Greater Greater Washington

A fair budget includes a smarter tax increase

On Tuesday, the DC Council will vote on how we'll close the District's gaping budget gap.


Photo by calnenearley on Flickr.

Grappling with a budget deficit of $188 million, that could balloon up to $500 million in 2011, the Mayor and DC Council have put virtually all city services on the chopping block.

Human services, public safety, public education, health care, public works and the government workforce will be cut to the bone. What's wrong with this picture?

Not a single tax increase is on the table. That's not fair.

My wife and I have not been asked to pay one more dime to help balance the District's budgetnot now, and not even in the last four years. We enjoy improved city services, safer streets and the renaissance of H Street NE, Barracks Row, the Waterfront and our Ward 6 neighborhood schools. Yet, to meet this challenge, our city's leaders have no plans to raise taxes for people who are most able to support a vibrant community. Instead, they imagine they can balance the budget by asking for sacrifices primarily from those DC citizens who are least able to afford them.

I understand that in this economy, budget cuts are unavoidable. But we're all in this crisis together. If we are truly one city, then I believe that every citizen needs to step up.

That's why I'm introducing a budget amendment to raise the DC income tax for citizens with the highest annual incomes. This modest increase would be graduated: ¼ of 1% for incomes of $75,000 to $150,000, ½ of 1% for incomes of $150,000 to $500,000, and 1% for incomes over $500,000.

Particularly for people who itemize their tax deductions, the cost would be minimal and partially offset by reduced federal taxes. For example, taxpayers with incomes of $75,000 would pay about $63 more for the year, those between $150,000 and $500,000 would pay between $188 to $1,938 more, and people with incomes around $1 million would pay an additional $6,938.

My proposal would raise $37 million in this fiscal year and $55 million in the next. Obviously, a tax increase can't completely close the budget gapnor should itbut it will help spread the cost of a devastating economy beyond our city's most vulnerable citizens. These funds will help sustain a great cityone that makes us all proud.

Tommy Wells is the DC Councilmember for Ward 6.

Support us: Monthly   Yearly   One time
Greatest supporter—$250/year
Greater supporter—$100/year
Great supporter—$50/year
Or pick your own amount: $/year
Greatest supporter—$250
Greater supporter—$100
Great supporter—$50
Supporter—$20
Or pick your own amount: $
Want to contribute by mail or another way? Instructions are here.
Contributions to Greater Greater Washington are not tax deductible.

Tommy Wells is represents Ward 6 on the DC Council. He is a former social worker, attorney, and member of DC's school board. He was a candidate for mayor in the 2014 Democratic primary. 

Comments

Add a comment »

Sounds fair to me. Though I still think DC's spending on social services per capita needs to brought in line with the surrounding jurisdictions, either by being more selective about who qualifies, or by pooling resources with MD and VA to fund regional poverty alleviation programs.

by oboe on Dec 6, 2010 9:57 am • linkreport

or by pooling resources with MD and VA to fund regional poverty alleviation programs.

Well, yes. This has needed to happen for quite some time -- there was one point at which Virginia even admitted to busing the homeless over the 14th St Bridge into the district.

Although I strongly doubt that this is currently the case, I suspect that any proposal for Virginia or Maryland to pick up the slack in DC's social welfare programs will be met by laughter...

by andrew on Dec 6, 2010 10:03 am • linkreport

This is a smart proposal. As a DC resident in what is currently the top tax bracket (income over $40,000/year), I haven't experienced a measurable change in my city services. The same can not be said of my neighbors struggling with poverty. I know my quality of life is higher when they have the choice to get a good education; receive training for quality jobs; and live in safe, affordable housing. I would gladly pay more to continue and expand those services.

by JoPo on Dec 6, 2010 10:05 am • linkreport

"Step up" and put your money where your mouth is, Mr. Wells. I'm sure the DC treasury would be happy to accept your additional revenue contributions if you feel that you aren't paying enough already.

by John K on Dec 6, 2010 10:06 am • linkreport

Mr. Wells,

I agree that some taxes will have to go up. Though I am not in the brackets you propose raising, I don't think it's fair to target any one group to fund services everyone enjoys. Any income tax increase should be across the board for all brackets, including my own.

by Eric Fidler on Dec 6, 2010 10:06 am • linkreport

Since taxes are a percentage of earned income, taxes go up or down as peoples incomes go up or down. Government should not expand faster than the incomes of the people who have to pay for government. The people who have to pay for government have had to cut back their spending so government should also.

by Jim on Dec 6, 2010 10:09 am • linkreport

Where do I sign the letter of support for this? Thank you, Mr. Wells, for being a voice of reason!

by NotesOnMyBathroomMirror on Dec 6, 2010 10:10 am • linkreport

I am a resident that would see my family's taxes raised $1,500 bucks or so. I support this measure as a fair distribution of sacrifice.

DC cut taxes during the real estate bubble and the bill is coming due. As CM Wells said, we can't tax hike our way out of a deficit, but any plan that doesn't consider some tax increases is unfair.

by TM on Dec 6, 2010 10:14 am • linkreport

"Government should not expand faster than the incomes of the people who have to pay for government."

And yet, people demanded or otherwise required those expansions at the time, so you can't have it both ways. I'm in favor of the tax increase, as long as the revenue is used wisely to close the budget gap.

by Scoot on Dec 6, 2010 10:16 am • linkreport

Property taxes for any assessed value over $200k should be increased. NOT income taxes!! We already have the highest top income tax bracket in the country, and people can easily choose to move 2 miles in either direction (MD or VA) to rectify this. Meanwhile, our property taxes are the lowest in the region. This is common sense. Cmon Tommy.

by SG on Dec 6, 2010 10:17 am • linkreport

I agree that DC taxes going up would not be too painful given the offset on federal. But raises in taxes have to come with cuts. DC should put together a website like the State of California did. People should see the choices for revenue and cost savings. As a society we have a very hard time realizing that we can't get everything for nothing.

http://www.latimes.com/news/local/la-statebudget-fl,0,95571.htmlstory

by GD on Dec 6, 2010 10:25 am • linkreport

SG: Not quite. CA, VT, OR, RI, NY, NJ, IA, and HI all have higher rates for the top bracket. They vary as to at what income they kick in, but they are mostly in line with what CM Wells is suggesting.

Also, they idea that this would inspire people to move is a canard. The cost of moving easily outpaces the increase. Moreover, so what if they move? They're not going to move without selling their house at a price they're happy with. Guess who are the only people who could afford to pay that price? People who make roughly the same money.

Also, we have been increasing the effective real estate tax since recent legislation has limited the ability of a home's taxable assessment to lag too far behindthe actual assessment.

by TM on Dec 6, 2010 10:31 am • linkreport

taxpayers with incomes of $75,000 would pay about $63 more for the year
Should this be $75,000 to $150,000? If the new tax bracket starts at $75,000, then someone with taxable income of $75,000 wouldn't pay any more.

by Keith Ivey on Dec 6, 2010 10:31 am • linkreport

@SG-

I don't think that's right. According to this table, it appears that a number of states (CA, HI, IA, NJ, NY, OR, RI & VT) have a higher top rate. In addition, some cities in those states tack a few additional percentage points onto that rate.

DC does have the highest top rates in the area though. Then again, I chose to live in (livable/walkable) DC rather than in the surrounding states despite having to pay higher taxes.

I support CM Wells' proposal, but I think that the city also needs to get a better handle on its headcount.

by Todd on Dec 6, 2010 10:33 am • linkreport

@SG -- Our top tax bracket is 8.5% and starts at $40,000 a year, nowhere near the highest rates in the country. Our combined taxes are lower than MD.

@Eric Fidler -- Even if you don't agree that those with more privilege and resources should contribute a higher share of their income, you can surely agree that lower- and middle-income families shouldn't pay a larger share than high-income households. That's how our tax system is set up now. According to the DC Fiscal Policy Instutite, "Families in the District with incomes of $20,000 to $60,000 pay one-tenth of their incomes in DC property, sales, and income taxes. ... Families with incomes of $1.5 million or more pay 8 percent of income in DC taxes." It's here: http://bit.ly/eudrd3.

by JoPo on Dec 6, 2010 10:33 am • linkreport

@SG:

Property taxes for any assessed value over $200k should be increased. NOT income taxes!! We already have the highest top income tax bracket in the country, and people can easily choose to move 2 miles in either direction (MD or VA) to rectify this. Meanwhile, our property taxes are the lowest in the region. This is common sense. Cmon Tommy.

You hear this argument a lot by folks who've never looked into the issue. In fact, the total tax burden on DC residents is slightly higher than that of a VA resident, and slightly lower than a MoCo resident.

As Einstein said, "Common sense is the collection of prejudices acquired by age eighteen."

by oboe on Dec 6, 2010 10:42 am • linkreport

DC should put together a website like the State of California did.

Not sure we should really be using California as a shining example of a workable tax regime. They've basically destroyed the ability to run the state through the unintended consequences of several ballot initiative driven missteps.

by oboe on Dec 6, 2010 10:48 am • linkreport

CM Wells:

Tax increases are the EASY way out and always the first proposal. Please make the very difficult decisions you were elected to make and CUT SPENDING.

As you know, 2/3 of the budget come from 3 areas: public safety, education, and human services. Unless we want to return to the Barry days when trash wasn't picked up and snow wasn't plowed, we have to cut in these areas.

We cannot tax our way out of this problem. Even the so-called millionaire's tax will only provide a drop in the bucket. Looking into FY 2012 and beyond, the problem only gets worse.

The only answer is to cut, cut, cut. As a W6 resident, I am counting on you to do so.

Please don't take the easy way out and raise taxes. We pay enough already (to the likes of groups like Peaceoholics most of the time).

by Today it Was a Good Day on Dec 6, 2010 10:51 am • linkreport

We will not tax and spend out way to prosperity.

DC has the reputation for being one of the most tax-friendly and business-unfriendly jurisdictions in the country. This latest proposal of tax increases will add to that. Why set up shop in DC when it can be quite cheaper - and far less governmentally burdensome - setting shop across the river.

If Mr. Wells and other like-minded liberals feel they're not paying their fair share, there is a very simply solution: Simply open your checkbook and write an additional check (payable to the DC Treasurer) for whatever additional amount will mollify your bleeding heart.

Here's an additional suggestion for Mr. Wells and other supportive tax and spend Council Members: Introduce a budget amendment to cut Council Members' salaries by 20% and to reduce Council staff levels by 20%.

Has Mr. Wells thoroughly scrubbed the proposed budget to identify any duplicative agency programs?

Has he proposed any city-mandated programs that are unfunded mandates on agencies, thereby resulting in agency resources being stretched too thin and spreading far from the agencies' core missions?

Has Mr. Wells conducted a review of the massive staffing levels and budgets of Dr. Gandhi's essentially separate branch of government?

When it comes to "paying a fair share", does that include asking social welfare recipients to give something back to the city?

And, maybe most importantly, if Mr. Wells' proposed solution to the current budget gap is to raise taxes on "wealthy" people making $75,000 or more, what's his plan for closing the even larger FY2012 budget gap and does it involve yet more "fair share" taxes?

Ultimately, calling for either tax increases or across-the-board spending cuts is both bad policy and intellectual laziness. There is agency waste from duplicative programs and functions. There is additional waste from unfunded government mandates and Council requirements that add significant costs to residents and business owners. Until the Council has carefully looked at those areas, it would be incredibly irresponsible to just hike taxes on what promises to be an annual event.

If our bleeding heart residents feel that they're underpaying the District government, then by all means they should voluntarily pay additional taxes.

But don't put your hands in our pockets simply because you, other Council members, and the mayor have been overspending year after year.

by Fritz on Dec 6, 2010 10:56 am • linkreport

Sorry, M$37 for a M$188 deficit, M$55 for a M$500 deficit? This is barely significant.

by Jasper on Dec 6, 2010 11:00 am • linkreport

The concept that DC services are "cut to the bone" is absurd and insulting. DC has 17k families on welfare. The ENTIRE state of Maryland only has 25k and has 10x the population and a city in much worse fiscal position (Baltimore). The city has become a de facto social services arm for the mid atlantic region due to the city council's policies. DC is way too small of a taxable region to carry that many people.

DC city services still has an inordinate number of folks 50+ years old doing half the work of a 25 year old. The primary reason young men and women can't find a job with the city is because there is no movement in the boomer generation out of city jobs. There are too many people on the city payroll for tax base of the city.

I encourage EVERYONE who wants to pay more in taxes to SIMPLY PAY MORE. It's the last line on the tax form and you can always make the number higher. It's really that easy.

