Plans for tax increases gained traction during a daylong public hearing on deep cuts proposed by the mayor to close a $188 million budget shortfall. The pressure to raise new revenues was brought to bear by a group of unions and community organizations that proposed a 1 percent tax increase on city residents who earn more than $200,000 a year. That plan isn’t likely to gain the support of council members, but several council members did say they backed raising taxes. The council, which has one week to sculpt Mayor Adrian Fenty’s proposals, heard from more than 140 witnesses on Tuesday, all of them begging that their programs not be axed.
Ward 1 Councilman Jim Graham frequently discussed his plan for a smaller tax increase on wealthy residents. He also raised the possibility of increasing taxes for drivers who rent space in underground parking lots. At-large Councilman Michael Brown voiced support for a plan similar to Graham’s tax on the rich. Other council members weren’t specific but made clear they support a tax increase.
| D.C.’s current tax rates: | |
| $0-$10,000: 4% | |
| $10,000-$40,000: 6% | |
| Over $40,000: 8.5% | |
| Proposal: | |
| $40,000-$200,000: 8.5% | |
| Over $200,000: 9.5% | |
No council member, however, was more forceful with his vision than at-large Councilman David Catania, who wants to raise taxes for every D.C. resident.
“Why isn’t it a better idea that everyone contribute a little than a few everything?” Catania asked rhetorically. He later said the proposals for taxing the rich were emblematic of “what is wrong with this country where now for years we believe that we can have what we want as long as someone else pays for it.” For Catania, “you lose all legitimacy with me whatsoever, the volume goes off, when you come and say I want this, but someone else should pay for it.”
Chief Financial Officer Natwar Gandhi reviewed the proposed 1 percent tax increase and determined it would raise $45.1 million this fiscal year and more than $330 million through fiscal 2015. The District’s top tax bracket currently pays 8.5 percent. Maryland residents earning $1 million or more are taxed at 6.25 percent. Virginia’s top rate is 5.75 percent for income above $17,000.
The group proposing the 1 percent tax hike was led by the DC Fiscal Policy Institute. Ed Lazere, the institute’s director, said about 39 percent of Fenty’s cuts affect programs for the poor when those programs comprise 26 percent of the budget.
“We as a coalition think there are better choices,” Lazere said after testifying. “There can be a better balance of cuts and revenue increases.”
