Dear Commissioners and Staff of the Tax Revision Commission,
I write on behalf of DC Action to submit comments for the record reacting to proposals being considered by the District of Columbia Tax Revision Commission. DC Action - and the 200+ organizations we collaborate with - works to make the District of Columbia is a place where all young people grow up safe, resilient, powerful and heard; the District’s public policies - and budgets - must support kids at every step from early childhood to early adulthood. As the Commission finalizes its work, we hope that we can count on you to put forward a robust package of proposals that thoughtfully advance racial equity and make our tax code more progressive. It is imperative for the Commission to advance revisions that raise revenue and enable the District to fully invest in the programs children and families need to reach their full potential.
The District has made progress in recent years at reducing child poverty, thanks to strategic and sustained public investments. Unfortunately, DC still has some of the most extreme racial and economic inequality in the country. The negative effects of poverty, housing insecurity, hunger, and inadequate access to opportunity for children and families cannot be overstated.
To combat hardships facing District families, DC Action strongly supports making changes to the tax code that will raise new and sustainable revenue to institute a local child tax credit, raise SNAP benefits, guarantee universal affordable child care and out-of-school time programs, and end youth homelessness, to name just a few priorities. Collectively, these policies will require hundreds of millions of dollars in public investments, and this is on top of budget pressures already facing the District like paying our fair share for the Metro, raising educator pay, ending homelessness for all residents, and improving the reliability of basic government services.
The District must be all-in on a tax system that is focused on meeting human needs and ending intergenerational poverty. While, yes, the tax code is in need of modernization and simplification, any change must prioritize progressive revenue generation strategies that enable the District to make meaningful investments in programs and services that provide resources to Black and brown children and families, in particular, those who live in neighborhoods with a history of underinvestment due to systemic racism. The District’s competitiveness, vibrancy, and economic resilience depend on implementing policies for District residents that root out poverty and inequality.
In addition to the positive investments and revenue raising changes to the tax code that we are advocating for, we also want to raise concern about some of the proposals before the Tax Revision Commission that risk making our tax code even more unequal or shrinking the District’s revenue base. The Commission should oppose these types of proposals, especially given the need to avoid funding cliffs due to the loss of American Rescue Plan Act (ARPA) and other federal COVID-19 recovery-related dollars that expire as soon as the end of Fiscal Year 2024.
Specifically, DC Action opposes:
- Cuts to the corporate franchise tax (DC's corporate income tax). The previous tax revision commission cut these rates and, to date, there’s no evidence they worked to attract or retain business, or to promote economic growth. Moreover, this largely amounts to a giveaway to big, multi-state and multinational businesses who are supposed to pay the corporate tax.
- Tax cuts for wealthy estates. The District should be increasing its taxation of wealth. Wealthy estates got a huge windfall under the Trump tax cut package. If anything, federal cuts give the District room to lower the wealth exempted from the tax and to raise the rates on estates when a wealthy person dies.
- Tax incentives that have not been vetted, especially massive breaks like those given in Puerto Rico that exempt wealthy investors from income, property, and capital gains taxes for 15 years. Big tax giveaways for wealthy investors will only exacerbate extreme inequality. It is wildly unfair that wealthy people would get a chance to live in the District without paying their share of taxes at the same time they profit massively from their ability to buy up property and land that is needed to solve our affordable housing crisis.
- Trickle-down tax incentives and subsidies given to broad business interests that are poorly targeted, not data-driven, duplicative, or that are better achieved through policies or programs that provide support directly to lower income workers, tenants, homeowners - and aspiring homeowners - or small business entrepreneurs.
- A race to the bottom in terms of tax rates based on fear-driven competition with Virginia and Maryland. The District of Columbia has so much to offer businesses and the region, with its density of universities, educated residents, government institutions, and excellent public transit system. In 2023, DC was ranked the 8th best state economy in the nation by Wallet Hub, better than our neighbors based on measures of economic activity, economic health, and potential for innovation. The District should focus on the things that will make people want to move here, stay here, and become entrepreneurs here, such as family-size housing that’s affordable, high quality schools, services for youth, and top-notch public amenities and government services.
Thank you for considering our comments. We hope we can count on the Commission to put forward a series of recommendations that grow the District’s base of revenue in racially equitable ways that ask those with the greatest resources to pay their fair share, too. We must continue growing our resources in order to make transformative investments for all of our children, youth, and families.