What I suspect though is that people want other people to pay more so that they can enjoy the same lifestyle a services. Do as I say, not as I do...

by John Doe on Dec 6, 2010 11:03 am • linkreport

Yes, yes, yes.

by Ken Archer on Dec 6, 2010 11:04 am • linkreport

People are confusing tax rates with actual tax someone who makes $1M is already paying ~10x as much actual cash as someone making $40k. Increasing that persons tax rate is an geometric increase in actual cash outlay. At the end of the day, it's the actual cash outlay that pays the budget.

Maybe we do need a tax increase, but "we need it to pay for the existing bloated budget" isn't a good reason because it's NOT FISCALLY SUSTAINABLE over the medium term. Maryland already proved that you can only play peter pan politics for a year or two, then you're in a WORSE position than if you had just left things alone.

There aren't enough people in the DC millionaires club to create a sustainable tax base for the city. DC hasn't learned anything from the federal takeover of city finances.

by John Doe on Dec 6, 2010 11:12 am • linkreport

I support this idea. I also would like to ask Fritz and SG to move to Virginia/Maryland.

by whoa_now on Dec 6, 2010 11:13 am • linkreport

Property taxes are a major component of total tax burden in DC and should be considered in this decision.

One of the inequities in the current property tax system is the Assessment Cap Credit for residential properties. This credit provides that a property may not be taxed on more than a 10 percent increase in the propertyÂ’s assessed value each year. This credit is not means-tested and not available for rental properties.

The effect is that homeowners who purchased houses several years ago now have much lower taxes. For example, CM Wells lives in a property with an assessed value of $540,930 for 2011. Yet his taxable assessment was only $328,094 after Homestead Deduction and Assessment Cap. Annual property taxes on this taxable assessment are $2789.

Newly purchased properties lose the benefit of the assessment cap credit. Someone who bought a similar property in 2010 with the same assessed value would have a taxable assessment of $473,430 after Homestead Deduction and annual property taxes of $4024.

If someone were renting out a similar property, they could not get the Homestead Deduction or the Assessment Cap Credit. Property taxes would be $4598. Although renters don't pay property tax directly, their landlords must factor in this expense in setting rents.

As a result of these policies, the property tax paid directly by a new homeowner is 44% higher and tax paid indirectly by a renter is 65% higher than what is paid by Tommy Wells.

Newer homeowners and renters might fairly ask CM Wells why they should be asked to shoulder higher income taxes in light of this inequity in property taxes.

by AlreadyTaxed on Dec 6, 2010 11:15 am • linkreport

I did my own math -- my taxes would go up by about $175 for the year. Mr. Wells, that's a fair bill for the improvements I've seen in my neighborhood, and you have my support.

by tom veil on Dec 6, 2010 11:17 am • linkreport

@JOPo The DC Fiscal Policy Institute is a social services advocacy wing of the prevailing powers that be in this city. The numbers they publish are extremely convenient for a councilman to make an argument for needing more money. I've never seen them make a fiscal case for eliminating, redirecting, or increasing efficiency through investment, any DC government organization or grant recipient.

A little information is a dangerous thing.

by John Doe on Dec 6, 2010 11:19 am • linkreport

John Doe, councilmembers Barry (of all people) and Alexander put forward a bill last month that would institute a 5-year time limit on public assistance in the District. This should help curb the number of families who rely on welfare and other social programs. According to a recent article I read, only about 500 or 3% of the families living on welfare in DC are in compliance with welfare elgibility policies.

by Scoot on Dec 6, 2010 11:20 am • linkreport

Anybody considered a sales tax increase? Yes, I know that the DC sales tax is high compared to surrounding jurisdictions, but on the other hand, DC has a lot of visitors that might be able for some of its expenses that was. Furthermore, a sales tax increase is a tax increase on anybody, not just the rich.

by Jasper on Dec 6, 2010 11:28 am • linkreport

Here's the Fiscal Policy Institute's current tax policy:

Raise taxes on the middle class and wealthy so that we can fund social welfare programs for those hurting most from the economic bust.

Here's the Fiscal Policy Institute's tax policy from the go-go days of the early 2000s:

Raise taxes on the middle class and wealthy so that we can fund social welfare programs for those not benefiting from the economic boom.

Has the Fiscal Policy Institute ever supported cutting taxes? Have they ever supported cutting spending and reforming social welfare programs? Why are they, as a special interest group, viewed as non-partisan and non-ideological, as opposed to, say, the US Chamber of Commerce?

by Fritz on Dec 6, 2010 11:29 am • linkreport

AlreadyTaxed: you raise a fair point about the disparity between longer term home owners and new homeowners. You should note, however, that last year the council passed a law saying that regardless of the annual 10 percent increase cap, no taxable assessment can be lower than 40% of the actual assessment. Maybe that number should be raised? It would face resistance of course, as it would accelerate gentrification. Those with low incomes whose homes have become a lot more valuable could be forced to sell. A lot if people would be fine with that result, of course, but many would not.

But in the interest of sharing sacrifice, I agree that it is an area ripe for consideration along with income tax changes. No one answer will solve this. It will take many tools. Saying we can cut our way out of it alone is as unserious and ignorant as saying we can tax our way out of it alone.

by TM on Dec 6, 2010 11:33 am • linkreport

Also John Doe, DC has the highest per-capita income of any U.S. state. DC ranks 10th in the nation for states with residents having over $1 million in assets (Maryland is 2nd, Virginia is 7th), with around 15,000 households or around 5.5%. 20% of District households earned $186,000 or more (compared with around $92,000 nationally). Someone who makes $1M is already paying ~10x as much actual cash as someone making $40k, but the former is earning 25x as much actual cash. Clearly, a so-called millionaire's tax is a viable way to raise money as noted by CM Wells' prediction that doing so raises $37 million this year without cutting any other services.

by Scoot on Dec 6, 2010 11:41 am • linkreport

The only we can even begin to address the deficit is by enacting the Fair Tax, HR 25. No more tax manipulation shell games by polticians and lobbyists. Bring those 12 trillion U.S. bucks in offshore tax havens back home, create jobs, increase the personal wealth of every single American citizen, broaden the tax base. Simple, transparent, fair.
Secondly, spending absolutely must be cut, starting with elected lawmakers' perks. Let them procure their own retirement plans - we certainly pay them enough to do so. When they get some skin in the game, then they'll be serious. Until then, it's all poltical posturing and theater.

by Jane on Dec 6, 2010 11:42 am • linkreport

@Fritz

Has the Fiscal Policy Institute ever supported cutting taxes?

No.

Have they ever supported cutting spending and reforming social welfare programs?

No. The DC Fiscal Policy Insitute is pretty much an Ed Lazere run mouthpiece. Do please check his website as well as back issues of his testimony before the Council going back to Tony Williams' administration and you will see a consistent message: DC residents pay too little in taxes.

When your only tool is a hammer...

by monkeyrotica on Dec 6, 2010 11:46 am • linkreport

Tommy, I would not oppose your proposed tax increase - were my tax dollars not used to bus vagrants downtown so they can panhandle and similar programs. DC can extract my $63 from that foolish million-dollar-plus budget, or from the welfare-forever budget, or from the DC television studio budget, or from the free-housing-for-anybody-that-wants-it budget, or from the . . . well, you get the idea. Cut-to-the-bone government includes great schools, superb police protection, responsive firemen and emergency services, garbage removal, maintenance of public spaces, and outstanding transportation infrastructure, but little else. DC can raise my taxes after it achieves the basics.

by Tom on Dec 6, 2010 11:48 am • linkreport

"Furthermore, a sales tax increase is a tax increase on anybody, not just the rich."

A sales tax increase actually increases the financial burden of poor people more than anyone else, who spend the highest percentage of their income on those goods subject to a sales tax. If one is going to increase sales tax, one should consider doing so selectively, for instnace, on luxury goods and not for basic living commodities like food and utilities.

by Scoot on Dec 6, 2010 11:48 am • linkreport

OK...so we want to grow middle class families in DC. Given the high cost of living, I believe I am a middle class family with a combined income of 150k with two kids. How much more should we be asked to pay before we pull up and move to Virginia. All these generic assumptions about who is "rich" and doesn't pay their "fair share" is ridiculous and overly simplified. The DC schools stink compared to our neighboring peers. Let's do some simple math (forgive me for not having my W2 in front of me, this is close):

150k income, after DC and Federal Income Tax leaves 100k to spend of which:

$25,000 for mortgage and insurance
$2,500 for real estate taxes
$3,000 for disability, auto, health insurance
$12,000 for food to feed the family
$8,000 for utilities (electric, gas, phone, cable, internet)
$20,000 for child care (and potentially private school which would be MORE)
$6,000 for automobile payment and expenses
$5,000 for household expenses like clothes, minimal maintenance

Leaves about 10k discretionary. So let's just take away some of that as I don't deserve it because I choose to value education (which cost me 60k) and to live in an walkable community instead of the suburbs. Considering I believe the schools are a "core service" for which I am getting screwed on, maybe they should all work before I am asked to pony up more for the "poor" who in this city have consistently undervalued education to stay in a perpetual state of poverty generating an inordinate amount of crime (my home was robbed 3 times in 10 years) driving up another "core service".

Sounds awesome doesn't it. Why should a truly "middle class" family be living pay check to paycheck? Are only "good fortune" was to be able to purchase a home for less than 300k 10 years ago. Try doing that now in a safe neighborhood....good luck. New home owners pay even more real estate taxes.

I think too many of the tax me more folks don't have a clue what it is like to try to raise children in this city.

For all the doubters about folks being willing to move, let me tell you my family situation is not unique. We WILL MOVE if we continue to be fleeced.

We could up to 20k more year to put towards retirement, my daughters future college educations (as another "core service" social security is insolvent) instead of the District Ponzi scheme. DC will continue to be a struggling city without middle class families in it.

by Joe on Dec 6, 2010 11:50 am • linkreport

I'm sorry, what "devastating economy" are you talking about, Mr. Wells? The DC region has the healthiest economy in the country, and even in relatively tough times the District has far greater resources to call on than most cities. The people trying to run places like Detroit or Schenectady would love to be in as "devastating" a situation as DC. It's time to stop the whining and start learning to live within our very substantial means.

by jimble on Dec 6, 2010 11:51 am • linkreport

Tommy: This can't be done in isolation. In order to make a tax increase politically palatable, there needs to be a bigger bargain in a unitary non-severable bill.

1. Pass your residency requirement for homeless services, and if it is legally possible extend this to general social services. This eliminates "bus therapy" from our lovely surrounding jurisdictions, and stops them from free ri=ding their social problems on our taxes.

2. Modify the Barry/Alexander PR stunt on capping welfare to 5 years into an actual bill. I'd suggest putting a 1-2 year grandfather to move the long timers to employment, so as not to just dump a stack of people immediately.

3. The proposed tax increase.

The combination of all three into a unitary non-severable bill would address the concerns of people who don't want to utterly slash the safety net, while also addressing the concerns of those who don't intend to be activist's "walking wallets" to just fund the region's issues.

If you attempt to just pass a tax increase without controls the backlash will be ugly, and it will probably fail the same way the SOSN coalition overreached last time with the vaunted "gym tax" (what a politically tone deaf stupid move that was).

by John on Dec 6, 2010 12:05 pm • linkreport

I'm not happy about the proposed tax increase, but I'd be willing to accept it if it were linked to something like the Barry-Alexander proposal for time limits on public assistance.

Setting aside the quality of education and human services spending decisions made in the past, a recession is not the ideal time for large-scale cuts to these programs, okay. But once the recession ends, the priority for operational spending should be rebuilding our reserve fund balance, and we can't do that while still remaining the designated poverty sink for the region. Over the medium term, we need to bring our public assistance standards into line with those of the neighboring jurisdictions and disperse the current concentrations of poverty.

That said, there is one tax "increase" I would enthusiastically support, notwithstanding that it would have a very small impact and really ought to be considered a loophole closing -- ending the income tax exemption for interest earned on out-of-state public bonds. Most states grant an income tax exemption only on public bonds issued within the state; only DC and Indiana allow it to apply to out-of-state bonds as well. There's no good public policy reason for DC not to adopt the national standard.

by cminus on Dec 6, 2010 12:08 pm • linkreport

As I noted in some previous comments, since moving into DC: I've been spending less money over all- reduced taxes, reduced utility bills, and reduces transportation costs.

The one expenditure which has gone up has been food... most because I eat out so often now that there are so many tasty options, so that increased cost is really more personal choice, given I live within an easy walk of both Giant & Whole Foods.

