Should DC Support More Affordable Housing … or Less?

July 7, 2014

The DC Council has two bills pending that force decisions on how — and to what extent — local taxpayer dollars should be used to create and preserve affordable housing in our increasingly unaffordable market.

One bill quite clearly would increase the stock of housing affordable to low and moderate-income residents. The other would, over time, have the opposite effect, though it’s doubtful that’s what the sponsors intend.

Leveraging Public Land

A bill introduced by Councilmember Kenyan McDuffie would require private-sector developers that buy or lease District-owned land for multi-family housing to make a specific portion of units affordable for specific categories of low-income residents.

The requirements would apply to both rental housing and condos, but in both cases, only those with 10 or more units.

For housing near a Metro station, major bus route or streetcar line, at least 30% of the units would have to be affordable. A 20% minimum would apply to housing less convenient to public transit.

Those who know how dicey affordable housing requirements can be will be pleased to know that the bill sets quotas. These are all based on the customary 30% of household income and, as is also customary, the Washington-area median income, adjusted for family size.

The affordable unit requirements differ according to the type of housing, as well as where it’s located.

For rental housing, 25% of the set-aside units would have to be affordable for what the bill defines as very low-income households — those whose incomes are no greater than 30% of the AMI. (Those familiar with U.S. Department of Housing standards know them as extremely low-income households.)

The rest of the units would have to be affordable for households in the next tier — 31-50% of the AMI. For a four-person household, this would currently mean a maximum monthly cost of about $1,338 a month.

Half the set-aside for ownership units would have to be affordable for households in this tier. The remainder would have to be affordable for households with incomes between 51% and 80% of the AMI.

These restrictions would remain in place “for the life of the building,” which I assume means for as long as it’s used for housing. (Keep reading to see why this is so important.)

The District would subsidize the affordable units by selling or leasing the land at less than its appraised value. Developers could request waivers from the affordable unit requirements if that, plus other subsidies wasn’t enough.

Cutting Back of Affordability Requirements

A bill introduced by Councilmember Anita Bonds would change rules designed to ensure that condos and single-family dwellings developed with Housing Production Trust Fund subsidies remain affordable for a goodly number of years.

As things stand now, owners of subsidized units generally must sell them at a price that’s affordable to other people in the same income bracket until 15 years have passed — or longer if their purchase agreement says so.

Once the time limit expires, they can sell to anyone at any price. But they must reimburse the Trust Fund for the subsidy that made the home affordable for them. The time limit drops to 10 years if the home is in a high-poverty neighborhood. The repayment requirement remains the same.

The Bonds bill would cap the affordability limit at 15 years, making some types of homeowner affordability programs ineligible.

More importantly, it would reduce the affordability requirement to five years for homes in “distressed neighborhoods.” Owners could then sell at whatever price they could get.

They’d still have to repay the Trust Fund. So it might seem that the subsidy were merely being recycled — repaid by one owner, available for the next.

But in a housing market like the District’s, the second subsidy would often have to be larger. And the cost of subsidizing the creation of a new affordable unit would generally have to be larger yet.

So the repayment wouldn’t fund a replacement in either case — or at least not in the same neighborhood as the unit that got sold at market rate. At best, the Trust Fund would be re-creating affordable homeownership units, rather than expanding the shrunken stock.

Which brings us to the second big problem with the Bonds bill — the definition of “distressed neighborhoods.” It would reduce the definition used for the current 10-year time limit from a 30% to a 20 % poverty rate.

For technical reasons, the rate wouldn’t reflect the current poverty rate, as the DC Fiscal Policy Institute’s Jenny Reed has explained. So we’d have many “distressed neighborhoods” that haven’t been distressed for some time, e.g., Columbia Heights, Logan Circle, parts of Penn Quarter.

The five-year limit would also apply to neighborhoods that will soon be wholly redeveloped — and pricey. I see condos sprouting up near the Navy Yard every time I walk down that way.

