Post-Filing Tax Thoughts

April 16, 2011

Just finished up my tax returns. Feeling grouchy, as I always do when I sign on the bottom line.

So many pieces of paper to riffle through. So many figures to enter. Doubts at some points that I’m putting the right numbers into the right places. Anxieties about potential penalties and audits.

And frankly, the amount I owe makes me feel somehow deprived. But I know this is irrational. Many people apparently don’t.

Every year, long about this time, the Tax Foundation announces Tax Freedom Day — the day when, according to its calculations, workers stop working for the government, i.e., have earned enough to pay all their taxes.

And every year, long about this time, the Center on Budget and Policy Priorities explains why the Tax Foundation’s figures are misleading.

But the whole notion of Tax Freedom Day is misleading because the only people who are working for the government during the time they’re earning what they’ll owe in taxes are government employees.

Our taxes aren’t feeding some abstract entity. They’re paying for programs and services we want — public education, police and fire departments, courts, libraries, parks, highways, reasonable assurance that the plane we’re on won’t blow up or crash into another, breathable air, safe food and drinking water, defense against threats to our national security, a modicum of economic security in our old age, a safety net that protects us and our less fortunate neighbors….

I know I’m leaving out a lot of things we want from our public sector. But point, I hope, is made.

Two things got me started on all this. One is the intense hostility to taxes that we see at both federal and state levels. And I’m not talking about Tea Partiers alone.

The other is how relatively easy it is for me to champion higher income tax rates, fewer credits, loophole closers and the like. Because such reforms would have little or no affect on me.

Let’s say I made $84.5 million last year, like the head of Viacom’s media empire. (Yes, let’s!) Would I still feel that the tax code should be reformed that I pay my fair share?

I’d like to think so. But I’ve just done every legal thing I could to reduce my tax liabilities. And I recall how cheery I used to feel when the home mortgage interest deduction — one of the costliest tax breaks in the federal code — reduced them significantly.

Still, I’d like to see a federal deficit reduction plan that restores more of the pre-Bush tax brackets than just the top two — all that President Obama still seems willing to target.

Restoring equal taxation of investment and employment income would be a good idea too.

Here in the District, I’d back a tax reform plan that put a new bracket low enough to capture more of my income and a property tax more in line with what our Virginia and Maryland neighbors pay.

I know I’d grumble at tax time. So I guess would most people fortunate enough to have a livable income and homes we own.

But a goodly number of grumblers have to get over the view that we can have everything we want — lower deficit, no tax increases that would touch our wallets and sufficient spending on everything we care about.

And those of us who advocate for shared prosperity and economic security — for ourselves, our neighbors and the next generation — have to be willing to put our money where our mouth is.

Yours truly included.


Mayor Gray Doesn’t See Property Or Income Tax Increases Either

March 28, 2011

Just as I pushed the Publish button for my posting on DC Council Chairman Kwame Brown’s views on tax increases, I learned belatedly that Mayor Gray probably shares them.

Patrick Madden at WAMU reports that the mayor said last Monday that he doesn’t “envision” any increase in either property or income taxes. Nor sales taxes, for that matter.

There are other options for revenue raising, he said, but “across the board tax increases — I don’t envision anything like that.”

There are indeed other options. No one, to my knowledge, ever said that property and/or income tax increases should be the only options on the table.

We’ve heard talk again about raising commercial parking fees — a good way to rake in a relatively small amount from visitors and commuters.

The just-released Fair Budget Coalition report for Fiscal Year 2012 recommends two others — a doubling of the District’s hospital bed tax and ending, at long last, the anomalous tax exemption for on out-of-state bonds.

But, I hasten to add, these would be in addition to at least one new top tax bracket for high-income households. Such a reform would not, of course, be an “across the board” increase, though the mayor apparently thinks otherwise.

Nor would an expansion of the sales tax to include theater tickets and services like pet grooming and yoga classes. I stubbornly still believe that this could be part of a sensible solution.

At any rate, the real issue isn’t whether next year’s budget includes any revenue raisers. It’s their structure and the balance between the projected revenues raised and the savings purportedly achieved by spending cuts.

Even former Mayor “No Tax Increases” Fenty put some fee increases into his proposed budgets, plus freezes on several broad-based tax benefits. Virtually all these revenue raisers would have affected low-income residents the most.