I'd urge the "I'll move out!" crowds to consider the above info & also that the neighboring states are mulling over similar problems of high spending and low revenue... while VA and MD also don't want to propose increased taxes; neither one has really come through with solutions based on 100% spending cuts, either.

I support Councilmember Wells' tax proposal and will share my opinions with Councilmember Evans later this evening, including CC'ing my ANC to make them aware of the proposal. While ANCs may not have much authority on the issue, ANCs may be a good outlet for getting others initiated in the debate whether they support it or not.

by Bossi on Dec 6, 2010 12:14 pm • linkreport

I would heartily endorse this proposal if it came hand-in-hand with a push on Congress to pass HR 1014 and alleviate unrepresented DC residents of the onerous and questionably legal Federal Income Tax burden. If we're going to get represented like a territory, it's time to start taxing us like one.

And the passing of HR 1014, while it would not significantly impact the federal tax revenues, would be a incalcuable benefit to the District and would solve the DC budget problem for decades to come.

by Andrew in DC on Dec 6, 2010 12:15 pm • linkreport

Things are pretty good for middle-class and college educated. It's pretty awful in Detroit and Schenectady because their workforce is blue-collar. Think it's pretty ironic to hear from the anti-tax folks accuse others of "whining" in the face of big deficits.

The adults are talking: we're discussing what's an appropriate level for revenues. This is a totally appropriate question.

"No more taxes!!" is not one of the options. But as you guys say, there's always the option of moving elsewhere. There are lots of folks looking to move into the District. Seriously, you won't be missed.

by oboe on Dec 6, 2010 12:16 pm • linkreport

Oh! Oboe's comment reminded me-
To those moving out... let me know if you have a nice place near a Metro station. I'd like to find a cheap townhouse and if you're desperate to sell, I'd be more than happy to offer my assistance.

by Bossi on Dec 6, 2010 12:21 pm • linkreport

$188 million sounds like a big number, but what is this figure as a percentage of the total DC budget?

by AlreadyTaxed on Dec 6, 2010 12:23 pm • linkreport

I'm hardly anti-tax. If raising taxes is part of a solution to balance the budget then I consider that responsibly living within our means -- because we are a very affluent and very fortunate population that has the means to pay more in taxes than we do.

by jimble on Dec 6, 2010 12:27 pm • linkreport

If Mr. Wells had experience at wealth creation instead of just wealth consumption he might feel differently.

by Steve on Dec 6, 2010 12:34 pm • linkreport

I appreciate CM Wells introducing this legislation.

What some of the folks commenting on here seems to fail to understand, is that there have been cuts to the DC budget. It is not the 1980's, the 1990's, or even 3 years go. In inflation adjusted dollars, the FY11 budget was $600 million less than the FY08 budget. Social service spending has been cut, right sized, what ever you want to call it, the belt is pretty tight.

Of the $188 million gap for this fiscal year, DC FPI and others have identified around $35 million in programs that Fenty has proposed to cut that are life saving programs for DC residents. They are also programs that in many cases save money in the long term. No one is saying no cuts.

Providing economic security for residents is a core function of government. If people get cut off from TANF and end up in the street, the city is still paying for them to stay in homeless shelters, if kids end up in the foster system because the city stops helping their grand parents care for them, the city is still paying for them. And really, all you people who would move out if your taxes go up, you will stay if the streets are full of homeless people and more kids are in the CFSA and DYRS systems?

This is not an issue where the first response has been to raise taxes, there have been cuts, there will be more cuts. Reforming our income tax system, which currently has its top rate kick in at $40k is only part of the solution. FPI and others are saying this.

As for the specific rates Wells is proposing, as others have mentioned currently the highest taxes as a percentage of income in DC are those making in the 30k-60k range. That is not progressive. In 2004, during the supposed boom times, we cut our top income tax rate from 9.5% to 8.5%. We lower taxes when times are good, we can't raise them when they are bad?

DC can raise its income tax, provide for the economic security of all residents, and continue to thrive. No one wants to live in a city that is not taking care of its residents needs. We can keep DC a city that continues to provide this core function.

by Mike Wilson on Dec 6, 2010 12:39 pm • linkreport

@Jasper, actually, D.C. sales tax is relatively low (for most goods, such as what you buy at Target, or groceries, even with the bag usury fee)

While some tax hike may be warranted with the budget shortfall, it doesn't, nor should it come close to closing the gap. CM Wells et al are making a big fuss about the cuts this year, when frankly, worse cuts are coming soon.

I know it's said often, and it's not really possible, but we really could use a commuter tax to alleviate some of the "structural deficit" that D.C. will face for decades to come.

If the Council really wants to help with the budget in the longer term, they should make it easier to start a business in D.C., and pursue policies and strategies to attract more tax paying residents to expand the taxable base. Attracting more consumers of government goods isn't exactly the way to do it, nor is wasting time (yes wasting) on pet pieces of legislation like urban chicken farming (CM Wells) or for the ridiculously expensive school lunch reform (I want kids eating healthy, but we don't have to subsidize buy-local/organic advocates/farmers to do it.) or also the early voting centers that didn't really improve on voter turnout, and potentially lessened it (you're spending get out the vote monies over a longer period of time which actually de-emphasizes Voting Day)

Gray should lead this rabble forcefully, Fenty has presented as good a budget as possible with the circumstances, hopefully Kwame will lead better when we go through this process again next year.

Kojo for Mayor

by S.A.M. on Dec 6, 2010 12:48 pm • linkreport

Tommy,

You've lived in DC for awhile. Served on ANC's and since 06, served on the Council.

I too have lived here a long time, longer than you and I agree with John Doe, and really have to laugh when you describe DC's current or proposed level of City Servces as "to the bone".

I lived here through the 80's and early 90's when trash pickup was a celebrated and non-regular event. When streets would be blocked off for a year or more because the potholes were literally 3' deep and the city didn't have the money to fix it.

Then we had 1999-2008, when the City economy was printing its own money, when there wasn't a yearly budget that wasn't exceeded but it still didn't matter because the local economy was going to gangbusters it still provided a surplus.

Between 2000 and 2009, District expensditures climbed 129%, from 6.5 to 15 billion a year (sunshine review). The smallest yearly increase was 5.5%, but 2005-2009 saw YEARLY expenditure increases in the 11.5% - 12.5% range.

Tommy, you've been on the council the past 4 years, seen the profilgate spending of the City at the hands of you and your Council peers so saying "to the bone" is so ridiculous is doesn't even pass the smell test.

Back to the drawing board Tommy...I'll even buy the red pens.

by freely on Dec 6, 2010 12:50 pm • linkreport

In the last 4 years, my property taxes have increased over 40%. I have no idea how Tommy Wells has escaped this massive increase on his house.

by Bruce on Dec 6, 2010 12:53 pm • linkreport

@cminus

I believe that exists because the District does not and has not a diversity of bonds to float to enable a diverse portfolio. This is sort of like the Tuition Assistance Plan where DC residents receive in-state tuition for public universities in lieu of the lack of a world-class public university within the District (although UDC is trying).

Given that it is mostly senior citizens who invest in these kinds of vehicles, and given that the investment decisions are made years in advance, I think it would be a huge disservice to change this tax policy now, or in the future.

by Andrew on Dec 6, 2010 12:57 pm • linkreport

@oboe: How did a tax increase suddenly become the only option? That's hardly the case, except for the usual tax & spend brigades who never met a tax increase (usually to be paid by someone else) they didn't support.

by Fritz on Dec 6, 2010 1:01 pm • linkreport

DC will raise the income taxes with this Tommy bill. Gray has already publicly said he wants to raise the tax on underground parking spaces which will affect many residents in hi-rise residences. I'm thinking property taxes won't be far behind and they'll probably rig whatever they do with those taxes to exempt the poor.

Obama will raise the federal taxes. The health insurance provider my employer contracts with decided they are going to charge people with higher incomes higher premiums. Where exactly does this all end?

And on the flip side of things our government is unwilling to reform education and WMATA to merit based organizations. Putting employees of those organizations (of which a large share don't live in DC) above the best interests of the student and resident populations. Also, as others have alluded, our safety net is generous compared to neighboring jurisdictions and thereby attracts more burdensome net takers.

by Jason on Dec 6, 2010 1:09 pm • linkreport

A small tax increase isn't going to lead to any mass moving out. That's just pweudo-market econ nonsense. the discussion of social services neglects what DC covers and how it differs from other jurisdictions or whether those services have gotten better. The usual right wing "we're spending too much" blather is more ad hominem attack than substantive critique. Sales tax increases are regressive because sales taxes are regressive. The District already weights them toward sin and out of towners (although those Marylanders who buy their liquour in DC, out of town visitors who stay & eat in the District), but further increases will only annoy the locals. DC's base sales tax used to be higher and seem to recall that it included food, back in the 90s. Property taxes are boxed in, party to protect property owners from big swings in property value and taxes---I've lived through other jurisdictions "discovering" pockets of market appreciation and doubling people's taxes in a single year. The proprty tax break does benefit long-term investment in previously cheap and perhaps blighted areas, but there probably is an argument for the social good of that long-term investment. That leaves income taxes and things like user fees and traffic adjudication. The user fees have crept up over the last couple years. the traffic cams seem to be providing a basis for getting more from tickets, although I wonder how well DC is at collections. A small increase on the highest brackets makes more sense than any of the other alternatives, if the need to raise revenue is made.

Any tax increase needs to be justified in terms of what's really needed and what can be deferred. the usual crank stuff about a small number of people "getting rich" from overtime or high salaries for some people is insufficient criticism, by itself. How is DC doing in getting out from under court supervision of its service programs? Are public improvements getting done on time, with work properly performed? Where have cuts happened? I know, for example, that library staffs have been reduced, although this has received no publicity. Tommy needs to give us more specifics, but the usual liberatarian cranks need to raise better questions.

by Rich on Dec 6, 2010 1:14 pm • linkreport

@John

Actually, all 3 of your points are being voted on tomorrow -- homeless, TANF, and taxes.

by Charles on Dec 6, 2010 1:25 pm • linkreport

@Rich

I find it ironic that you characterize excessive spending criticism as "ad hominem attack", and yet those who are opposed to raising taxes are "cranks". Could you please clarify for the rest of the class -- are you, or are you not opposed to ad hominem attacks?

by Andrew in DC on Dec 6, 2010 1:35 pm • linkreport

Message to Tommy Wells, pass a "Right to Work" bill in DC, thereby eliminating unions, and the dollars recouped from eliminating the inefficiences due to incentivizing non-working vs. working, will be more than enough to give out even more generous social services AND not have to raise taxes.

Incidentally, we really do need to take property taxes into the equation. Most local jurdictions rely mainly on property taxes for the bulk of their tax revenues to fund things like police protection and fire houses and roads etc. (I realize we also have state-like functions such as welfare which normally get funded by the state through mechanisms such as income taxes. But here I'm talking about local-type services.)

My property taxes since 2005 have nearly tripled and are now more than I pay in income tax. The first big hit came in 2006 when they doubled because I was the 'new owner' to my house and the cap the previous owner enjoyed only last for the 5 months I had the house before the new tax year started. It didn't matter that I'd been in the District already over 10 years (and was supposed to be 'protected' from such bumps given I had 'seen the bad times too' as everyone said when they passed this cap, or the fact that I was investing in the city's redevelopment by selling a condo in a 'safe' area to buy a house in an area that was still then very borderline safe (i.e., there was a reason the house had bars on almost all its windows. Something I'd never before had to experience.) It also didn't matter that the recordation amounts I paid on selling the old place and buying the new one probably equally 2 times what I pay in DC incomes each year. What mattered was that the District was glad to take my money.

Additionally, the property tax increase didn't stop there. That 10 % cap doesn't mean a thing over the long run ... nope ... nada ... zilch ... Because over the long run, a 10% increase each year will eventually get you to where you'd be otherwise. In addition to my not getting the benefit of the cap the former owner had, the assessed value of my property also somehow more than doubled in 5 years. The same 5 years that everyone in the world will tell you that property values have been dropping or holding steady. I contested these increses twice and was successfull in getting them lowered twice ... but surprisingly (or not) that didn't translate into any savings on property taxes paid ... because even if the total assessed value goes down, the taxable assessed value is allowed to rise 10%. So, since I've owned the home, the first year I had a 100% increase in my property taxes owed and each and every year since then I've had a 10% increase in my property taxes.

When does it all end? Where have all these increased property taxes gone? And the tens of thousands of dollars I and the people who bought and sold homes with when I moved from the condo to the house ... repeated a 100,000 times in this city during the boom?