The end result would be affordable housing losses in nearly 40% of the District’s Census tracts — the technical definition of “neighborhoods.”

And as housing advocate Angie Rodgers points out, it’s not only prospective homeowners who’d be affected. Any new Trust Fund money invested on their behalf would mean less to subsidize affordable rental housing, which we’re already so short on.

Preserving the current affordability requirements wouldn’t deny homeowners the opportunity to build wealth, as homeownership is said to do. It would merely ensure that future homeowners can benefit from subsidies we’ve paid for to preserve some modicum of diversity and opportunity in our community.

The current law probably isn’t the best way to do this, as Urban Institute housing and community policy expert Brett Theodos (and others) have explained.

But it’s a whole lot better than shrinking the time limits — and over-defining neighborhoods that prospective homeowners might shy away from if they couldn’t turn a maximum profit for 15 years.


Nothing Friendly to Low-Income Families in House Republicans’ Child Tax Credit Reform

July 2, 2014

Republicans on the House Ways and Means Committee took another step in their piecemeal approach to tax reform last week. The focus this time was the individual tax code — specifically, the Child Tax Credit.

No big surprise here, I suppose. We know Republicans have decided they need to show they care about the interests of working families. And what could be more family friendly than a more generous Child Tax Credit?

For better-off families, the Ways and Means bill surely is that. But for low-income families, nothing of the sort. Some millions, in fact, could no longer claim it at all.

What Is the Child Tax Credit?

Like the Earned Income Tax Credit, the Child Tax Credit reduces federal tax liabilities for filers who claim it. In the case of the CTC, those eligible are parents with dependent children under the age of 17. Each of the kids is worth a credit of up to $1,000.

Also like the EITC, the CTC phases in and then out. However, anyone with earned income can claim the EITC. For the CTC, the phase-in currently begins at $3,000.

This threshold isn’t permanent law. It was set by the Recovery Act and extended through 2017 as part of the fiscal cliff deal. Without the extension, the threshold would have been about $13,300 last year — and higher this year because the permanent law provides for an annual adjustment to reflect inflation.

The income level at which the phase-out begins depends on whether the filer is a single parent or married — and if married, whether filing jointly or separately.

The phase-out threshold for a single parent is more than twice the threshold for a married couple filing jointly — $75,000, as compared to $110,000. The threshold for a married person filing separately is simply half the joint filer threshold.

The fact that the threshold for a married couple is less than double the threshold for two single parents is sometimes referred to as a marriage penalty. The penalty here, i.e., the ability to claim the full credit, kicks in only when a single working parent marries — and obviously not always then.

Unlike the EITC thresholds, the CTC phase-out thresholds aren’t indexed to keep pace with inflation. But they’re considerably higher. For example, a married couple becomes ineligible for the EITC when its income is less than half the phase-out threshold for the jointly-filing couple claiming the CTC.

What Does the Ways and Means Bill Do?

The bill House Ways and Means Republicans passed would eliminate the so-called marriage penalty by raising the phase-out threshold for married couples filing jointly to twice the threshold for single parents — $150,000.

The higher threshold would be indexed to inflation, as would the threshold for single parents. The maximum $1,000 per child credit would also increase with the inflation rate.

The maximum credit boosts would, of course, benefit only families with earnings high enough to qualify for the full credit. Many already don’t. In 2011, 23% of children with working parents received only a partial credit, according to a Tax Policy Center brief.

These changes would all become permanent law — at an estimated cost of nearly $115 billion over the first 10 years. Again, no offset, since tax breaks seem to have a privileged status.

But not altogether. The CTC improvements initiated by the Recovery Act would be left to expire. So the threshold set in permanent law would kick in at the end of 2017, with all the inflation adjustments since it was temporarily superseded. And that qualifying threshold will rise — and rise — because there will be ongoing annual adjustments.

How Would the Bill Affect Low-Income Families?

