Testimony to the Tax Revision Commission

Testimony to the Tax Revision Commission

Matthew Hanson, Chief of Staff, DC Action

Wednesday, May 3, 2023

Good afternoon members of the Tax Revision Commission. My name is Matthew Hanson. I am a Ward 7 resident, a proud father, and the Chief of Staff at DC Action. DC Action uses research, data, and a racial equity lens to break down barriers that stand in the way of all kids reaching their full potential. Our collaborative advocacy campaigns bring the power of young people and all residents to raise their voices to create change. We are the home of DC Kids Count, Under 3 DC, the DC Out-of-School Time Coalition, the DC Home Visiting Council and the Youth Economic Justice and Housing Coalition. We are also a proud member of the Fair Budget Coalition and the Just Recovery Campaign, and through these efforts, we work to advance budgets that serve the needs of all residents, especially Black and brown ones, and to advance a racially equitable and just tax code. 

As we all know, the Tax Revision Commission is appointed by the Mayor and the DC Council once every 10 years to review the tax code and make recommendations for how to improve it. This commission has named promoting racial equity and protecting low-income residents as two of its guiding principles, the importance of which we all agree on. The recommendations that this commission puts forward, and the changes that the council ultimately makes to the tax code, will have long-lasting repercussions for the future of the District. That’s why it is so important that we get this right. 

The District of Columbia is one of the wealthiest states in the country, but does a poor job distributing those resources equitably. According to the DC Fiscal Policy Institute, roughly 1,500 households have a net worth over $30 million, and hold nearly half of all wealth in the District. Not surprisingly, white households have 81 times the wealth of Black households and 22 times the wealth of Latinx households.

That kind of extreme wealth concentration means that a handful of our residents are able to live lives beyond most people’s wildest dreams, while others have to forgo basic human needs; make impossible choices among food, medicine, or rent; or end up living on the streets. 

According to the latest Kids Count data, nearly one in six District residents live in poverty, or roughly 105,000 people. At least 29,000 of those who live in poverty are children, and more than two-thirds of those live in extreme poverty (with family incomes less than half the federal poverty line). Despite progress towards reducing homelessness, thousands of our neighbors remain homeless or unstably housed, including roughly two thousand young people, with dozens of people who were homeless losing their lives last year because of these policy failures. 

The racial disparities here are egregious. Our analysis of Kids Count data shows that “roughly 9 out of 10 of the children living in poverty are Black. Regardless of the ward a family resides in, in every ward a higher percentage of Black households live in poverty than the White households living in the same ward.” More than four out of five people in the District who are homeless are Black.

It’s often said that budgets are moral documents, so what does it say about ours, and our tax code, that we have the resources to address these challenges but haven’t done so? 

Local revenue growth is projected to slow, which means that, unless policy makers make changes to the tax code, they will be forced to make difficult cuts to the budget. These cuts will result in more families being forced into poverty, lacking access to basic services, and ending up homeless. Failure to advance a more progressive tax code will lead to budget austerity and will ultimately slow our economic recovery too, exacerbating the pain that families experience, and widening racial disparities in the process.

Austerity would not only be irresponsible, but wildly unpopular. Recent polling shows that four out of five DC voters support raising taxes on wealthy residents and corporations to prevent cuts to essential services.

By taxing extreme wealth concentration, we will not only prevent harmful cuts to essential services, but expand programs and raise the revenue we need to invest in a caring economy that supports working families and reduces racial inequities. 

In addition to funding existing programs and services that help families, children, and young people meet their basic needs, including housing, early childhood and afterschool education, and healthcare, we also need to invest in new measures that boldly address racial income and wealth inequities and inequalities. 

One new idea that deserves support is a robust child tax credit, even more generous than the one currently proposed. If adopted, a generous child tax credit could effectively eliminate child poverty in the District, and help close the racial income gap. Raising incomes for Black and brown families will help make our communities more resilient and diversify our tax base, making it less susceptible to shocks, which would benefit all residents.  

As we note on our DC Kids Count website, “racism continues to drive the economic divide in the District. White families earn nearly four times ($237,074) as much as Black families ($61,531), and well over twice as much as Latinx families ($104,781). In DC concentrated income inequality and poverty only persists for Black and brown families.” While closing this gap may at times feel insurmountable, effective programs like the Earned Income Tax Credit, a new child tax credit, and guaranteed income pilot programs can help go a long way towards this goal. 

As the Tax Revision Commission engages with the public, and prepares your recommendations to Mayor Bowser and the DC Council, I hope you will prioritize your commitment to racial equity and protecting low-income residents above all else. The tax code is a powerful tool. For too long we’ve allowed it to exacerbate racial inequities and extreme income and wealth inequality to the detriment of everyone. Let’s rebalance it now. 

I will be available for questions.