In the process of running for office, the most disturbing issue I have discovered is that our elected officials failed to keep track of and maintain the benefits we received along with our Home Rule Charter. Because of this failure we have one of the highest state tax rates in the nation. What is the point of getting home rule, or even more important becoming a State if we can't even maintain the benefits we started with? Obviously we need to elect smarter, more honest leaders. Hopefully, the Statehood Green Party will be up to the challenge.
Little by little our benefits have been whittled away or sold to the highest bidder with very little effective protest by us, the voters. For example, we used to receive a Federal payment for all the untaxed land in the District. This included Federal government land, churches, non-profit associations, and so forth. "Unlike residents of US territories such as Puerto Rico or Guam, who also have non-voting delegates, D.C. residents are subject to all U.S. federal taxes. In the financial year 2007, D.C. residents and businesses paid $20.4 billion in federal taxes; more than the taxes collected from 19 states and the highest Federal taxes per capita. A 2005 poll found that 78% of Americans did not know that residents of the District of Columbia have less representation in Congress than residents of the 50 states." [Source: Wikipedia]
Just imagine how much extra tax money DC government could collect from us if we only paid 2/5ths Federal taxes (for the President & Vice President we can actually vote for). With an additional $12 billion in our pockets, the DC government would gain the needed revenue to correct the tax unfairness that has slowly accumulated over the years. Given that this figure was from 2007, and that our population has grown both in numbers and wealth, this would probably result in close to a $1 billion in extra revenue.
Frankly, I am amazed that no lawyer/aspiring politician has ever had the chutzpah (Yiddish for audacity) to file a lawsuit claiming refund of the unrepresented portion of taxes paid to the Federal government. What a class action suit that would be!! Of course, if the Feds wanted to save 1/3rd of a $billion, they could see to it that our non-voting elected Representative actually be allowed to vote.
In 2004, while doing my DC taxes I wondered why they were higher than my Federal taxes. Years earlier they were only one half. Checking 1974 tax records I found that DC's Exemptions and Deductions were about the same as the Federal rates. However, while the Federal rates increased to reflect inflation, DC rates were only changed when someone remembered to do it. After 1991, NOBODY remembered!! By 2004 we were only allowed 1/3rd the Federal rate.
I called Mr. Catania and explained the situation. In 2005 he introduced a bill in Committee to “couple” our rates of Deductions and Exemptions with the Federal figures. Unfortunately, this effort failed. However, slight increases were made in 2006 saving perhaps $28, and in 2008, saving about $90 each year since. The 2011 DC rates for D&Es are $4,000 per couple and $1,650 each. The Federal figures are $5,800 single, $11,600 couple for Deductions; and $3,700 Exemption each person. With “coupling” Taxable Income for a family of four would be $15,800 lower, for a couple $11,700 less and for a single person $3,850 lower. [On the campaign trail when I asked Mr. Orange, who served from 1998 to 2006 how he had voted, he did not remember. 11/13 In fairness I should add that the proposed "coupling" did not make it out of committee.] There seems to be a lot of amnesia among politicians where protecting our benefits and rights is concerned.
Actual tax savings for a family of four with Adjusted Gross Income of $40,000 using “coupling” would be $948. A similar family with $60,000 AGI saves $1,183. A family with $26,400 AGI currently pays $750, with “coupling” $ZERO. Has this tax unfairness helped drive families out of the city? Council member Jack Evans proposes cutting taxes about 1/2% from the top down. Let's cut taxes from the bottom up, restore the 1974 parity, and keep our families. Using Mr. Evans formulations would result in much smaller savings at the bottom, and much larger ones at the top. The hypothetical family of 4 with $26,400 AGI would still pay around $600 under Mr. Evans proposal. Fifty dollars a month may not seem like much, but to a low income family of 4 it is quite a lot.
Worse yet was done to business property taxes. Upon granting Home Rule, Congress said “...it is the intent of Congress, that the tax burdens in the District be reasonably comparable to those in the surrounding jurisdictions...” [DC Code, Paragraph 47-817] They are not! DC Class 2 Business Tax is $1.85 per $100 assessed value. Arlington and Alexandria charge 85 cents, PG Co. around $1. [There have been some increases in regional tax rates since 2009, but they are still much lower than DC's.] Why would businesses in blighted areas want to have higher taxes assessed on their buildings by fixing up marginal property? No wonder we have so many liquor stores, bars, clubs, and run down store buildings. Why one rate citywide?? Montgomery Co. has various rates for different areas, although none are as high as in DC.*
Why can't we vary the business rates in DC? Is it fair that Georgetown businesses pay $1.85 while across the river in Rosslyn they are paying around a dollar? Perhaps upper Wisconsin Ave. can compete with Bethesda, but how can Georgia Ave compete with Silver Spring? No wonder Anacostia is so run down when businesses can pay close to one half the business tax by moving crossing the line. There is absolutely no incentive to fix business buildings until the surrounding neighborhoods can support our high Class 2 rates.
Finding the money to restore tax equity will require some creative thinking. I hope the above information about our "taxation without representation" will encourage more ideas. [In 2012, I was informed that a new business property rate of $1.65 for business property under $3 million was instituted. How about an even lower rate for business property under $500,000. And let's not forget to INDEX these figures.] When I ran for office in 2014 I suggested a $1.45 rate for business property assessed under a $million, and $125 for property under $500,000.
* Tax rate source: DC Government report. Part II: A comparison of Tax Rates in the Washington Metropolitan Area as of Jan. 2009, page 35. I don't know if there is anything more recent.