As of 2018, families earning less than about $14,500 wouldn’t qualify for the CTC at all, according to the Center on Budget and Policy Priorities’ analysis of the bill.

A single mother with two children and that $14,500 a year income would lose $1,750. Parents with somewhat higher incomes would lose as well, since their credits would, as now, be calculated on the basis of how much they made over the threshold.

At the same time, a married couple with two children and a joint income at the new phase-out threshold would gain $2,200. And families with considerably higher incomes would still qualify for a partial credit.

Looking forward to 2023, the Tax Policy Center projects that more than two-thirds of the credit, in dollars, would benefit families in the top two-fifths of the income scale.

The refundable Child Tax Credit lifted about 3 million people — more than half of them children — above the poverty threshold in 2012, according to another CBPP analysis.

Without the Recovery Act improvements, roughly 900,000 more people would have been officially poor. This, as I’ve often remarked, is very poor indeed.

One can understand then why no Democrats on the Ways and Means Committee voted in favor of the misnamed Child Tax Credit Improvement Act.

Improvements friendly to better-off families, for sure. But as in the past, Republicans don’t extend their friendliness to families at the bottom of the income scale — not even those who work.

UPDATE: The House Rules Committee added a provision to this bill that would deny the CTC to parents who file using an Individual Tax Identification Number, rather than a Social Security number. These are mostly immigrants. According to recent estimates, about 5.5 million children would lose the credit. All but about a million are U.S. citizens.

 


Lots of Solutions to Long-Term Jobless Crisis. But Bipartisan?

June 30, 2014

A panel discussion hosted by the Congressional Full Employment Caucus took on the plight of long-term jobless workers. The big push — and push-back — as you undoubtedly know, has centered on the need to renew their federal unemployment benefits.

But even if — big if — Congress does renew them, long-term jobless workers will still face daunting challenges in the labor market.

These have everything to do with how long they’ve been unemployed — and virtually nothing to do with anything else.

A recent analysis by panelist Heidi Shierholz at the Economic Policy Institute found that long-term unemployment rates were considerably higher last year than in 2007 for every group — age, education level, race/ethnicity, gender, prior type of occupation and industry.

So “it’s not something wrong with the workers,” she said. And her fellow panelists agreed. Their main business, however, was to identify “proven bipartisan solutions to the crisis.”

I wish I could say that I came away believing that the ideas they teed up would, in fact, gain bipartisan support in Congress.

As panelist Judy Conti at the National Employment Law Project said, there is a bipartisan consensus on the problem to solve — not enough jobs for everybody who needs one.

But that’s about as far as it goes. Conti mentioned what are generally partisan splits over how job-creating measures should be paid for — by closing corporate tax loopholes, for example, or by cutting other federal spending.

The split, I think, goes deeper than that. We’ve got Republicans going on about the job-killing effects of the Affordable Care Act, other regulations that are strangling businesses, etc.

Democrats, on the other hand, talk of more federal investment — in infrastructure, education, clean energy and other cutting-edge technologies. They’d like to channel more money to state and local governments for police and firefighters.

They want to change provisions in the tax code that effectively subsidize the costs of off-shoring jobs, as well as others that enable corporations to significantly reduce — or altogether eliminate — their federal tax liabilities.

And, of course, they want long-term unemployment benefits renewed — not only because jobless workers and their families need them, but because they create and/or preserve jobs.

This is because people who receive the benefits generally perforce spend them on basic needs. So demand for goods and services rises. More demand translates into more jobs — and more jobs into more demand.

This, I take it, is the same basic premise underlying the call for more investments. It also underpins another solution Shierholz mentioned — action that would deter other countries from manipulating their currencies so as to make their exports cheaper and imports from the U.S. costlier.

What’s not altogether clear is whether more jobs would solve the long-term unemployment crisis, unless there were so many more employers needed to fill that they couldn’t continue to screen out applicants who’d been out of work for some time.

