Rep. Darrell Issa (R-CA)

Much as he surprised D.C. voting rights advocates and city officials at a hearing last year by saying that he would be open to expanded budget autonomy, Rep. Darrell Issa (R-Calif.) said at a hearing today that he would entertain proposals to allow D.C. to tax income at its source—i.e., impose a commuter tax.

Issa’s sudden admission came towards the end of a hearing on a proposal to loosen height restrictions on D.C. buildings. During the hearing, D.C. CFO Natwar Gandhi said that since so much of the city’s land cannot be taxed and the Home Rule Charter forbids the imposition of a commuter tax, allowing the city to build upwards was necessary to establishing a solid tax base. “We have to take care of our people, and we need a tax base for that,” he said.

Gandhi’s pleas seem to have struck a chord with Issa, who said he would be open to discussing the issue later this year. Issa also seemed flexible on loosing the 1910 Height Act, which would allow D.C. building to grow beyond their usual 130 feet.

D.C. officials have long fought the commuter tax prohibition, which contributes to a structural imbalance in the city’s finances that exceeds $1 billion a year. In 2003, D.C. sued the federal government for not allowing the city to tax the income of Maryland and Virginia residents who work here, but a U.S. Court of Appeals decision in November 2005 upholding the ban. After that decision, the D.C. Council introduced legislation that would have called a referendum on removing the prohibition from the Home Rule Act. (The act lists the commuter tax as one thing that D.C. officials can’t change—Congress has to do it.)

While members of Maryland and Virginia’s congressional delegations have largely opposed a commuter tax, in 2005 and 2006 they were amenable to an annual federal payment to D.C. of roughly $800 million to compensate the city for the money it lost in income that went back to neighboring states. That position was supported by the Court of Appeals’ decision, which said that “the enhanced burden of financing the District’s operation should fall on the nation at large, rather than on the residents of the neighboring states.”

In 2010, the council debated a variation on the commuter tax—one that targeted only D.C. government employees that lived outside of the city—but it never passed.

During today’s hearing, Issa’s open admission that a commuter tax discussion could be in the offing shocked D.C. Del. Eleanor Holmes Norton, who praised Issa’s ability to constantly surprise her. Still, any such proposal would have to navigate the usual congressional politics—and it may not come out the way D.C. officials would like. After Issa first floated increased budget autonomy, he presented a proposal that granted it—but at the same time codified a ban on the use of local dollars for abortions. Norton and city officials rejected the deal.