DC Council Poised to Give Away Needed Tax Revenues

One hand clapping for the DC Council. Last week, it postponed a vote on a bill that would provide a double dose of property tax relief for homeowners. But it only postponed the vote. And it approved another that has no more justification than the first.

The postponed bill, sponsored by Mayor-hopeful Jack Evans, would cap annual property tax increases at 5%, instead of the current 10%. At the same time, it would eliminate the requirement that homeowners pay at least 40% of their home’s assessed value.

The DC Fiscal Policy Institute raised three concerns about the proposal. Basically, it would:

  • Disproportionately benefit owners of the priciest homes.
  • Produce widely disparate taxes on homes with the same value because there’d no longer be a minimum tax rate to moderate the differences.
  • Benefit only homeowners, though most District residents are renters and thus pay property taxes indirectly, through their rent. So we’d have yet another disparity, also tilted toward higher-income residents.

Councilmember Evans argues that no one gets an annual 10% raise. “So the government is just taking more and more of our money” — as if the government doesn’t spend the money on services for us. Besides, he says, the government doesn’t need it “when we have record high surpluses.”

Well, we’ve had surpluses in the last several years. But to say the government doesn’t need all the revenues it’s collecting is to ignore many under-funded program areas.

Too many to cite in a blog post. Anyone who lives in the District or follows what goes on here in the nation’s capital knows that larger investments in a range of programs would alleviate hardships and do more to level the playing field for low-income residents.

It’s not only that we’ve got plenty of good uses for the tax revenues that Evans and cosponsors want to give away — $32.5 million in the first four years alone. We can look forward to further shrinkage in what the federal government provides.

Though the recent budget deal suspended sequestration, it will still provide less funding for non-defense programs that depend on annual appropriations than the severe pre-sequestration cap set by the Budget Control Act. And there will be even less next year — nearly 17% less in real dollars than what was available in 2010.

So we’ll probably need more local funding just to sustain what we’ve got — and would even without federal cuts, since programs generally cost more to operate over time.

At the risk of making this post a total downer, I feel the need to add the virtual certainty of another recession, perhaps only a couple of years from now. More safety net needs then and less tax revenues too.

And if past is prologue, programs for low-income people will take the biggest hits — bigger I would guess if our policymakers have deliberately given away tax revenues.

Similar objections can be raised to the property tax proposal the Council did pass. This one altogether exempts homeowners 75 and older from the tax if they’ve lived in the District for 15 years, unless their income exceeds $60,000 a year.

Speaking as a senior homeowner, though not one yet old enough to qualify, I see no reason why age should give someone a free pass. An income low enough to make the property tax an excessive burden is a different matter.

For that, the District has a tax relief provision — Schedule H — which benefits both homeowners and renters, regardless of age. The Council has already passed and funded changes that will make more residents eligible and give them a larger tax credit.

And for us older homeowners, the District cuts our property tax in half so long as the adjusted gross income of everyone living in the house is less than $125,000 and we own at least half of it.

Not, you’ll notice, a benefit restricted to low-income seniors for whom the property tax may be a budget-breaker. Nor is the exemption of Social Security benefits from D.C. income taxes — a tax break for even the very wealthiest.

So the District is already “helping those who need help,” as Councilmember Bonds says the new exemption would do — and some who don’t, as her bill would also.

And again, it will mean less money — reportedly $21 million over the first four years — to provide help to those who need it most.

As DCFPI notes, the DC Tax Revision Commission spent 18 months looking at the District’s taxes and decided no changes in residential property taxes were needed — understandably, when they’re already lower than any others in the region.

The Commission did recommend changes that would actually benefit low-income residents. Hard to see how the Council could enact these and still balance the budget if it gives away more property tax revenues.

The Council will have to vote on the Bonds bill again, as it must for virtually all legislation. Now that it’s shown its sympathy for us seniors, I hope it will defer to the Tax Revision Commission and leave better than well enough alone.

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3 Responses to DC Council Poised to Give Away Needed Tax Revenues

  1. […] Revenue lost from property tax breaks could do some good (Poverty & Policy) […]

  2. danmac says:

    As a 75 year old DC resident who has an income greater than the 60 thousand I agree with Ms. Baer, we seniors are well treated tax wise by DC and more revenue invested in meeting DC needs is required not less.

  3. Kathryn Baer says:

    Thanks for weighing in, Dan. I think we older residents who are comfortably situated have unique credibility on this issue. So it’s important we speak out.

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