Happily, panelists also had some thoughts about how to level the playing field.

One already underway is somewhat similar to the subsidized employment programs most states created, using money from the now-expired TANF Emergency Contingency Fund that was part of the Recovery Act.

Two other solutions are already pending in Congress. An uphill battle there. One would prohibit employers from using credit checks as a screening tool. It’s not specifically for long-term jobless workers, but for obvious reasons, they’re more likely than others to fall behind on their bills.

The other would undo a Supreme Court ruling that makes it extraordinarily difficult for older workers to prove age discrimination — apparently a reason that so many who become jobless remain so.

Though I’ve referred to these solutions as leveling the playing field, the last two could also be viewed as preventive measures.

Another explicitly endorsed by two panelists (and a third who couldn’t participate) would also tend to prevent unemployment — and thus the risks of its becoming long term.

It’s commonly known as work sharing. And federal funds are temporarily available for states that adopt it — or modify their existing programs to comply with the Department of Labor’s standards.

Under work sharing, employers may reduce workers’ hours, with their consent, rather than lay them off when business is slow. What the workers lose in wages is partly made up for by unemployment benefits.

This is obviously better for workers than getting fired. And better for employers because they don’t lose experienced workers — and incur the costs of hiring and training when business picks up again.

Work sharing isn’t new, but we’ve been hearing more about it, thanks to the Great Recession — and ongoing labor market woes. It’s often cited as the reason Germany’s unemployment rate didn’t spike, though its economy was hard hit.

Even though our unemployment rate is inching down, there are still about 1.5 million layoffs a month, Shierholz told us. So work sharing could still save a lot of grief.

And it enjoys support from lead economists at the right-leaning American Enterprise Institute and the decidedly left-wing Center for Economic and Policy Research. Bipartisan in this respect, at least.

Lastly, Conti reminded us that jobless workers used to have to pick up their unemployment benefits checks. Office staff told them about suitable openings and sometimes helped them in other ways.

Such individualized, in-person services have dwindled — at least partly due to cuts in federal funding for the One Stop Career Centers.

A greater investment in these services would more than pay for itself, NELP says — in unemployment benefits saved, tax revenues collected and reduced social and human costs.

We see a glimmer of bipartisan support for more robust reemployment services in the new “bipartisan” bill to renew long-term unemployment benefits, as in the bill that recently died in the House.

Ultimately, I suppose, it all depends on what we mean by “bipartisan.” A number of the panelists’ solutions have — or could gain — support from some conservatives. But substantial support from both parties in Congress is a whole other matter.

 


Amendments to DC Homeless Rights Law That Shouldn’t Be Needed, But Are

June 26, 2014

The DC Council Committee on Human Services will soon hold a hearing on a couple of bills affecting homeless families in the District. At least one — the Dignity for Homeless Families Amendment Act — shouldn’t be necessary. But it is.

The bill doesn’t do something else that shouldn’t be necessary, but also is. Advocates will argue strongly for an amendment. And the committee should adopt it.

The bill clarifies what the Homeless Services Reform Act means when it says families should be sheltered in a private room, if no apartment-style units are available.

A “private room,” the bill says, has to have “four non-portable walls, a ceiling and a floor that meet at the edges,” a door, with an inside lock, as its main point of access, lights that occupants can turn on and off from within the room, and so forth.

Well, whoever thought a private room was something different? Apparently the Department of Human Services.

In late January, it resorted to warehousing homeless families in recreation centers, separated from one another by flimsy partitions on the sides, but open at the top — and to anyone who felt like walking in.

Families got a reprieve when an administrative law judge ruled that the spaces weren’t rooms. Shortly thereafter, a Superior Court judge told the agency it couldn’t place any families in rec centers — at least until he issued a final decision in the case.

But the Gray administration has said it will contest the rulings, indicating that it wants to preserve the option. No surprise here, since families placed in the rec centers generally stayed only a couple of nights, if that. And others, hearing of the placements, decided not to ask for shelter.

