A D.C. Council member on Tuesday proposed increasing income taxes for the District’s highest-earning residents, saying it was preferable to digging through the city’s budget for savings.
Graham introduced legislation, the “Equitable Income Tax Act of 2009,” which would create a new tax bracket for D.C. residents who earn a half-million dollars or more.
A D.C. resident who earns $1 million today pays $2,200 plus 8.5 percent of the excess more than $40,000, or roughly $86,000 a year. Under Graham’s plan, that person would pay a $5,000 base, 8.5 percent for everything between $40,000 and $500,000, and then 8.9 percent on everything over $500,000 — or about $90,800 annually, according to Graham’s staff.
Graham said his bill would generate more than $35 million a year, citing an analysis provided by the Office of the Chief Financial Officer.
As he introduced the measure, Graham cited the 138 job cuts proposed for the Department of Public Works, the potential end of Emancipation Day as a legal public holiday, the $51-a-year fee for the maintenance of streetlights, and other revenue-raising and -slashing measures found in Mayor Adrian Fenty’s fiscal 2010 spending plan. “I don’t want to have these savings,” Graham said. “I want to find new revenues.”
Ed Lazere, executive director of the D.C. Fiscal Policy Institute, agreed.
“It’s better to raise taxes on high-income people than to cut services for poor people,” he said.
But no other council member co-sponsored Graham’s bill.
“I don’t think that we should rush into tax increases,” said at-large Councilman Phil Mendelson. “The District has worked hard to reduce the tax burden to become more competitive. I am a supporter of progressivity, and what Mr. Graham has proposed is progressive, but if we’re going to go there, it ought to be part of a more deliberative tax strategy.”
Raising taxes to fill budget gaps “is just bad policy,” said Ward 2 Councilman Jack Evans, chairman of the Finance and Revenue Committee.
“We’re not doing it,” Evans said. “We’ve got our rate down to 8.5 [percent], and my goal is to get it even lower to be even more competitive.”
