When the D.C. Council debated the city’s fiscal year 2012 budget last spring, Chairman Kwame R. Brown put the kibosh on raising income taxes. He pledged before any such action a commission would be created to conduct an extensive review of the city’s tax code. The council approved legislation establishing that commission. But Mayor Vincent C. Gray hasn’t made any appointments — although he has proposed a new sales tax and the legislature eventually raised the tax rate on so-called high-income earners.
Pledges aren’t worth much in the District.
Ron Collins, director of the Office of Boards and Commissions, told me he’s “still gathering information on candidates [for the commission] to provide a list of recommendations to the mayor.” That process won’t be completed until “the end of the month.”
“The commission would take an overall look at the tax structure and come up with a more comprehensive approach, instead of doing things piece meal,” said Councilman Jack Evans, head of the Committee on Finance and Revenue. In an Oct. 25 letter to Gray and Brown, he suggested possible appointees, including former Mayor Anthony A. Williams, former Ward 3 Councilwoman Kathy Patterson, Federal City Council executive John Hill, and D.C.’s former economic forecaster Julia Friedman.
There’s plenty evidence of the city’s helter-skelter tax policy method. Gray pushed for a sales tax on food sold in movie theaters without regard for the one that already exists on tickets. Last week, the council held a public hearing on possible changes to housing credits provided to District tax filers. But who knows how adjustments to Schedule H fit within the entire taxing scheme?
The legislature recently hiked the rate from 8.5 percent to 8.95 percent on annual incomes of $350,000 or more. Council members claimed they wanted to prevent retroactive application of a tax on out-of-state municipal bonds, which anchors many senior citizens’ investment portfolios.
That move resulted in a double whammy: Residents purchasing those out of state bonds still must pay a tax on them. Further, if those same residents also earn $350,000 or more, they will pay that higher income tax rate.
District’s officials don’t seem to fully understand the tax burden carried by residents and businesses. They may not even know the impact of work conducted by the 1996 tax review commission. That panel issued a report in 1998 that offered four recommendations, including consolidating four business taxes and providing a more generous standard deduction.
But, when I asked Natalie Wilson, a spokesperson for Chief Financial Officer Natwar Gandhi, what recommendations from the 1996 commission actually had been implemented, she stunned me by being unable to provide an answer.
It’s not acceptable for elected officials to continue to tax without knowledge. Absent the comprehensive analysis that could be provided by the review commission, the District’s tax policies will remain chaotic and, possibly, corrupt. The needs and desires of special interests groups and their lobbyists will take precedent over the best interest of the city.
jonetta rose barras can be reached at [email protected]
Jonetta Rose Barras’s column appears on Monday and Wednesday. She can be reached at [email protected].