Some I’ve heard went back to dangerous situations, including living with abusers. One mother and her children started spending nights in a stairwell again. And so the Mayor’s people concluded that the homeless family crisis was over — or had never existed.

The bill’s sponsors clearly want to put a permanent end to this form of diversion. But, as I mentioned, they’ve got more work to do.

Because long about the time DHS came up with the rec center “solution,” it also began requiring all newly-homeless families to reapply for shelter every day — and re-sheltering them for another night only if it had no legal alternative, i.e., because the outdoor temperature put them at risk of freezing to death.

The HSRA doesn’t unequivocally grant homeless families a right to remain in a shelter — or a motel room — once they’ve been placed there. This, however, had been government policy since at least 1996, shortly after the law was passed.

One can understand why. Homeless families face many risks besides freezing when they have no safe place to stay —  abuse by people in homes they’ve perforce returned to or by strangers who come upon them in stairwells, for example.

Parents can’t look for work — or keep the jobs they have — if they have to spend part of each day sitting around in the intake center.

Those who participate in the Temporary Assistance for Needy Families program, as many do, can’t comply with their work preparation requirements — something you’d think would concern DHS, which has made such a much of its efforts to help “more families in making the climb to self-sufficiency.”

Bad as these things are, the harms to children are probably worse. We know that homelessness itself puts them at high risk of emotional and behavioral problems. For this reason, as well as others, many fall behind in school — and eventually drop out.

A root cause is the stress and insecurity children experience when they don’t have a stable home base. How much greater when they have to pack up every morning and don’t know where they’ll spend the night.

The big picture, of course, is that the District must do more to prevent family homelessness — and more to ensure that when it’s unpreventable, it’s brief and non-recurrent. Both will require larger investments than the Mayor and the Council seem prepared to make.

But at the very least, the Council can accord families the “dignity” of a genuine private room they can stay in until they’re able to move into an affordable place of their own.

Better for them, especially the children — and ever so much better for our community than the efforts, abortive and otherwise, to keep them out of the shelters that are supposed to protect them from harm.

 


Congress Moves Toward a Better Workforce Development System

June 23, 2014

Congress may soon do a remarkable thing — pass a significant, non-urgent bill on a bipartisan basis. We can’t be sure, of course. But advocates are justifiably hopeful.

The bill I’m referring to would reauthorize the Workforce Investment Act — the single largest source of federal funds for a broad range of programs and services that help people prepare for and find work. Or looked at another way, that provide employers with workers whose skills match their needs.

WIA hasn’t been reauthorized since it was created in 1998. Needless to say, the labor market has changed since then, as have the needs of people who want to enter it, re-enter it or move up from dead-end, low-wage jobs.

That’s not all that’s changed. State and local agencies have gained experience — not altogether happy — with the administrative complexities the current law imposes.

And experts have noted some perverse incentives, created partly — but not entirely — but funding cuts that predate the Budget Control Act caps and across-the-board cuts. Those, of course, have only made matters worse.

Most importantly perhaps, thinking about how workforce development programs should be structured has evolved. So have views on how public agencies and their contractors should be held accountable — and for what.

All of which brings us to the proposed Workforce Opportunity and Investment Act — proclaimed by key Republicans and Democrats both as a “bicameral, bipartisan … deal to improve the nation’s workforce development system.”

Getting to this point wasn’t easy. Last year, House Republicans crafted — and with scant help from Democrats, passed — a bill that would have eliminated 35 WIA programs and effectively rolled the rest into a block grant, with funds frozen for seven years at the Fiscal Year 2014 level.

The effect, as the White House said, would have been to shortchange the needs of “vulnerable populations” who face “significant barriers to employment.”

So one of the best things we can say about the new bill is that the block grant is dead. The basic WIA structure remains the same, ensuring that each top-level component — job training, employment services, adult basic education and vocational rehabilitation for people with disabilities — gets funding.

