What’s So Bad About Raising Taxes?

Washington Examiner columnist Harry Jaffe warns against raising D.C. taxes. Doing that, he says, is a “prescription for disaster.”

The main reason he gives is that bond rating agencies just told city representatives not to do it–or to rely on one-time cuts. They want cuts in core programs like education and human services.

Granted, the District has to protect its bond rating. But does this mean that Wall Street financial interests should decide what kind of community we live in? Because that’s what’s at stake as the City Council goes about revising the Mayor’s budget proposals.

Let’s just say, for the sake of argument, that raising certain taxes could, as Jaffe asserts, cause some businesses to flee to the suburbs. Does this mean that all taxes should be off the table?

Take, for example, Councilmember Jim Graham’s proposal to raise the top individual income tax rate. I can’t see why this would prompt businesses to relocate. Nor do I think wealthy residents would take flight.

As the DC Fiscal Policy Institute has reported, the new top tax rate Graham has proposed would still be lower than the top rates paid in both Montgomery County and Prince Georges County. As for Northern Virginia suburbs, the property taxes there offset the lower income tax rate.

Of course, income taxes aren’t the only way to raise revenues. DCFPI suggests eliminating the sales tax exemption for theater tickets and promises more to come. The new message from the Coalition for Community Investment suggests we won’t have long to wait.

The bottom line is that the Mayor has proposed cutting some $52 million from safety net programs. And some Councilmembers seem to be whetting their knives for more. A mix of targeted tax reforms and expenditure cuts that spare our fraying safety net would be smarter.

Sure, none of us likes paying taxes. But do we want to live in a community that doesn’t take care of all its residents? Will the business environment be improved with more homeless people on the streets?

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