Isn't coming to us hat in head with 'sad stories' just a bit much after your having fleeced us already?

by Lance on Dec 6, 2010 1:38 pm • linkreport

*typo: 'hat in hand'

by Lance on Dec 6, 2010 1:41 pm • linkreport

@Wells - "Not a single tax increase is on the table."

This statement is valid only for income tax provisions. You've neglected to note, Councilmember, that DC's residential real estate assessments have once again begun to rise. And, of course, this leads to an increased tax burden on many residents of whom most can be counted as being upper-income earners, i.e. the wealthy -- the same folks, Councilmember, you're targeting for higher income taxes.

If the now quasi-tax parity between DC, Virginia and Maryland is disrupted to favor either Virginia or Maryland, or both, people will consider moving. It's that simple. It's happened before and can happen again. Think Mclean, Vienna, Bethesda and Potomac. Those locales were initially populated by former DC residents who bellowed "Hello, Virginia" and "Hello, Maryland." We don't need a repeat Councilmember. And, it goes without saying, that if enough wealthy residents part ways with DC and are not replaced, DC will then face an even more monumental budget crisis.

What's desperately needed, Councilmember, is pension reform. As you are well aware, many states and cities are now taking steps to address this pressing issue. That these overly generous programs are now longer affordable or sustainable is now an unfortunate, undeniable reality for many municipalities. DC must do likewise and take a hard look into pension reform. This should be priority No. 1 on your to-do-list, Councilmember, not hiking income taxes on already burdened residents.

If any tax is to raised, consider the sales tax. And, let's have the sales tax, perhaps at a lower level, apply to many, if not all, services.

Other revenue enhancers to be evaluated might include a fee on tourist busses. A $50 or $100 charge per visit is reasonable. There will be some hand wringing of course from tourism officials, but after a while this charge will be just part of the expense of visiting DC. People will still come as they have.

Also, although it's been raised and debate ad infinitum, strong consideration must be given to placing tolls on DC's bridges, as well as on the city's major entrance/arterial roads. New York City does this for its bridges and tunnels, why can't DC? But don't sell it as a commuter tax. It isn't, really. It's will be a fee -- a cost, so to say -- of traveling to or through the District of Columbia by personal vehicle, truck or bus, and nothing more. Make it cheap, say 50 cents per trip. If implemented, this will be a nice revenue stream to fund road maintenance as well as transportation capital projects, such as Metro and streetcars.

What's at the heart of these revenue enhancers -- with the exception of the sales tax -- is they mainly apply to people who don't reside in the District of Columbia. That's the direction that you, Councilmember, and others should turn your attention to -- raising money from other folks, not DC residents!

by Anonymous on Dec 6, 2010 1:51 pm • linkreport

Anom That's the direction that you, Councilmember, and others should turn your attention to -- raising money from other folks, not DC residents!

Sorry, I don't buy into the 'let's just fleece others' argument. We add tolls to our bridges, and Va. will soon be doing the same.

Let's work at getting our own house in order before we think to burden others with our problems.

by Lance on Dec 6, 2010 1:57 pm • linkreport

@Fritz:

@oboe: How did a tax increase suddenly become the only option? That's hardly the case, except for the usual tax & spend brigades who never met a tax increase (usually to be paid by someone else) they didn't support.

Come now, let's not be dramatic. First of all, there are many cuts on the table. Did you read the post we're commenting on? The question was whether there would be a moderate tax increase in addition to the cuts we're considering.

Secondly, my guess is that the Wells household has more than $75k in income, so he *would* be subject to the tax he's proposing.

A variation on this theme is Steve's "If Mr. Wells had experience at wealth creation instead of just wealth consumption he might feel differently." Seems to me that anyone who is self-sufficient and can keep a roof over their heads has experience at "wealth creation." Though there's a strain of slack-jawed Galtianism that equates "has experience in wealth creation" with "managed a Pizza Hut at some point in one's life."

After all, if Obama had ever run a carpet-cleaning business, we wouldn't be in this economic mess we're in!

by oboe on Dec 6, 2010 2:06 pm • linkreport

Let's work at getting our own house in order before we think to burden others with our problems.

That just seems silly. Why wouldn't we do both at the same time?

by oboe on Dec 6, 2010 2:08 pm • linkreport

@Oboe Seems to me that anyone who is self-sufficient and can keep a roof over their heads has experience at "wealth creation."

I don't want to speak for Steve, but I read what he said to mean in terms of Wells' time on the Council. So far he's been all tax and spend. Even the one area where you might initially think he's doing something to create wealth for the District, H Street NE, it turns out it comes with a price tag attached to it ... the H Street NE streetcar line which we'll undoubtedly be paying for out of our taxes first to build it and then to maintain and opearate it.

Wealth creation from a Councilmember perspective would be more along the lines of what Councilmember Evans has accomplished in his many years on the Council. Things such as creating the whole NoMa and Verizon areas out of what were areas that looked like they'd been bombed during the Second World War and forgotten about.

by Lance on Dec 6, 2010 2:12 pm • linkreport

If Gray were a governor, he'd be the highest paid governor in the US (NY's and CA's don't currently accept their salary) If Kwame were a governor, he'd be right behind Gray.

Seems to me, there's plenty of fat on this pig to feed us all without us pitching in with taxes to buy more bacon...

by S.A.M. on Dec 6, 2010 2:20 pm • linkreport

Ah, fair enough, I just assumed Steve was using "wealth creation" in the dingbat, Teabagging, "Steve Forbes" sense of the phrase. Though one could make the argument that Wells lack of "wealth creation" might have more to do with his set of committee assignments and duration of service.

by oboe on Dec 6, 2010 2:21 pm • linkreport

@ Lance - "We add tolls to our bridges, and Va. will soon be doing the same."

This makes little sense. So Virginia will place tolls on Virginia residents returning to their homes from DC? That's doubtful.

Tolls on bridges and roads into the District will be more palatable to Virginia and Maryland politicians if some revenue is returned to the respective states. A 50/25/25 revenue split between DC, Virginia and Maryland is reasonable.

With this tolling paradigm, a new revenue steam is created, something that is desperately needed to fund transportation maintenance and improvement projects in both Virginia and Maryland, as well as the District.

by Anonymous on Dec 6, 2010 2:23 pm • linkreport

@Anomymous This makes little sense. So Virginia will place tolls on Virginia residents returning to their homes from DC?

You must live a different life from most of us. I go to Va. to work every day. And mine is not the only car with DC tags on it heading either into Va. or MD. Commuting for work ... or even for play or for shopping is not a one way deal. For years, most DCers shopped in the suburbs for just about everything since we had so few stores of any kind in the District. That has somewhat turned around of the last decade, but it's still not the rule that people don't go to the burbs to shop. And that is just an example. Bottom line is that in the 21st Century (like the 2nd half of the 20th Century) people tend to look at the whole metro area as 'their town' ... and accordingly work, play, eat, shop wherever their car can take them. You assumption is based on parochial ideas that died a long long time ago for most of us.

by Lance on Dec 6, 2010 2:34 pm • linkreport

"Think Mclean, Vienna, Bethesda and Potomac. Those locales were initially populated by former DC residents who bellowed "Hello, Virginia" and "Hello, Maryland." We don't need a repeat."

The reasons these communities flourished is not because of increasing taxes in DC. They flourished practically as a direct result of the white flight from DC between the 1960s and the late 1990s. They said "Hello Virginia" and "Hello Maryland" because they didn't want to deal with race tensions that had developed in the city and because like most regions during this time, commuting into the city by car and enjoying a nice sprawling, safe home in the suburbs was increasingly desirable. In fact, as most people know, federal taxes for the wealthy have decreased significantly since the 1960s and most taxes in DC (sales, income, property) have decreased or remained stable since the 1970s when most of these communities began seeing a boom.

Rising property outlay costs have been met with a net population increase in the District in the last 10 years -- it makes no sense to assume that rising property or income taxes amounting to a few hundred dollars each year will cause people to move out in droves.

by Scoot on Dec 6, 2010 2:35 pm • linkreport

@SAM-

While I agree with you, keep in mind that any cuts to salaries of a select few personnel would, comparatively, be a rather trivial reduction.

by Bossi on Dec 6, 2010 2:36 pm • linkreport

@Bossi, it'd at least make me feel better. And for the rest of the council, with their part-time job, if they were governors they'd be somewhere in the middle of the pack.

At most, it would/could be a nice political gesture that you'd think one of them would seriously consider...

If Jack Evans had to pay traffic tickets, that would be much more of a gap closer than anything...

by S.A.M. on Dec 6, 2010 2:50 pm • linkreport

This thread could be a case study in why nothing ever gets done.

1. Out of state bond loophole - Really? Someone managed to come up with a heart blood pumping all over excuse on that one? It would harm "the elderly"?! You gotta be kidding me.

2. Tolls on bridges and roads? Uh...how's that gonna work? Exactly how long do you figure the traffic backup will be? Either someone hijacked Lance's handle, or he has utterly flip-flopped on his love for subsidized cars...you wanna talk about a practical logistical disaster.

3. Sales taxes. Take a look at map...note proximity of places where sales tax would lower. Hazard a guess how many big ticket items would be purchased there instead. Discuss.

4. Services sales tax. Yeah, it went over so well last time (see, politically tone deaf "gym tax").

5. TANF, or in Mike Wilson's world...PANF. Yes, some people cut off would end up using other services. Others faced with things like homeless services would get a job. It ain't either/or between said services, and the restriction would eliminate migration to PANF by folks maxing out in other jurisdictions. Sheesh.

6. Property taxes...raise 'em and you're accused of driving people out. leave 'em the same or lower 'em, and you're accused of pandering to people with the money to buy property.

Sheesh. It's a wonder anyone wants to be in govt. reading this incoherent mess of demands.

by John on Dec 6, 2010 3:03 pm • linkreport

@Lance: "My property taxes since 2005 have nearly tripled and are now more than I pay in income tax."

Oh, come on. First, if your house is worth $1 million, you qualify for the homestead deduction, and you are taxed on the full assessed value of the home, you pay $7926.25 in taxes. You think that's excessive?

And for your property taxes to be more than your income taxes (and I'll be charitable and assume you mean more than your DC income taxes, not federal), if you owned a $1 million house you'd have to have annual taxable income of less than $110,000. If your house is worth nearly 10 times as much as your annual income, either:

(1) You have overbought and are house poor - but your failure to make sound financial decisions is not good grounds on which to base DC's tax policy.

OR

(2) You are the "victim" of a dramatic increase in property values. (Wait, are you a victim of gentrification?)

Either way, forgive me if I direct my tears elsewhere. You know the old saying about luxury cars - if you have to ask how much it costs to maintain it, you can't afford it in the first place. Seems to apply here (if your laments are true in the first place).

by dcd on Dec 6, 2010 3:15 pm • linkreport

@dcd: Wouldn't the same apply to social welfare recipients -

If you have to depend on handouts year after year in order to live in DC, then maybe you can't afford it in the first place?

Likewise, their failure to make sound financial decisions (and if a person is on welfare, their parents are/were on welfare, and their grandparents are/were on welfare, then there's pretty clearly a system failure of making good decisions) is not good grounds on which to base DC tax policy?

Is there any expectation that Mr. Wells will respond to the comments in this thread, particularly those comments that are not as enamored with the usual tax and spend policies that he's advocating?

by Fritz on Dec 6, 2010 3:32 pm • linkreport

Feh, sorry...I forgot the right wing half.

"Just cut spending!!!"

On what? Who knows? "Waste". We all know there is waste. Watse, waste, waste. Specifics? Who need's 'em? Cut waste.

Oh, yeah...and platitudes. Lots of platitudes. "Tax n spend". Platitudes and "Waste"...that's the ticket.

by John on Dec 6, 2010 3:36 pm • linkreport

@ John: 3. Sales taxes. Take a look at map...note proximity of places where sales tax would lower. Hazard a guess how many big ticket items would be purchased there instead. Discuss.

Doesn't work. Jurisdictions are pretty aggressive pursuing sales tax for their own jurisdiction. Why do you think your state income tax form has a line for sales tax on online purchases? You owe it, even it you bought it out of state. I avoided sales tax on some jewelery by having it sent to a different jurisdiction last year. No go this year after an audit. Vendor got in trouble and doesn't do it anymore.