And those adopted didn’t raise nearly enough to allow for even level funding of programs and services that meet vital human needs.

The Fair Budget Coalition has singled out just seven that it says make up “the bare minimum of a safety net” and, at the same time, enable those who can to move toward economic self-sufficiency.

Seems to me that protecting these is the very least we can do. And by protecting, I mean ensuring they’ve got enough funds to do what they’re supposed to.


DC Attorneys Oppose Legal Services Cut, But Some Don’t Want To Chip In

May 15, 2010

Yesterday’s Washington Post reports on a breakfast meeting DC Councilmember Michael Brown hosted to discuss the proposed new income tax brackets with residents who would be affected. Also to give them a clearer view of what the tax reform would mean for them personally.

Another aim, it seems, was to test the notion that wealthy residents would flee to the suburbs if their taxes increases. The Post article indicates that some of Brown’s guests debunked it. But “younger residents–mostly attorneys–were opposed” to the tax increase.

Meanwhile, more than half the practice sessions of the D.C. Bar have issued a public statement calling on the Council to reject the proposed cut in funding for the Access to Justice Program.

This is the program that provides free legal services for low-income District residents. It also supports a bank of interpreters for those who aren’t fluent in English and/or have a hearing disability. And it helps attorneys employed by nonprofit legal services organizations pay off their student loans, thus enabling them to work for relatively little pay.

Mayor Fenty has proposed a $1.8 million cut for the program–this on top of the $700,000 cut for the current fiscal year. Together, these would leave the program with only half the D.C. funds it had in 2009.

As I’ve written before, local legal services organizations have been hard hit by reduced funding from other sources. They’ve cut back on both full-time attorneys and staff that support the quantity and quality of legal services they provide. This at a time when even more people need their help.

So the attorneys in a broad spectrum of the D.C. Bar sections understandably want at least level-funding for the Access to Justice Program. Where do the attorneys who oppose a tax increase think the money’s going to come from?

Or maybe I’m seeing a paradox where none exists. Perhaps the up-and-comers at Brown’s breakfast voted against the Bar’s statement, feeling that a couple of hundred dollars of their handsome incomes were more important than equal access to justice.

Fortunately, there are partners at a number of our biggest law firms who are ready to invest in D.C. If you’re a lawyer, you can join your voice to theirs.


At Least Would-Be Mayor Vincent Gray Is Honest

May 12, 2010

One thing I like about DC Council Chairman Vincent Gray. He’s honest when it comes to his mayoral campaign. Some months ago, I recall, he confessed he wasn’t sure he’d run because if he lost, he’d be out of a job.

Now another sterling instance of Gray’s candor. Feisty Save Our Safety Net volunteer Mike Wilson got in his face at a campaign event. Said he hoped the Chairman was with them on the proposed new top tax brackets. Gray said he shared some of their “sentiments.” But he wasn’t sure “the timing is the best.” Not because of the recession, but “well, the elections.”

Is he worried that a majority of D.C. residents would vote against him if he supported the tax increase? Only about 5% of them would have to pay more. A far larger percentage would be affected by the proposed cuts in safety net programs that the increase could avert.

Or is he afraid to get pounded with Mayor Fenty’s claim to have solved the budget gap without raising taxes? Gray has already said, in effect, that the mayor’s proposed budget is smoke and mirrors–putting himself forward as the leader who will, once again, produce a plan that “provides services in a fiscally responsible way.”

And he’s publicly stated his support for pre-K and child care programs for all D.C. infants and toddlers. This in contrast to the cuts the mayor has proposed.

So where will the revenues come from? Seems that Gray is still trying to figure that out. No harm there. But he’s had time enough to decide where he stands on a tax proposal that dates back to last year.

After all, he was quick to decide against one revenue-raising option. All it apparently took was a barrage of e-mails from riled-up health club members for him to announce that he wouldn’t be putting an expansion of the sales tax on the table.

I’ve admired Chairman Gray’s leadership, though I’ve not always agreed with the results. But now he seems preoccupied with how the political winds are blowing and keeping the people who fund campaigns happy–not to mention using the budget deliberations as an occasion for Fenty-bashing.

We need Councilmembers who will stand up for choices that serve the needs of our community as a whole. Will Gray measure up to the “character, integrity, leadership” he claims?