the District were scrutinized merely because
it had the effect of “preferring the States at the expense of the
District,” Br. at 37, Congress’s authority over the District would
be much less substantial than the power “[t]o exercise exclusive
Legislation in all Cases whatsoever” granted to it by the
Constitution. U.S. Const. art. I, § 8, cl. 17. Even routine
instances of that authority might be called into question. Indeed,
in financing the District, Congress necessarily faces a choice
between using revenues from local taxation and general
revenues, i.e., revenues largely derived from the states. Any
decision to rely more on the former would seem to implicate
appellants’ reading of Binns. For example, if Congress were to
cease funding the local courts, thereby requiring the District
government to fund them by raising taxes, Congress could be
said “to relieve its constituents at the expense of District resi-
dents,” Br. at 38, and thus act in violation of the Uniformity
Clause. We see no reason to adopt a reading of Binns so in
tension with Congress’s constitutional authority over the
District.
The commuter tax restriction is more properly viewed as
simply an aspect of Congress’s authority to levy local taxes on
the District and therefore entirely consistent with the Uniformity
Clause. Congress has delegated to the District government the
power to levy an income tax while restricting the kinds of
income the District may tax. The arrangement is no different
from Congress determining how to treat various types of income
in the course of imposing an income tax itself. Governments
often must decide, as Congress has here, how to treat revenue
sources on which another jurisdiction may have a claim. See,
e.g., D.C. Official Code § 47-1809.01 (2001) (residency
definitions for tax on estates and trusts); id. § 47-3703 (tax on
transfer of taxable estate of non-residents). If Congress has the
15
authority to impose local taxes on the District — and it does, see
Mercury Press, 173 F.2d at 637 — it surely can make such
determinations in the course of exercising that authority.
The fact that no state currently exempts all non-resident
income from its income tax is of no consequence. Any state
could do so tomorrow, see Allied Stores, 358 U.S. at 530: would
Congress then have the power to enact the commuter tax
restriction? Congress’s authority over the District is not so
precarious. It is enough that the power Congress has exercised
here within the District is one that “the legislature of a State
might exercise within the State.” Palmore, 411 U.S. at 397
(internal quotation marks omitted) (emphasis added). As such,
the restriction does not violate the Uniformity Clause.
* * *
It is beyond question that the Constitution grants Congress
exclusive authority to govern the District, but does not provide
for District representation in Congress. That constitutional plan
does not require heightened scrutiny of congressional enact-
ments affecting the District. The policy choices are Congress’s
to make; we hold simply that the commuter tax restriction does
not violate equal protection or the Uniformity Clause of the
Constitution. The judgment below is
Affirmed.