At the same time — and here’s where things get interesting — states must develop a single, comprehensive plan for all “core” programs for both eligible youth and adults, including those with disabilities and those who are “dislocated,” e.g., have been laid off or soon will be.

Local Workforce Investments Boards — also sometimes known as Workforce Investment Councils — must then develop plans that align with what their state has produced.

What we see here isn’t just administrative streamlining. The unified plan requirement will tend to break down silos, e.g., between the agency that administers the one-stop employment services centers and the agency that administers adult education.

Beyond this, the bill establishes a clear preference for a career pathway approach to workforce development.

Basically, this approach involves a continuous, interlocking series of programs and services that enable participants to move from wherever they are to successively higher levels of education and employment in a particular industry or occupation that offers significant opportunities in the area where they live.

Services here may include various “needs-related payments” that enable recipients to get — and stay — on their pathways, e.g., transportation subsidies, child care. Also included are diverse hands-on work experiences, paid as well as unpaid.

More generally, the bill eliminates the current sequence of services for adults — an approach that reserves “intensive services” like job counseling for those who haven’t gotten jobs through basic, limited services and training only for those who are still unemployed, despite the intensive services.

The bill requires not only a single, unified plan, but a single set of accountability measures for all core programs serving adults and another set for youth-specific programs.

For adults, this will mean tracking participants according to various success measures. How many secure — and retain — unsubsidized employment, for example, plus their earnings. How many gain additional credentials and/or marketable skills.

Somewhat similar measures for disadvantaged youth — a category that will be broadened to include young adults up to 25 years old.

And, very importantly, results for subpopulations must be reported separately, including each group the bill defines as having a barrier (or barriers) to employment, e.g. homeless people, recipients of major safety net benefits, ex-offenders, single parents, individuals with disabilities.

This is one, though not the only way that the bill seeks to ensure sufficient attention to people for whom a job listing and perhaps some short-shot training won’t be enough for them to gain employment — let alone prospects for advancement.

Well, there’s a lot more in the bill — all 811 pages of it. And a lot of it, including what I’ve tried to summarize is very complex. So I’ll note just one other feature.

WIA authorizes Congress to spend “such sums as are necessary” — in other words, however much (or little) it chooses in any given year. Mostly how little. Funding, in real dollars, was more than 30% lower last year than in 2002.

The Workforce Opportunity and Investment Act specifies authorized, i.e., permissible, funding levels for each major component and for each of the six years it covers. These would generally bring funding back to Fiscal Year 2010 levels by Fiscal Year 2017, according to a National Skills Coalition brief.

But, as NSC also says, it’s very unlikely that programs will be funded at the authorized levels if Congress lets the caps and related cuts continue as currently mandated.

So a bipartisan, bicameral bill that’s a whole lot better than what we’ve got now, but not enough money to appropriately serve the many millions who could benefit — unless Congress does something even more remarkable.

 


“Endless Weeks of False Hope and Promises,” As Jobless Workers Grow Desperate Without Unemployment Benefits

June 18, 2014

A fellow District of Columbia resident writes, “Where to start … the abrupt termination of emergency benefits, or the endless weeks of false hope and promises.

“I have no money to get to interviews…. I also have no money for phone, no money to even keep up my personal hygiene. For over 11 years, I was steadily employed at $40K-$55K, and now I’m soon to be homeless.”

This is one of well over 2,000 stories that struggling jobless workers have shared with the Center for Effective Government.

They speak of selling belongings, including a wedding ring. They speak of living without hot water, having electricity, phone service and/or internet connections cut off — of actually becoming homeless.

And they speak of ongoing, frustrating efforts to find employment — any job at all, some say, though like my fellow District resident, many used to earn a comfortable living.

Meanwhile, House Speaker John Boehner has run the clock out on the stop-gap bill to renew Emergency Unemployment Compensation that the Senate passed in early April.

