Necessity being the mother of invention and all, D.C. politicians and policy makers are looking for ways to shovel money into the city’s bare coffers. Our leaders are staring at years of falling revenue beyond this year’s $188 million shortfall; how can they continue to spend and spend without raising taxes or cutting programs? Bring in more cash in the form of other peoples money, natch.
Last week at-large council member Michael Brown suggested D.C. become “Vegas on the Potomac.” His legislation would legalize online poker and fantasy sports betting in the nation’s capital.
“Because of shortfalls across the country,” Brown told the Examiner, “many jurisdictions are looking to do something similar. We’re looking for other sources of revenue.”
Brown is looking in the wrong places. Sure, the District is losing revenue from gambling operations in Maryland and West Virginia. Casino gambling is alive and well a short drive to our east and west. But do we really want to encourage gambling on our home turf? Brown would have to face the fact that gambling is a drug to poor folks and those already down on their luck. Why prey on them?
Natwar Gandhi has a better idea: Let’s bring in dollars from rich corporations, namely banks and insurance companies who currently park millions of dollars abroad in island tax havens. Gandhi wants to change federal tax laws and make D.C. “Bermuda on the Potomac.”
Sounds reasonable.
“The financial center of the country is in Washington now,” Gandhi tells me. “All the trading can be done in New York, but the decisions are made here.”
So why not make the capital into a tax haven?
Lawrence “Larry” Mirel saw the potential when he was D.C. tax commissioner from 1999 to 2005. “I was looking for ways to make D.C. more economically viable,” he says. He knew that insurance companies stashed their required reserves in offshore tax havens. He and Gandhi agreed it would be a great idea if they could park their millions in D.C.
If only Congress would agree to change tax laws.
Herein lies the rub, of course. Having no vote in the House or the Senate, D.C. is at the mercy of our suburban neighbors. Every time D.C. floats a tax haven idea, politicians from Maryland and Virginia see it as giving the central city a competitive advantage.
“It’s an idea we have explored in the past,” council finance chair Jack Evans says. “Maybe it’s time to do it again. I’m all for it.”
But few congressmen rushed to support H.R. 5762, the bill D.C. Delegate Eleanor Holmes Norton introduced in July to change the IRS code and make D.C. a tax haven for insurance companies’ disaster funds. Perhaps because Chairman Charlie Rangel was constrained by his own indiscretions?
Oddly enough, the new Republican-controlled Congress might be more hospitable to Bermuda On the Potomac. Perhaps we can make a trade: D.C. gives up its right to control firearms; in exchange, we become a tax haven, narrowly defined.
Two problems, easily solved.
Harry Jaffe’s column appears on Tuesday and Friday. He can be contacted at [email protected].
