The remaining 1% (encompassing actual govt. buildings like the White House and the Capitol) should remain federalized.
Problem solved.
Regards,
99% of the territory of D.C. should be split up between the two bordering states (Maryland and Virginia) from which it was originally carved.
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Who would want it?
The whole idea of a federal district was to protect the representative from other states from being persecuted by the government in the capital city which disagreed with them.
The new “State of New Columbia” government could well try to harass GOP representatives who simply try to eat in a restaurant or stay in a hotel near the Capitol building, as after statehood these places would not be in a federal district, but rather in a state. The state government could try to tax their wages as congresscritters. Federalist paper #43 covers the issue of a neutral federal district for the national Congress.
DC was once square shaped it include Virginia. Arlington County Va was once part of the district. That’s why it has the odd regular shaped. So the Virginia part of your idea was done in the early 1800s. Now as you say the Maryland part needs to be done.