Look at car sales for another example. Maryland charges sales tax when you register your car regardless whether of you paid it in the past (they may call it a title tax, or use tax or something, it boils down to the same). Many states do. This is why car dealers in the region always shuffle your car sale to your own jurisdiction. Found a good Chevy deal in MD, but live in VA? You will be picking up your Chevy from a VA Chevy dealer for the MD dealer's price.

by Jasper on Dec 6, 2010 3:44 pm • linkreport

Jasper: Go to the Pentagon City Costco and watch all the DC plates loading $2k flat panels into their cars, and other such goods. Ya think they are reporting the sales tax differential to DC? If so, I have a great bridge in Brooklyn I'd love to sell you some shares in.

You name one of the few big ticket items that is licensed and tracked to a point where you can't do this. On the jewelry, nothing stopping you from buying it and paying for it physically in a low/no sales tax jurisdiction and not voluntarily reporting on your tax forms.

by John on Dec 6, 2010 3:52 pm • linkreport

Building on Jasper's comment: bingo, that's why it's formally called a "Sales and Use Tax" and not just a sales tax. The problem is that the "use" part can be difficult to enforce & collect on.

by Bossi on Dec 6, 2010 3:59 pm • linkreport

@ Fritz "Wouldn't the same apply to social welfare recipients. Likewise, their failure to make sound financial decisions (and if a person is on welfare, their parents are/were on welfare, and their grandparents are/were on welfare, then there's pretty clearly a system failure of making good decisions) is not good grounds on which to base DC tax policy?"

It could, but in almost 80 comments we've yet to hear from a social welfare recipient decrying DC's fiscal policies as unsound. Yet we've heard from plenty of people, who by almost any reasonable measure would be considered privileged (enough to spend more money on childcare alone than tens of thousands of DC families earn in a year), who are decrying DC's fiscal policies as unsound.

Since you seem to be concerned about why poor people have chosen to be poor, maybe you should conduct a little study by going door-to-door in wards 5, 7 and 8 asking residents there why they have decided to live on welfare, why they haven't moved to Virginia or Maryland yet, and what they think about CM Wells' tax proposal. Maybe while you're at it you can ask them why they've decided to let their average wages rise 8% in the last 30 years when average wages for the top 20% of income earners rose 33% over the same period.

by Scoot on Dec 6, 2010 4:01 pm • linkreport

@Bossi, it'd at least make me feel better.

Well, at least your honest. We see the same dynamic at work on the national level: the top 2% of earners pay next to nothing in taxes, and here we are proposing to extend these tax breaks still further, at the cost of $700,000 million dollars over the next 10 years.

But that's okay because we're planning on eliminating $1 million earmarks for things like volcano studies.

Woo-hoo! It's total insanity, but at least it makes folks feel slightly better.

by oboe on Dec 6, 2010 4:06 pm • linkreport

@Scoot:

Isn't asking a person who doesn't pay taxes and lives on the public's dime whether he/she supports increasing taxes on other people so that he/she can continue to live on the public's dime a wee bit pointless?

by Fritz on Dec 6, 2010 4:11 pm • linkreport


@Tommy Wells
I do not have any problem with the tax raise, it's not pleasant to have to pay more, but it's the right thing to do.
The gap between the poor and the rich is wider than ever, wider than in any industrialized country according to 2010 Census, it has come to a point that it is creating two different societies in this country.

Having such inequalities in a country leads to very serious problems and ideologies. We all need to have solidarity to those that don't have (the education, the opportunities, the families behind...)
Cutting taxes for the richest was a great idea and it worked (I really mean it) during the Reagan era, but the context was different.
I totally support the tax raises if it means that it will help even out the growing differences in DC.
However, the welfare system needs to be controlled, so it does not damage the tax dollars, or the recipients.

by Mar on Dec 6, 2010 4:13 pm • linkreport

@oboe-

There's a bit of distinction between those two cases, though. Some earmarks go toward valid programs serving a national interest and serve to provide a clear and tangible benefit. On the other hand, I'm not entirely sure that higher salaries for elected officials translates to higher-quality elected officials. I don't intend that to jab at any elected official; but I think most of them do it for the authority to make change &/or to serve their communities; not for the money.

While I agree that salaries & earmarks flies in the face of the relevancy of orders of magnitude (http://xkcd.com/558/), I do agree with SAM in that it'd be a good public relations move to demonstrate some personal commitment by volunteering a pay reduction; or perhaps even dedicating a portion of their pay to a charity, non-profit, public program/project, etc. of their choice.

Back to earmarks... I'm OK with earmarks which serve a national interest, to which a number of research programs tend to fit into. But since this is largely an infrastructure/planning blog: my opinions on those is actually a bit different... I'm generally against federal earmarks for those since there are so many which don't serve a *national* interest. However, it's the sad truth that most infrastructure investments come in the form of earmarks... but that's more the result of a bad infrastructure policy which needs to be fixed before earmarks can be properly taken on.

by Bossi on Dec 6, 2010 4:17 pm • linkreport

I totally support the tax raises if it means that it will help even out the growing differences in DC.

Getting back to the 'parochial' view I talked about earlier. Isn't looking at DC as an isolated part of the region a part of the problem? We're the center of probably the fastest growing (in terms of wealth) region in the country. As time goes on, the land closest to the center becomes increasingly more valuable ... and more 'exclusive' ... It may not sound like a nice thing to say, but the hard reality is that what Fritz is saying has a lot of truth in it. Why are we spending mega bucks trying to help people live in the center of an increasing more expensive region where our dollars get increasing stretched trying to conver the ever expanding cost of everything based on the ever increasing cost of the land here? Why don't we work with our neighbors to better provide for these folks in areas where its cheaper to provide for them. For instance, why does it make sense to give someone $100 for groceries to spend that $100 in DC where, for example, in some place like Springfield Va or Baltimore MD. they could get twice as many groceries for the same money, get 3 times as much living space for the same money as we pay to get them a cramped apartment here in DC, and have a lot more opportunity for them and their kids then they have here where many are stuck in isolated projects with no hope of ever getting out and being part of the rest of society.

So, building on Fritz' point, how are we really helping anyone by incentivizing them to stay put in the expensive 'center' of this expensive 'region'?

by Lance on Dec 6, 2010 4:27 pm • linkreport

"Think Mclean, Vienna, Bethesda and Potomac. Those locales were initially populated by former DC residents who bellowed "Hello, Virginia" and "Hello, Maryland." We don't need a repeat."

@Scoot - "The reasons these communities flourished is not because of increasing taxes in DC."

That is true, to an extent. The people who reside in the DC region and those who plan to come here have three options where to live: Maryland, Virginia, and the District. They usually carefully look at a myriad of factors when choosing where to call home. They do their homework on what their expected expenses will be. Taxes--both property and income--are among the factors most carefully evaluated. Tax factors, to be sure, may not be the deciding issue causing an individual or family to choose a particular location over another, but they certainly play a role. To think otherwise is folly.

During the 1980s and 1990s, the District's population steadily declined. Most of this decrease can be attributed to African-Americans migrating to the suburbs. But during the same time, the population of Whites stayed about the same, all the while the region's population grew by about 1.5-2 million. Obviously, a lot of folks bypassed DC in favor of other locales--Whites, Asians, Latinos, and Blacks, as well. High-income earners in particular stayed away as did families. And where did many of these new folks decide to call home, especially the higher-income earners: McLean, Vienna, Bethesda and Potomac.

Any negative factor that causes people to think about moving to another location within the region should be a major concern for the District. There are enough hassles as it is living in the city. For instance, parking. If you don't have a regular spot, it's trouble. Car insurance, too, is usually more expensive for those living in the city as opposed to the suburbs. Add in the school situation, crime, and other challenges of city living, and the case for living elsewhere is appealing. Higher taxes, particularly on income, will result in people having one more reason not to live in the District.

by Anonymous on Dec 6, 2010 4:34 pm • linkreport

"Isn't asking a person who doesn't pay taxes and lives on the public's dime whether he/she supports increasing taxes on other people so that he/she can continue to live on the public's dime a wee bit pointless?"

I don't believe to be pointless at all to gauge these peoples' opinions when they are the primary recipients of the social services at risk of being eliminated. I guess the only opinions that matter are of those of the wealthy. :-/

I believe most services in this city need to be streamlined to cut waste and to elminate those on its payrolls that don't deserve to be there and I believe this should be a priority for the Council. I also believe that raising taxes one percent for the District's wealthiest residents will not decrease their quality of life at all, but could have a measurable increase in the quality of life for people lviing below the poverty line (even for those who haven't chosen to live below the poverty line, if you can believe it!).

by Scoot on Dec 6, 2010 4:37 pm • linkreport

Word.

by Gavin on Dec 6, 2010 4:39 pm • linkreport

It is very telling how no one addresses my point that the middle class is punished with high cost to spend money for private schools because one of the most essential "core missions" of government to educate has been a complete failure in DC despite the decades of spending to pull folks out of poverty with vast assortment of funding for non profit do gooders, government giveaways, and non performance based teacher union rewards.

My vote is for a higher sales tax to whack the vast underground cash DC economy.

It is also interesting how no one discusses the impact of children on middle class family income (defined as rich here somehow)in a city with poor performing schools. Let's keep moving forward with DC (and other urban areas) as being primarily for empty-nesters, youth, and the poor because that has turned out so awesome these last 50 years.

by Joe on Dec 6, 2010 4:40 pm • linkreport

@ Lance

So...what do you mean? That we need to "work" with our neighbors and send them to Maryland?
Why don't you go?
To help others out is not always "incentivizing" them to stay in that position

Nowadays poverty and inequality is not only the projects, in case you have not noticed.

by Mar on Dec 6, 2010 4:44 pm • linkreport

@Lance

Please do make a list of all those suburbs in MD & VA chomping at the bit to host all of these people on TANF, foodstamps, etc? They will be happy to have some welfare family move in next door and happy to have their kids in school with little Johnny! Oh wait, isn't that why everyone moved out of cities in the 40s, 50s, 60s?

I guess you could build public housing for cheap in middle of nowhere and move people out there, but then you'd find, as has been noted in studies on this website, that when you add in the cost of getting those people to work, their children to school, etc. you'll end up spending MORE in the long run. Housing may be cheaper there but transportation definitely isn't. And then you'll just have a suburban ghetto instead of an urban one.

by MLD on Dec 6, 2010 4:44 pm • linkreport

I swear this city makes me more conservative everyday. Charging more taxes for services that are marginally adequate on the basis that they're now not completely failing is ridiculous. I want to hear what cuts and efficiencies will be made before someone asks me to get out my wallet... again.

by Stanton on Dec 6, 2010 4:46 pm • linkreport

Let's be honest: Having the income tax bracket top out at $45,000/year is crazy, especially when you consider that $45k doesn't go particularly far around here.

(Also, the Fairtax plan is an instant non-starter, given that there are multiple neighboring jurisdictions that do not use FairTax. People would just stop shopping in DC.)

by andrew on Dec 6, 2010 4:47 pm • linkreport

@Scoot:

Here's some sample questions for your survey:

1. Do you support reducing your social welfare benefits?

2. If you answered no, do you support raising taxes on other people so that you can continue to receive the same level of social welfare benefits?

Can we set an over/under on the responses?

by Fritz on Dec 6, 2010 4:51 pm • linkreport

@andrew "the Fairtax plan is an instant non-starter, given that there are multiple neighboring jurisdictions that do not use FairTax. People would just stop shopping in DC."

I must have missed the party where anyone suggested the FairTax... the concept of the FairTax is impossible to implement by any one jurisdiction and is, by definition a massive change to the Federal Tax code for all jurisdictions (not just DC).

I suggested, earlier, HR 1014 -- which is completely different and has nothing to do with the FairTax. Rather, it is the recognition by certain members of Congress, that taxation without representation is wrong and the law would undo the former part of that equation. But no one seems to like that idea.

by Andrew in DC on Dec 6, 2010 4:53 pm • linkreport

@Mar, If I (and the all the others who pay the taxes here) move out, who's going to be left to fund all the social programs?