The bill covered five months of EUC benefits, back-dated to when they expired at the end of last year. So the benefits it provided would have ended more than three weeks ago.

Supporters had hoped that the bill would buy time for negotiations on a further extension. Surely justified. Notwithstanding newsworthy job growth, there are still nearly 3.4 million people who’ve been job-seeking for more than 27 weeks.

Only two state unemployment insurance programs provide benefits for this long — and none for much longer.

So at this point, more than 3 million have lost their unemployment benefits since EUC expired, as the counter House Ways and Means Democrats have posted. Look at the numbers roll — about one more worker cut off every 8 seconds, 72,000 or so a week.

Well, I don’t suppose I need to convince you of the mounting crisis — not only for jobless workers themselves, but for their families.

The question is, what will convince Speaker Boehner to let the House vote on an EUC bill? Not apparently some bipartisan job-creating measures to go with it, since he shrugged off the Secretary of Labor’s invitation to discuss what those might be.

The campaign I wrote about earlier hasn’t let up. We’ve been tweeting House Republicans weekly, urging them to tell their leader it’s time — past time actually — for a vote.

Not only the Center for Effective Government, but House Ways and Means Democrats have been collecting stories — many begging Congress for help.

Last Wednesday marked a new phase in the campaign — the first of what will be seven weekly events on the grassy triangle in front of the House side of the Capitol.

Witness Wednesdays they’re called because they center on readings of stories collected — all participants bearing witness to the suffering of our fellow Americans, who, as one of them says, are “swimming as hard as … [they] can, yet … still drowning.”

I joined the crowd for the first event. It was a heart-wrenching — and at the same time, rousing — experience, as you can see.

Thankfully, the organizers and the many other groups supporting the cause aren’t counting on touching Boehner’s heart — or if you prefer, pricking his conscience. Nor, I think, are they counting on pressure from his colleagues to get a standalone bill on the floor.

We perhaps see a glimpse of the Democrats’ strategy in a recent donnybrook in the Senate. Senator Jack Reed, who’d partnered with Senator Dean Heller to negotiate the five-month EUC bill, planned to attach a year-long renewal to the bill extending expiring tax breaks.

Republicans blocked a substantive vote on the bill because House Majority Leader Harry Reid wouldn’t allow them to add amendments.

But the tax extender bill is one of those so-called must-pass pieces of legislation. And there are others — a bill of some sort to avert a government shutdown at the end of the fiscal year, for example, and another to keep funds flowing to road and public transit projects.

So we may see an EUC extension after all. Senators Reed and Heller are reportedly working on a new bill — this time, prospective only. No compensation for benefits already lost, though that might avert some further emergencies.

The challenge again is to find an offset that would satisfy most Democrats and enough Republicans to get the bill — or amendment — passed.

Because we know that Senate Republicans, as well as their House counterparts, will insist the benefits be fully paid for though they’re willing enough to extend tax breaks with no offset whatever.

Meanwhile, the clock is ticking — and the number of jobless workers with no source of cash income rising. Members of Congress will go home in about six weeks and stay there until after Labor Day.

So even if EUC is ultimately resurrected, jobless workers who’ve already said they’re facing foreclosure or eviction may be homeless. And who knows how many more will find their job searches frustrated because they can’t afford gas or public transportation to get to interviews?

This is all so pathetically unnecessary. No wonder that two-thirds of American voters have a higher opinion of lice than of Congress.


DC Fitness Club Owners Again Up in Arms Over Sales Tax Expansion

June 16, 2014

Once upon a time, not so long ago, the District of Columbia faced a severe revenue shortfall. Balancing the budget — as the District, like virtually all states must — required deep program cuts, unless laws were modified to collect more taxes.

The DC Fiscal Policy Institute and allies recommended, among other things, an expansion of the sales tax to at least some of the services that were perplexingly exempt — fur storage, for example, and homes-away-from-home for fur-bearing pets.

