residents are exempt from Federal taxes on income they earn in Samoa, Guam, and Northern Mariana Islands, but are subject to Federal taxes on income earned elsewhere. (12) In keeping with the early history and democratic traditions of the United States, the principles established in the Constitution, and in conformance with the other territories of the United States which have delegates but no Representative, the residents of the District of Columbia should be exempt from paying United States Federal income taxes. 3. Exclusion from gross income for income from sources within the District of Columbia (a) In general Subpart D of part III of subchapter N of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 938. Income from sources within the District of Columbia (a) General rule In the case of an individual who is a bona fide resident of the District of Columbia during the entire taxable year, gross income shall not include— (1) income derived from sources within the District of Columbia, and (2) income effectively connected with the conduct of a trade or business by such individual within the District of Columbia. (b) Deductions, etc. allocable to excluded amounts not allowable An individual shall not be allowed— (1) as a deduction from gross income any deductions (other than the deduction under section 151, relating to personal exemptions), or (2) any credit, properly allocable or chargeable against amounts excluded from gross income under this section. (c) Bona fide resident and other applicable rules For purposes of this section, rules similar to the rules of section 876, 937, 957(c), 3401(a)(8)(D), and 7654 shall apply. . (b) Clerical amendment The table of sections for subpart D of part III of subchapter N of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 938. Income from sources within the District of Columbia. . (c) Effective date The amendments made by this section shall apply to taxable years ending after the date