We can easily give more for less by acknowledging the reality that being in the center of everything isn't for everyone. For example, when we give these people vouchers for housing, must they spend it in DC? or do they have the right to go, for example, to Springfield and get more for their dollars. Yeah, eventually that would mean they'd become Va. residents, but how is that a bad thing for anyone ... including them?

by Lance on Dec 6, 2010 4:53 pm • linkreport

"During the 1980s and 1990s, the District's population steadily declined. Most of this decrease can be attributed to African-Americans migrating to the suburbs. But during the same time, the population of Whites stayed about the same"

I agree, and this is because most of the white people had already moved out by the 1980s. In 1950 the white populaton of DC was ~520,000 and the black population was ~280,000. By 1980 the white population was ~172,000 and the black population was ~445,000. Between 1980 and 2000 more black people left than white people who came in, but the District also saw an influx of Hispanics and other nationalities. The years between 1950 and 1980 saw a 21% population drop compared to a 10% population drop between 1980 and 2000, so I think it can be reasonably assumed that the worst population loss in DC's history involved a bunch of people moving out for reasons that were more or less not tax-related.

by Scoot on Dec 6, 2010 4:57 pm • linkreport

@Scoot ... back in the 60s, the African-American population that later could afford to move out in the 80s and 90s did not exist for the most part. In addition to increased opportunities for African-Americans, the 60s also saw the start of Johnson's Great Society program ... which would have meant a rise in taxes for those who could afford to pay them ... so while what you're saying it true, it's not as unequivacally true as you're saying it is. Lower suburban tax rates (including much lower property tax rates AND more living space) definitely contributed to the allure of the suburbs for those who could afford to own a car and get out of the dirty, crowded, and increasingly taxed city center.

by Lance on Dec 6, 2010 5:02 pm • linkreport

@Lance
DC is going to be full of bicycles and bicycle lanes which you despise. We probably will not have a Walmart and they are going to raise your taxes.
As somebody noted above, you will not have any problem selling your house or condo to somebody.
If Washington has something plenty of, it is people with nice incomes willing to move in. Young people that for the most part have the gift of solidarity.

by Mar on Dec 6, 2010 5:03 pm • linkreport

Fritz, I don't think anyone would be surprised to learn that most low-income residents do not want their social services eliminated, just as I don't think anyone would be surprised to hear learn most wealthy residents do not want their taxes increased.

by Scoot on Dec 6, 2010 5:07 pm • linkreport

Saying "you won't have any problem selling your house or condo to somebody" to those who are against tax increases is oversimplifying the situation. Yes, there will always be a buyer for every seller at some price. But if the supply from sellers increases while the buyers become less interested then there is less unmet demand in the existing housing pool. This will diminish the demand for new construction. Less demand for new construction will limit the city's ability to increase density and the tax base.

These tax increases might not be enough to draw out anyone to move. But I'm with Stanton when he says "charging more taxes for services that are marginally adequate on the basis that they're now not completely failing is ridiculous."

by Jason on Dec 6, 2010 5:28 pm • linkreport

I'm in one of those brackets and fully support this move by Councilman Wells. Furthermore, he's my councilman and I'll keep voting for him as long as he does such good work...

by Michael on Dec 6, 2010 5:32 pm • linkreport

What about raising the gas tax?

by Jeff on Dec 6, 2010 5:33 pm • linkreport

Good points Lance, but I thought that Johnson cut the top rate and reduced others? Poll taxes and other such taxes negatively affecting the working poor were eliminated as well I think.

Certainly the overall expense of living in the city persuaded some people to leave, especially since quality of life was deteriorating, I'm just trying to refute the point that raising taxes slightly for the wealthiest residents of the District will lead to the mass exodus that Anonymous predicts, especially in a time when quality of life is getting better and not worse. I do not believe that rising property taxes will persuade someone to move unless, as another poster mentioned, those people are ready and willing to sell their homes.

by Scoot on Dec 6, 2010 5:36 pm • linkreport

Before raising taxes, let's look at cutting some of the fluff that is non-core to educating our kids, protecting our city and meeting the most basic social service needs. For one, let's eliminate the politically-feel good offices like the Office of LGBT Affairs or the Office of Latino Affairs. Maybe they're nice to have, and they're popular with political constituencies, but they're not necessary in an era of thight budgets. Also, no more taxpayer spending on $600,000+ dog parks, like what DC build in McLean Gardens. If people want dog parks, they should raise the money themselves for the next few years.

by Bob on Dec 6, 2010 5:36 pm • linkreport

Other revenue enhancers to be evaluated might include a fee on tourist busses. A $50 or $100 charge per visit is reasonable.

We already have that in place. DC requires vehicles of sufficient weight to qualify for apportionment but that are neither apportioned nor registered in DC (essentially, tour buses) to purchase a trip permit, costing $50 for six days.

by cminus on Dec 6, 2010 5:38 pm • linkreport

Mr. Wells,

I'll happily pay more taxes if we pass Marion Barry's bill to end DC's current welfare-for-life policies. There's 1/3 of your defecit right there. Heck, we can get to a surplus at this rate!

Ugh, gotta go, my tax dollars are subsidizing a guy peeing in my front yard again.

by QStreet on Dec 6, 2010 5:50 pm • linkreport

@Anon 1:51 pm

I believe that Marion Barry some years back proposed building a big bus center where all tour buses would have to pay a fee and be "inspected" before entering the District, while their passengers presumably stood around cooling their heels. Think of a glorfied DMV station/Superior Court jurors lounge with vending machines! Fact is, group tourism is a mainstay of the DC economy and fees and hassle factors are a great way to dampen it and the service jobs that come with it.

Also, one can just imagine the traffic mess that erecting toll booths on the bridges and at Connecticut and Wisconsin Avenues would lead to. Plus, you'd have to build a wall down Western and Eastern avenues to keep cars from bypassing the tolls by cutting through residential neighborhoods.

Finally, even if a commuter tax were possible (not gonna' happen), has anyone considered that MD and VA would then institute the same on DC residents, who work in the burbs but currently pay all of their income tax to the District? Many of them are high earners with tech and consulting companies in Arlington, Tysons and the Dulles and I-270 corridors. The net effect of those residents paying taxes to other jurisdictions should be considered.

by Bob on Dec 6, 2010 5:56 pm • linkreport

For example, when we give these people vouchers for housing, must they spend it in DC? or do they have the right to go, for example, to Springfield and get more for their dollars.

You hit on some generally useful ideas here -- DC doesn't have to be the local poverty sink, and public policy ought to focus on getting the most housing bang for the buck, which suggests that land prices ought to be a consideration for siting public and subsidized housing.

However, as you present your solution, it would either be useless or catastrophic.

If your proposal is to allow DC residents to use housing vouchers outside the District, it would be useless: once they sign a lease outside the District, they cease to be District residents and lose the voucher, and if they could afford the rent without the voucher we wouldn't have needed to give them the voucher in the first place.

If your proposal is to allow poor people, without regard to residency, to receive housing vouchers from the District good throughout the region, it would be catastrophic: there's no way we could afford to be the rent subsidizer for the entire region, not even with a tax increase that would make what Wells is suggesting here sound like stuff you scrounged out from the sofa cushions.

If you've got some sustainable way in mind to get around these problems I'd love to hear it, but I have no idea what it could be.

acknowledging the reality that being in the center of everything isn't for everyone.

And yet you still refuse to move to your true spiritual home in Chantilly. ;)

by cminus on Dec 6, 2010 6:04 pm • linkreport

@cminus

I hope you mean Chantilly, Va. Because Lance would definitely not fit in Chantilly, France (that evil socialist city that preaches: "La cohésion sociale c'est n'exclure personne, la solidarité c'est soutenir et aider ceux qui en ont besoin. Chaque jour, la ville de Chantilly participe à la lutte contre l'exclusion" The social cohesion is not the exclusion of the person, it's the support and the aid for those who need it, everyday the city of Chantilly participates in the fight against the exclusion"

He definetely fits in a suburb with his big truck, his 80's economic theories and probably his gun.

by Mar on Dec 6, 2010 6:22 pm • linkreport

Heyyy I'm a gun-toting urbanist :P

by Bossi on Dec 6, 2010 6:25 pm • linkreport

In general you don't tax yourself to prosperity. On the other hand if you create a low tax community you will attract business, residents, and jobs. Jobs should be the number one concern of DC. I've often considered moving to DC but the single reason I have not done so are the high taxes.

by Jim on Dec 6, 2010 6:36 pm • linkreport

@cminus, The bottom line is that just because you're helping someone, that doesn't give you the right to dictate what they do with that help. In this city we've created a cycle of poverty that doesn't do anyone any good, most especially those stuck in it. If the city wanted to give people housing vouchers to use until they could afford to pay for their own housing, I wouldn't care if they spent it here or in Timbuktu. The idea behind helping someone is to help them get out of their predictament, not to help them stay in it. The center of job creation for entry-level lower-skilled worked isn't DC. It's out in the places of the big Walmarts. The immigrants coming here from even more impoverished places like parts of Latin America know that. They can't get usually get welfare and the like because their immigrant status isn't always 'green card', and lacking that incentive to stay in places where there are no jobs for them, they don't. They go to where the work is for them. Why are we creating a false incentive for folks to stay where they will always be mired in poverty? It's not kind to them in the least. Yes, it makes some of us feel better about ourselves that we've 'helped' someone through our taxes, but it does no longer lasting good for these people than we do when we throw them a dollar in their box instead of giving them opportunities to really participate in life and thereby earn their own living. More taxes for more handouts doesn't really equate with doing good.

by Lance on Dec 6, 2010 7:06 pm • linkreport

@Lance, for the most part I actually agree with what you're saying. My objection isn't philosophical, but operational -- if we allow non-District residents to receive housing vouchers from the District, as you suggest, how do you propose to stop people throughout the metro region from gaming the system?

If we cut them off once they leave the District, they won't leave because that means giving up the voucher. If we allow them to keep the voucher even after leaving, we'll face a flood of poorer residents coming to the District, getting their District housing voucher, and then moving to the suburbs -- but keeping the voucher in perpetuity. We'll be spending far more than we do already, because we'll be paying for every lower-income resident in the region, not just those in DC.

by cminus on Dec 6, 2010 7:33 pm • linkreport

Kinda pathetic Very interesting to see a bunch of people that have barely known poverty discuss what the poor should be doing.

by Jasper on Dec 6, 2010 7:48 pm • linkreport

Mr. Wells,

Your assumption that our tax dollars are responsible for the revitalization of parts of our city is only partially correct.

It's businesses and those that own them that are largely responsible. I have watched Barracks Row go from an urban hell into the wonderful shopping and dining area that it is today. Long before the city ever proposed infrastructure improvements there was CHAMPS - business owners and residents leading the way. They built solid businesses that generate tax revenue and jobs for the city. In short, business leaders came first - the city showed up after the party had started.

So, when the city finds itself in a budget crunch you think that the business owners should pay more taxes. Apparently the expense of the never ending cycle of welfare, public assistance, and the other plethora of city programs that give our money away is to be preserved at all costs.

I remember the days when we had no money to fuel our fire trucks and police cars. Yet, the money kept flowing to "those in need." Everyone else fled.

As we all know, once taxes are raised they never go down. So, when the city finds itself in yet another fiscal crunch will you propose yet another tax increase? When will you stand up for proper fiscal management and personal responsibility?

Your constant drone of raising taxes suggest that it won't be anytime soon.

by Jimmy on Dec 6, 2010 7:55 pm • linkreport

@cminus, You pose all good questions. The Devil is in the details as they say.

I think the answer might lie in our acknowledging that the ghetto-ized nature of what we've created through our social welfare policies of the last 50 or so years doesn't facilitate these victims of the system seeing how they could be living if they entered the mainstream instead of feeding off of it. The Post had a done a great article on this may 5 or 10 years ago. We have whole generations of families which are defined by women who have to get pregnant as soon as possible to qualify for welfare, and then who can't marry the fathers of the children (or even live with them) because they'd lose those benefits which all must in the end depend on in the end to subsist with. We're now talking about grandchildren of the original grandchildren locked into the cycle of public sustenance and public dependence. They haven't a clue as to how much better life could be by getting up to go to work in the morning and actually having aspirations to ever accomplish more than their immediate parents did. I'd bet that just giving them the freedom to go out to where the jobs for their skillsets are and see everything else that is out there would ensure that most wouldn't stay on welfare any longer than they had to. When one can see opportunities for something better out there than what they have now, they're naturally incentivized to do better.

I know you could make the argument that we could do the same thing by letting them use these vouchers in the 'richer' parts of the city. There's a problem there with that though. First off, the jobs in these richer parts of the city aren't for entry-level low skilled workers. Heck, I have a Masters and my best opportunities are out in the 'burbs! By and far, unless you're a government worker or a lawyer or lobbyist or something else very specific to what is the work of the District, i.e., government and its support, the better opportunities are elsewhere. Add into that that being 'in the center' the real estate here is expensive, and you've have another reason why someone with low skills is better off in the the land of the Walmarts ... where not only is there more opportunity for them, but they can actually live better on less.

I guess you could call it 'One Metro Area' thinking ...