Word got out that the DC Council just might tax some of the exempt services. And next thing you knew, Councilmembers were barraged with e-mails from people who worked out at gyms and/or took for-fee yoga lessons — these orchestrated by the business owners, of course.

For this, as well as other reasons, the Council decided to increase the sales tax rate, but leave services alone.

Now we’re being treated to another round of outrage because a Council majority has voted to apply the sales tax to “health clubs,” as well as five other types of services.

This time, the sales tax expansion would partly offset revenues the District would lose by adopting other recommendations made by the Tax Revision Commission.

Most of these would cut personal income tax liabilities for low and moderate-income filers. But there’d also be a reduction in business franchise taxes — presumably a boon to the unhappy fitness club owners.

Clearly, the tax cuts must be offset. Otherwise, the District would be left with many, many millions less for essential programs and services.

And clearly, the fitness club members will have considerably more money in their pockets to pay the 5.75% tax on their dues — on average, $36.33 a month for those with adjusted gross incomes in the $50,000-$70,000 range, according to Council Chairman Phil Mendelson.

What’s now a $70 a month gym membership would cost an extra $4.01 — less than the cost of two short lattes at Starbucks.

But, says the Yoga Alliance, the District would be “taxing essential healthcare.” A “wellness tax,” one of the several petitions calls it. This makes about as much sense as saying that the sales tax on my daily newspaper is a tax on literacy — or informed citizenship, if you prefer.

We’re asked to worry especially about lower-income residents — people “on the fringe,” as one fitness club owner calls them.

Those folks over in the east part of the city have “ZERO full-service gyms,” exclaims another petition. And the smaller operations there “don’t need another reason to have fewer customers,” especially when obesity and diabetes rates are higher in low-income areas.

Might this have something to do with the fact that many who live there can’t afford a healthful diet, let alone a health club membership? Is there no way to get exercise except at a members-only gym or in a yoga class?

The so-called yoga tax will bring in an estimated $5 million in the first year it’s effective. Where will that $5 million come from if the fitness club folks get their way — or the additional millions in years to come?

From the “record [revenue] surpluses,” Councilmember Jack Evans says — as if we don’t have better uses for the money, e.g., affordable housing for homeless residents. As if the latest recession is the last we’ll ever have.

But it won’t be. Sooner or later, the mayor and the Council will again have a tough time balancing the budget. As always, programs that serve the needs of low-income residents will be especially vulnerable.

So, says Citizens for Tax Justice, will businesses whose goods and services aren’t exempt from the sales tax — and, of course, their customers. But there will be “less pressure to jack up the sales tax rate” if the base is broadened now.

In other words, giving the fitness club owners a free pass will shift the burden to other business owners — and to residents who’ve got no choice but to buy certain taxable items, e.g., toilet paper, soap, diapers.

All this said, I understand how the health club owners could feel picked on. As I said, their services are one of only six types the Council’s plan would tax.

The group seems to me oddly arbitrary — carpet cleaning, home water delivery, car washes, billiards parlors and bowling alleys, storage locker rentals, plus tanning studios, which are lumped together with health clubs.

An expert retained by the Tax Revision Commission identified these — apparently because he thought they’d be difficult for residents to purchase untaxed. But he also recommended two the Council will leave tax-exempt, unless the package changes before the final vote.

Notwithstanding the rationale, I find the choices over-selective. People who have to store their belongings because they’ve lost their homes will pay the sales tax. People who store their fur coats still won’t.

People who have their cars washed will pay the sales tax. People who have their dogs washed still won’t. People who go bowling will pay the sales tax. People who go to the ballet still won’t.

Merely examples from a list that’s perhaps a bit outdated, but still fairly accurate. There are more than eighty tax-exempt services on it.

Seems to me the better approach would have been to begin with the presumption that services would be taxed and then selectively exempt those for which there’s a compelling reason. Health club memberships wouldn’t qualify in my book, but bona fide healthcare would.

 

 


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