Critique of Jack Evans on DC Tax Revision

Second, here is my updated critique of Jack Evan's advice on DC tax revision (Jack's Newsletter, September 14, 2012), taking into account the latest 2013 tax burdens from ITEP:

Jack Evans is a prime example of DC Democrats who advocate Republican economic policies. I highlighted Jack's comments on the tax issue below with my own responses (in green):

"I am also excited to monitor the progress of the newly operational Tax Revision Commission.  Chaired by former Mayor Anthony Williams,

The architect of "balancing the budget on the backs of the poor" and Bush-like tax cuts favoring the wealthy (Note that Tony Williams is now the CEO and Executive Director of the Federal City Council.

 the Commission will take a hard look at a number of tax proposals and hopefully come up with a rational set of integrated proposals that balance the need to fund our operations in the short term with longer term goals of fostering business development and retention of District residents and families that too often choose to move to Maryland or Virginia (partly so they can avoid our high taxes! [bold added]

There is no evidence for this claim: see e.g., http://www.dcfpi.org/raising-revenue-by-creating-a-new-tax-bracket-for-top-earners-a-progressive-approach-to-addressing-dcs-budget-shortfall  : "There is no evidence supporting the idea that a new tax bracket would lead to “rich flight” from the District. Critics often respond that top earners would simply move to a place with lower income taxes. Yet they offer no data to support their claim, and a Princeton University researcher has found that this effect is minimal." An excellent letter to the Current newspaper by David Power in June made the same case (see below).
 
A commuter tax can help with this).

A commuter tax singling out non-residents conflicts with the Home Rule Charter. Congress has to approve its amendment to produce such a commuter tax, with no indication that either Maryland or Virginia congressional representatives would back it.  But we can implement congestion charging into our downtown business district which would mainly impact non-resident commuters but also DC drivers.  Aside from Home Rule Charter amendment, only DC Statehood would empower us to tax non-residential income earned in DC by reciprocal taxation.  More at: http://www.dcstatehoodgreen.org/testimony/wmata_march2012


I addressed the Commission earlier this week and made a number of suggestions for consideration, including the following: Repealing the tax on interest earned on out-of-state municipal bonds;

 lowering the sales tax rate to its prior level of 5.75%;

Sales and excise taxes are regressive. Lowering them, especially on essentials is a good step forward. But the rate should be raised on high-priced luxury items.

 lowering the top income tax rate back to 8.5%;

Rather, this top rate should be raised not lowered!   Here are the latest DC tax statistics, updated by the Institute on Taxation and Economic Policy (ITEP): the top 1% of DC families, averaging $2.4 million income now pay a lower DC tax rate (6.3%) than the bottom 20% with $12,600 annual income (6.6%), while the working/middle class pays 9 to 11%, taking into account the federal deduction benefit, mostly helping the upper income families,  restoring some of the money spent for their DC taxes.

 lowering the income tax rate on lower income brackets - specifically, under $40,000 and between $40,000 and $80,000;

Yes, lowering the income tax rate on low income residents by raising the DC Earned Income Tax Credit is imperative but there should be no lowering of the rate for the upper end of  income brackets ($80,000), depending of course on family size.  This could be accomplished in part by updating the DC income tax structure by coupling the deductions and exemptions with Federal rates as Lee Aikin has advocated. I have advocated a more thorough revision of our DC income tax structure basing on the more progressive federal structure, with an update to be posted shortly (see http://www.dcstatehoodgreen.org/testimony/fairtax).  Further, property taxes should be lowered for low income residents, both homeowners and renters who pay the property tax of their landlord as a pass on in their rent (see e.g., http://www.dcfpi.org/its-time-for-the-dc-council-to-update-dcs-low-income-property-tax-credit).

 reducing the corporate income tax rate to 6%; repealing the unincorporated business franchise tax; and repealing the estate tax."

Another giveaway to the corporate sector which would lower revenues needed to fund essential programs in our District budget; again there is no convincing evidence that these measures would bring in more jobs and income for most DC residents (e.g., see: http://www.dcfpi.org/legislation-would-allow-wealthy-tech-investors-to-pay-lower-tax-rate-than-working-dc-families)



DC Fair Budget Coalition http://www.fairbudget.org/

DC Fiscal Policy Institute http://www.dcfpi.org/

DC for Democracy http://www.dcfordemocracy.org/

DC Jobs with Justice http://www.dcjwj.org/

DC Public Banking Center http://dcpublicbanking.org/

DC Statehood Green Party 

http://dcstatehoodgreen.org/

Citizens for Tax Justice

http://ctj.org/

Empower DC http://empowerdc.org/

Institute on Taxation and Economic Policy

http://itep.org/

ONE DC http://www.onedconline.org/



 Email:  dschwartzman@gmail.com