Yeah, there'd be a lot of things to work out, but 'less is more' (i.e., set the parameters and let the free market forces do their magic) and use tax dollars to open opportunties for the needy rather than locking them into a cycle of poverty.

by Lance on Dec 6, 2010 7:55 pm • linkreport

Jasper:

I grew up in real poverty. I've seen first hand what the never-ending welfare without work mentality does to families.

Don't assume everyone that thinks our current DC welfare policies are stunningly expensive and equally counterproductive has never known real poverty.

by Hillman on Dec 6, 2010 8:23 pm • linkreport

Those of you who laugh off the "millionaires will leave" scenario are simply being naive.

Maryland is a perfect example for us to look at. They raised taxes (again) on the wealthy and the very next tax year, 1/3 of all MD millionaires disappeared from the tax rolls. Yes, the economy came into play but it didn't wipe out 33% of an entire states millionaires.

http://online.wsj.com/article/SB124329282377252471.html

by freely on Dec 6, 2010 8:37 pm • linkreport

Apparently you want to go back to the days of the Control Board. DC, run by idiots, without any fiscal responsibilty, makes one bad decision after another, and is taken over by Congress. You are surely no Tony Williams, who was a smart guy, but take a lesson from the past. Increasing DC taxes to make it compare unfavorably to the surburbs is not a formula for success. Somehow, in a city that rejected Fenty and Rhee who brough accountability to DC govt, my guess is this advice will far on deaf ears. But don't worry, Congress is there, and will undo you mistakes in short order.

by Worst Idea Ever on Dec 6, 2010 9:00 pm • linkreport

Could some of the incremental tax revenue be used to pick up garbage outside of my house (specifically: the garbage that I place in trashcans for the city to pick up on a biweekly basis that is frequently left uncollected) or provide mental health services to the crazy homeless guy who yells at the top of his lungs in the middle of the night and threatens to kill me?

The proposed tax hike (on top of an already staggeringly high tax rate), coupled with lack of basic sanitation and social services, is a compelling reason to remain a resident of the district.

by wallace on Dec 6, 2010 9:00 pm • linkreport

Stop the shannanigans, please! Maryland income taxes are higher than DC after accounting for the local share. In Montgomery and Prince George's County, that comes to 3% + 6.25% state for a total of 9.25%. DC also has far lower property taxes than MD or VA, so this whole argument against a less regressive tax structure is a red herring. Yes, Virginia income tax rates are slightly lower, but not there property rates, but if you get in trouble, whether it be getting sick without insurance or falling into poverty, it's tough luck to you.

by Jeff on Dec 6, 2010 9:20 pm • linkreport

I don't think a small increase for those who have a very comfortable income is unreasonable.

by Amber on Dec 6, 2010 9:32 pm • linkreport

@Jeff, No one is denying that MD is worse off than here. But that's not the point. I think what we're hearing here is that we just throwing more money at a problem doesn't solve the problem. Sometime, no actually usually, it just makes the problem worse. DC is probably the most generous juridiction for the poor within hundreds of miles of here, if not thousands, but that doesn't mean we're getting anywhere to really improve the lives of these folks and get them into the mainstream.

As someone pointed out earlier, our budget has gone up something like 150% since the year 2000. I.e., It's more than doubled. 2/3 of our current budget goes to education and social services ... just like it did prior to the increases. That means that 2/3 of that 150% increase went to education and social services. I.e., 2/3rds of that 'more than doubling' in our budget dollars. You can't justify not reducing that level of spending ... never mind even trying to justify maintaining it.

by Lance on Dec 6, 2010 9:40 pm • linkreport

@Wallace: Have you tried calling the Sanitation Department about the garbage issue you are having? The government cannot compel the "crazy homeless guy" you are mentioned to get treatment. However, if he was motivated, there are plenty of programs to help him, at least compared to states like Virginia. Due to the recession that has affected nearly every local government, nationwide and even worldwide, If the taxes don't go up this year, there won't be enough money to pay for the peers of the "crazy homeless guy" who actually want and are getting treatment. Then you'd have 50 crazy homeless guys screaming in front of your house. Be careful what you wish for.

by Jeff on Dec 6, 2010 9:45 pm • linkreport

Lance, maybe if you and your buds stopped reflexively opposing commerce, density and smart growth, our tax base would be much larger, and taxes wouldn't need to go up.

by Jeff on Dec 6, 2010 9:49 pm • linkreport

How about the elderly? The people who actually are too old or too sick in DC to get a job? Those who survived the tough years of DC
Do we also "ship" them to Md or Va?
As I said before, welfare is not only the ghetto. But in the "ghetto" there are children who are also suffering this recession. Do we leave them to the rule of "free market".
Free market is for merchandise and goods, not human lives.
All of you that totally deny helping others, I hope are never faced with the loss of a job, an expensive illness or a nasty divorce that takes you to the cleaners, coupled with a Wall Street crash.

by Mar on Dec 6, 2010 10:02 pm • linkreport

Finally, even if a commuter tax were possible (not gonna' happen), has anyone considered that MD and VA would then institute the same on DC residents, who work in the burbs but currently pay all of their income tax to the District? Many of them are high earners with tech and consulting companies in Arlington, Tysons and the Dulles and I-270 corridors. The net effect of those residents paying taxes to other jurisdictions should be considered.

Based on the morning traffic patterns, I suspect this would be a non-issue, or would even encourage businesses to set themselves up *in* the city, where people evidently want to live, rather than just across the border to save a buck on taxes. Hell.... it'd even take some of the strain off of Metro if we actually enacted a tax code that was friendly to residents *and* businesses.

Does anybody have any firm numbers on how much money DC spends on social services? I'm wondering if this argument is a canard like foreign aid or earmarks are in the federal budget (ie. not even a drop in the bucket, but people love to scream about it)

Also: Stop feeding the Lance/Fritz troll. No good will come of it.

by andrew on Dec 6, 2010 10:05 pm • linkreport

Budget is available here:
http://cfo.dc.gov/cfo/cwp/view,a,1321,q,589949,cfonav,%7C33210%7C.asp

by Bossi on Dec 6, 2010 10:10 pm • linkreport

@Andrew, Education and Social Services make up 2/3rds of the budget. It's not a canard. It's where we spend the bulk of our hard-earned tax money.

suspect this would be a non-issue, or would even encourage businesses to set themselves up *in* the city, where people evidently want to live, rather than just across the border to save a buck on taxes.

given that our population is about 600,000, and the metro area is something like 4,000,000 (not counting the Baltimore part of the MSA), I'd say your statement 'where people evidently want to live' is perhaps not all that accurate given that people tend to vote with their feet.

by Lance on Dec 6, 2010 11:10 pm • linkreport

@Jasper/Mar

I've had members of my family on welfare in the state of Connecticut. I've seen that in each case welfare just enabled them to be lazy and wallow in self-pity.

I was in Virginia for a good number of years before moving to DC three years ago. I'm active in neighborhood associations. I've had the displeasure of working with an able bodied ANC commissioner who is unemployed and lives in subsidized housing. Possibly he's on welfare too. While I'm underwhelmed with his literacy I believe if you can serve as ANC commissioner (even in half ass fashion) you should be able to work some sort of job and pay your own bills.

If you are able bodied you should work. Safety nets should be temporary not indefinite.

by Jason on Dec 6, 2010 11:11 pm • linkreport

@Jason, your post about members of your family is a great personal testimonial. I'm in agreement with just about everything you are saying. And it's really not about the numbers. Wells' proposed tax hike is indeed minimal and wouldn't hurt the folks paying the extra bucks (myself included.) But that's not the point. The point is more along the lines that it's way too easy to throw a few more bucks at a problem and hope it'll go away, and well, if it doesn't 'well we tried ... our conscience is clear ... and that's all that matters'. No it isn't.

by Lance on Dec 7, 2010 12:06 am • linkreport

Btw, I'm also from the great liberal state of Connecticut ... and have lived in Virginia also. Maybe that's why I too consider myself an 'realist' Democrat. I've seen the two extremes too.

by Lance on Dec 7, 2010 12:08 am • linkreport

@Lance - before you declare me your new BFF for the record I think you post far too much on GGW during the work day to be legitimately earning your salary at IBM.

by Jason on Dec 7, 2010 12:49 am • linkreport

Jason, Some people are smart and efficient and some people aren't. It rarely takes me more than 60 seconds to post a reply. In the time it takes you to sit around thinking about your next task, at work, chances are I've already finished mine and moved on to the next one. And how do I know that? People who are smart and efficient rarely work along the lines of just 9 to 5 as was your the underlying assumption in your post.

by Lance on Dec 7, 2010 1:26 am • linkreport

[California] basically destroyed the ability to run the state through the unintended consequences of several ballot initiative driven missteps.

there was nothing unintended about those consequences.

Maryland is a perfect example for us to look at. They raised taxes (again) on the wealthy and the very next tax year, 1/3 of all MD millionaires disappeared from the tax rolls. Yes, the economy came into play but it didn't wipe out 33% of an entire states millionaires.

i haven't seen a study on Maryland, but it would likely show the same effects that occurred in New Jersey and New York -- significant-to-huge revenue gains for the state. it doesn't matter how many people enter or leave -- it only matters how much more revenue you raise, how many more people keep their jobs, how many new jobs are created, etc.

tax policy answers are pretty straightforward -- start taxing the rich again, replace a very significant portion of property taxes with income taxes, and states should raise taxes in unison to help prevent 'capital flight'. everyone knows these things, but it takes courageous leaders to step up and say what needs to be said.

this is a good policy -- the only reason it's not great is that it doesn't go far enough. DC shouldn't not be cutting any more services. if you're actually horrified by violent crime, there's a really easy way to stop it -- stop participating in the poverty trap by advocating that rich people start paying their fair share. wealth inequality breeds anti-social behavior. and people love equality. let's narrow the gap between rich and poor.

since i don't live in DC, i'll make a one-time donation of $63 (even tho i don't currently reach that bracket) to DC (anyone know how i can do that?).

hope y'all get it done -- it would set a great precedent, and be a great example for other cities to follow.

by Peter Smith on Dec 7, 2010 2:08 am • linkreport

It's kinda lame that Mr. Wells hasn't thought it worthwhile to respond to the 130+ comments on this thread. There are lots of questions when it comes to his tax and spend mantra, and I doubt very few of them will actually be addressed by the Council later today. It's rather sad that this blog has had a more detailed discussion of taxes than the Council likely will.

Let me restate that Mr. Wells, Graham, and Michael Brown's various tax and spend proposals are simply intellectual laziness. They completely shirk their responsibilities to identify and eliminate useless or redundant government spending and programs. Instead, their solution is to just raise taxes on "the rich". And next year, when we're in a deeper financial hole, who doubts what their method of closing that hole will be? Why, it'll be more taxes on "the rich" because "they're not paying their fair share." Now, how it's a "fair share" to pay for services that a person doesn't use is left unsaid. And, how the qualification of who is "the rich" continues to be lowered so that sooner or later, if a person has a job, they're deemed "rich" also escapes scrutiny.

If Mr. Wells is serious about "sharing the pain", then he needs to push for a reduction in Councilmembers' ridiculously high salaries. He also needs to push for a reduction in the huge growth in Council staff and salaries.

Until then, his tax and spend mantra is simply your typical economy-stiffling measure put forth by someone with no actual business experience.

If Mr. Wells and his like-minded bleeding heart compatriots want to pay more to the city, then they can make voluntary higher tax payments, they can decline to itemize their income taxes (I assume they also believe the IRS is undertaxing them), and they can decline the Homestead Deduction on their property taxes.

But keep your overspending hands out of my overtaxed pockets.

by Fritz on Dec 7, 2010 6:57 am • linkreport

Actually, social services have not been 'cut to the bone'.

Far from it.

We could save literally hundreds of millions of dollars a year if we'd reform our welfare and public housing programs.

I'm not talking about doing away with welfare and leaving people truly in need to rot on the street.

I'm talking about reform. Reform that is 30 years overdue.

As it is now DC encourages the social services poor from the entire region to locate in DC. We then warehouse them in poverty boxes - giant housing complexes.

Then the welfare advocacy groups insist that we can't take basic common sense steps to reduce crime. We don't actively police these complexes.

As others have pointed out, even modest private housing complexes have security cameras in common areas, sign-in sheets requiring a photo ID, security guards at major access points, etc.

And those are for facilities that don't have a proven crime record.

Instead, we police public housing complexes only as a reaction to a particular crime. Then once that crime is no longer news the police leave.

Why? The welfare advocacy groups have convinced us it's 'mean' to do otherwise.

In reality, it's selling our welfare housing population short.

If we were serious about balancing our budget we'd put a limit on benefits to match those of our suburban counterparts.

