June 2012

One more letter. DC for Democracy sent a letter to all the Council members Monday in advance of their vote on the FY2013 budget Tuesday reiterating our position since the Council restored some of the cuts in the Mayor’s proposal. We gave our proposals for restoring further funding in FY2013 and reminded them about the tax bracket proposals DC4D offered last year. Having heard nothing but silence so far from the Tax Reform Commission that was set up (more than a year ago now?), it seemed like a good time to remind the Council why DC4D believes so strongly in the need to move DC toward a progressive tax system.

See the link to the text of the letter below.
FY2013 Letter to DC Council

[The following letter was submitted to the Current Newspapers by David Power of DC for Democracy’s Budget Committee.

The Current often publishes groundless suggestions that D.C. should not raise more income tax revenue or that raising tax rates on the wealthy would reduce revenues. Recently, The Current claimed that retirees have an “incentive” to change their legal residence to avoid taxation, based solely on an anecdote from an anonymous retiree [“Top officials talk retiree taxes, possible incentives for Georgetown store,” May 30].

The Current argues that raising income taxes on the wealthy or taxing retirement income would either harm D.C.’s economy or cause residents to migrate away from D.C. Both are myths.

The Institute on Taxation and Economic Policy rightly calls the myths fomented by The Current, D.C.’s business community and members of the D.C. Council (such as Jack Evans) “junk economics.” The institute concluded, “There is no reason for states to expect that reducing or repealing their income taxes will improve the performance of their economies.” It showed that from 2001 to 2010, six of nine “high rate” states had growth in real per capita gross state product that far exceeded the average of all states. Maryland was a leading example, with real per capita gross state product growth of 12.6 percent.

Your readers probably do not know that D.C.’s rate of real per capita gross domestic product growth over a very similar period (2000 to 2010) was more than 25 percent, double the growth rate of Maryland, and fourth highest in the nation over that period.

The Political Economy Research Institute at the University of Massachusetts recently published an extensive survey of economic literature concluding, based on years of empirical research published in peer-reviewed journals, that if taxes are raised, “The rich will not go on strike. They will not cease working, stop investing, or even move … .” The Center on Budget and Policy Priorities reported that experts have found that raising taxes on high-income households does not harm economic growth.

Thus, the D.C. Council and the mayor have no excuses for pretending to “fund” chronic safety net needs by eliminating vacancies, or selling city-owned buildings, or vastly expanding speed-enforcement cameras, or extending bar hours, or undertaking any other short-term, unsustainable gimmicks. There is no excuse for cutting investment in affordable housing, or cutting employment training for needy families, or cutting homeless shelters or cutting services for homeless families.

D.C. must raise more revenues from the wealthy so it can increase its employment rolls, inject more money into the local economy, fund economic security programs, fund long-term growth of affordable housing, and put D.C. residents to work immediately to rebuild D.C.’s infrastructure.

Please stop using junk economics in your newspapers.

David F. Power
Forest Hills

[The following letter was published in the Current Newspapers on May 30, 2012 by Kesh Ladduwahetty, Chair of DC for Democracy’s Budget Committee.]

Mayor Vincent Gray and the D.C. Council have proudly proclaimed that there are “no new taxes or fees” in the fiscal year 2013 budget. So how is it that the council voted May 15 to raise about $67 million in new revenue with hardly a murmur of protest from the public? Perhaps it is because the public does not know.

While there has been much discussion in the media about the expanded hours for selling alcohol, the bulk of the new revenue will be raised through other means, including a clever accounting trick that will raise $12 million from practically all D.C. taxpayers. Specifically, the city has cut back a planned adjustment of the standard deduction and personal exemption for income taxes, as well as the homestead deduction for property taxes; in essence, the new figures will account for two years of inflation, rather than six — and the D.C. government will end up with an extra $12 million.

The D.C. Council has apparently relied on this underhanded method of raising income and property taxes for decades. For upper-income D.C. families, this increase is negligible; for lower-income families, which include 140,000 residents on food stamps, the increase is painful.

Fairness dictates that as income increases, the burden of taxation should increase. This is the principle behind progressive taxation. The 2013 budget continues decades of regressive tax policies that unfairly burden low- and middle-income taxpayers, while failing to ask the richest among us to pay their fair share.

According to a 2010 report prepared by the Office of the Chief Financial Officer, the overall local tax burden on a typical D.C. household earning $150,000 (including D.C. income, sales, property and automobile taxes) is 8.9 percent of income, compared to 10.4 percent for a low-income household earning $25,000.

The council’s revenue measures for 2013 further increase the unfair tax burden on low-income families. Meanwhile, the council would not even debate the option of raising revenues from the richest 5 percent of D.C. taxpayers earning $200,000 or more, whose annual taxable income of $9.2 billion is about the same as that of the poorest 83 percent.

If the public knew of this outrageous unfairness in our 2013 budget, I cannot imagine they would let the council get away with it.

Kesh Ladduwahetty
Van Ness