Then we'd start breaking up these huge housing complexes. Relocate the families individually into safer environments, both in the city and outside the city.

The key is to put them in areas where their kids can go to decent schools away from a culture that discourages them becoming decent contributing members of society (that rules out most of DC). Relocating them one family at at time to a neighborhood where the parent is more likely to find entry-level work (those jobs are by and large in the suburbs these days), where the kids aren't confronted by drug dealers on their corner, where cost of living is less than in DC..... these are common sense improvements we can start making right now.

But we won't.

Because welfare advocacy groups have convinced us that it's more important to 'keep the welfare families in their preferred urban environments'.

In other words, it's important to keep them poor and visible within the physical limits of DC, rather than have them integrate better in the burbs where they are no longer a DC political constituency.

Once the housing poverty boxes are broken up, provide the families with real services. Real daycare. Real family planning. Real drug and alcohol rehab.

But don't make it optional.

Make it a condition of receiving taxpayer funds.

If recipients refuse to participate, give them a time limit and then kick them off.

If they have kids, consider their refusal to find a job or participate in drug rehab and such as evidence of child abandonment. If you refuse to care for your child that's the same as physically leaving them.

Take the children and care for them in a modern-day style orphanage and include them in a well-funded and well-monitored foster care program.

Make sure everyone knows that having a kid is no longer a meal ticket.

Make sure the Moms know that.

And make sure the dads know that we will start real enforcement - making the dads pay for these kids.

Within five years you'd see a remarkable difference.

Yes, we'll always have poverty. But a great deal of the antisocial and self-rotting behavior we see in our public housing complexes will be a thing of the past.

The savings would be tremendous. Literally hundreds of millions a year. If you factor in the decreased police, court and incarceration costs particularly (it costs upwards of $100,000 a year to incarcerate one person in DC).

Then add in the increased tax revenue you get from redevelopment of the huge housing complexes. They go from being a massive drain on the taxpayer (often in a very expensive part of town) to generating tens of millions in annual real estate and development tax revenue.

More taxpayers are willing to move to the city, as the crime will have gone down dramatically.

So suggesting that we have 'cut social services to the bone' is simply not true.

Until we look at welfare reform we have no one but ourselves to blame for massive deficits and yet another generation of kids lost to crime and low achievement.

by Hillman on Dec 7, 2010 7:02 am • linkreport

"How about the elderly? The people who actually are too old or too sick in DC to get a job? Those who survived the tough years of DC
Do we also "ship" them to Md or Va?"

I don't think anyone is advocating cutting off benefits to the truly sick or elderly.

Welfare reform does not mean cutting off the truly need and those unable to work.

Once we get that red herring out of the way, it's easier to address the real problems with the welfare system in DC.

But if I were elderly I'd dang sure want a safe and decent environment to live in.

And we are rarely providing that in DC. Instead, we demand that they live amongst the drug dealers and petty thugs that dominate our public housing complexes. And yes, this includes senior housing, as many kids move in with their senior parents and grandparents, and the complex can very quickly become yet another haven for destructive behavior.

by Hillman on Dec 7, 2010 7:09 am • linkreport

The idea that raising the sales tax hurts the very poor isn't totally accurate.

First, unprepared food items in DC have no tax. So a 1 cent raise in the taxes on no tax is still no tax.

And utilities taxes are set independently of sales tax. A hike in the general sales tax doesn't affect utilities.

So arguably the two things you must have for existence - food and heat/electricity/utilities - those would not be affected in the slightest.

Clothing - the other necessary expense. There are plenty of thrift stores and charity groups providing very cheap clothing. A one cent tax hike on a $2 shirt sucks, but it's not going to prevent many from buying that shirt. And I may be wrong, but aren't thrift stores exempted from sales tax on clothing items? I could be wrong about that.

A sales tax will hit the working class and middle and upper classes. But it's impact on the very poor is less than you'd imagine.

by Hillman on Dec 7, 2010 7:24 am • linkreport

"if you're actually horrified by violent crime, there's a really easy way to stop it -- stop participating in the poverty trap by advocating that rich people start paying their fair share. wealth inequality breeds anti-social behavior. and people love equality. let's narrow the gap between rich and poor."

Really? That's what causes crime in DC?

Tell that to the three kids that assaulted me at gunpoint.

They were all being supported by my taxpayers. They lived in Potomac Gardens, the public housing complex. My taxes were paying for their housing, their utilities, their school, their after-school programs, their midnight basketball, and everything else the city thought they needed.

Yet they thought they should stick a gun in my crotch anyway.

Exactly how much more was I supposed to do to bribe them into not robbing me at gunpoint? Offer to pay for a beach house for them?

by Hillman on Dec 7, 2010 7:33 am • linkreport

"if you're actually horrified by violent crime, there's a really easy way to stop it -- stop participating in the poverty trap by advocating that rich people start paying their fair share. wealth inequality breeds anti-social behavior. and people love equality. let's narrow the gap between rich and poor."

I actually agree with this. It really *is* wealth inequality that exacerbates (if not "breeds") anti-social behavior. Numerous studies have shown that it's the perceived poverty compared to one's neighbors that breeds discontent. So it's better to be the richest guy on a poor neighborhood than the poorest in a rich one.

As Gray asserted in his primary campaign, we've seen a lot of growth in DC over the last decade or so, but some have been left behind. Now, to those who see the phenomenon of middle-class folks moving into the District--thereby raising the median household income--as "leaving some behind", I'm not quite sure what the proposed solution is. After all, it's not like we're going to get those folks up-to-speed by finding them jobs with $35k yearly salaries. They'll still be "behind."

Just to play Devil's Advocate, there are two ways to achieve this: First, by making sure everyone's in DC has an upper-middle class job, even those who have no professional skill-set whatsoever. For that non-trivial number who are completely unemployable, you just need to subsidize them to the tune of $80-$150k per year. The alternative is to let the market run its course, and reduce the number of desperately poor who live in DC until it approaches an equivalent proportion to that of DC and VA.

by oboe on Dec 7, 2010 9:40 am • linkreport

@Hillman, I suspect part of the reason that the Council won't take your suggestions seriously is that they 'like' having people to care for. Your plan's objective is to break the cycle of poverty and give these people dignity. That is counter to what a do gooder wants. They want to feel needed. I'm not saying they purposely put these people into a position of being dependent. They just don't see that the vast bulk of these people really are capable of taking care of themselves if they just received a little 'tough love'. But 'tough love' would be counter to the do gooder's need for satisfaction that they've helped someone ... even if they really haven't, at least not for the longterm, and not for helping them become self-sufficient.

by Lance on Dec 7, 2010 10:40 am • linkreport

@ Hillman: I grew up in real poverty.

I did not say that nobody hear has seen poverty. But there are very few people here who've not been in poverty and have a big mouth about how the poor should behave. That's all I noted.

@ Jason: I've had members of my family on welfare in the state of Connecticut. I've seen that in each case welfare just enabled them to be lazy and wallow in self-pity.

Seeing poverty is not the same as being poor.

Safety nets should be temporary not indefinite.

I agree that safety nets should not be a fluffy mattress. However, your statement is too simplistic to be useful. Even the term indefinite is useless. Life-time welfare is finite.

@ Lance: It rarely takes me more than 60 seconds to post a reply.

That explains a lot.

by Jasper on Dec 7, 2010 10:57 am • linkreport

"Even the term indefinite is useless. Life-time welfare is finite."

Not really. In DC it's intergenerational. The mom passes it on to her kids, who pass it on to theirs.

Technically the name on the checks / housing vouchers / etc. are different, but it's really the same never-ending welfare.

by Hillman on Dec 7, 2010 11:02 am • linkreport

"First, by making sure everyone's in DC has an upper-middle class job, even those who have no professional skill-set whatsoever."

We tried that. We called it the DC Public Schools, the Department of Public Works, Dept of Transportation, Dept of Parks and Rec.

And on and on.

Turns out we got a crappy unresponsive local government and a whole slew of DC government employees that moved out of DC but still kept their DC jobs.

by Hillman on Dec 7, 2010 11:04 am • linkreport

@Jasper - you clearly didn't even read my link. Probably because you know everything. My mother is on welfare not some distant relative who I barely knew or an acquaintance.

by Jason on Dec 7, 2010 11:54 am • linkreport

Hillman nailed it!

by Joe on Dec 7, 2010 11:58 am • linkreport

He sure did. A post from Wells addressing Hillman's suggestions would be quite nice to read.

by Lance on Dec 7, 2010 12:56 pm • linkreport

Why is nobody calling out his asertion that Federal Income taxes will be lower? This is simply not true. If anything they will be the same. They may be lower compared to pre-2001 tax cuts. However, as compared to last year, they will be the same. They could even be more if those people on the hill do not get their act together.

And why defend it by sayting that it will not be as great for people who itemize? Really only people who own homes get to itemize. So the people who already enjoy comparitively lower property taxes, as compared to surrounding jurisdictions, will not bear as much of the tax increase. While those of us who rent, and already find it hard to save for a house, will bear more of the tax and have a harder time saving for a house.

by Zane on Dec 7, 2010 1:36 pm • linkreport

While this is still an interesting discussion, the Council voted 8-5 to reject both proposals to raise taxes. For now.

Captcha: Lord Budara

by dcd on Dec 7, 2010 1:48 pm • linkreport

That's super generous of Mr Wells to propose a plan to make others pay more!

by cvd on Dec 7, 2010 4:39 pm • linkreport

No DC politician has ever answered the basic question of why real welfare reform is NEVER on the table.

And please don't misunderstand. I'm not some right wing troll that thinks the poor should live in the dirt out of sight somewhere.

I fully embrace the idea of a safety net.

Hence my suggestion that in addition to 'tough love' we give real resources to child care, substance abuse training, etc.

It's just that for forty years it's been all carrot and no stick.

And then we sit back and wonder why it's not only not helping - it's actually stunningly counterproductive.

So we wreck our budget and ruin another generation of lives.

Yet no one ever advocates doing anything about it.

Except, stunningly, Marion Barry. And that only to a small degree (he addressed TANF only, not actual public housing).

by Hillman on Dec 7, 2010 5:21 pm • linkreport

Just to make Hillman's brain explode:

http://www.washingtonpost.com/wp-dyn/content/article/2010/12/07/AR2010120705639.html

On a more serious note, here's a great example of how the city provides a massive subsidies to the suburbs:

1) We provide a comprehensive (and expensive) set of social services for the region's most dysfunctional residents while they remain dysfunctional.

2) When some percentage of these folks on welfare manage to get on their feet, and acquire a decent job, they move out of the city and become MD or VA taxpayers.

Short-term, her goal is to pass the test and find a job. Long-term, she wants to move out of a subsidized, rundown house in Northeast. "When I hit 30, I want to have everything my own," Taylor says - her own house, car and steady income.
3) Folks who "fall through the cracks" in MD and VA move into the city, and join the pool of dysfunctional residents.
As Perkins tells it, his downfall came not because he didn't work hard enough, but because he worked too hard. He was a registered nurse for 17 years and at one point had everything he desired: nice cars, designer clothes, a big house - a property in Upper Marlboro that was tied to his name is valued at more than $1 million.
4) Repeat.

This is a pretty stirring story, and I hope a few of the participants make it. But as public policy for DC, it's pretty ineffectual. You figure maybe 15% of the participants in this program go on to become self-sufficient, contributing members of society. And probably close to 100% of those "successes" are going to move out to the suburbs, and contribute to the tax-base.

Pretty good deal if you're MD or VA.

by oboe on Dec 8, 2010 10:05 am • linkreport

@oboe - sounds like the downfall for Perkins from the WaPo article was that he drastically overconsumed as opposed to "worked too hard".

by Jason on Dec 8, 2010 10:32 am • linkreport

@Jason,

Perhaps--though the article claimed he was falling asleep on his feet, and pretty much worked himself to exhaustion.

My point, though, was that when he was a productive member of society, he was living and paying lots and lots of taxes in MD. When he became a homeless crack-addict, the first thing he did was move into the District and get on DC-funded welfare.

That's incredibly common, and it's a problem if you're a DC resident.

by oboe on Dec 8, 2010 10:39 am • linkreport

Add a Comment

Name: (will be displayed on the comments page)

Email: (must be your real address, but will be kept private)

URL: (optional, will be displayed)

Your comment:

By submitting a comment, you agree to abide by our comment policy.
Notify me of followup comments via email. (You can also subscribe without commenting.)
Save my name and email address on this computer so I don't have to enter it next time, and so I don't have to answer the anti-spam map challenge question in the future.

or