Statehood Greens push for ‘Fair Tax & Revenue Plan’: tax relief for DC families & working people; solutions for shortfalls

Press release sent to contact.ipr@gmail.com

THE DC STATEHOOD GREEN PARTY
http://www.dcstatehoodgreen.org

For immediate release:
Wednesday, April 14, 2010

Contact:
Scott McLarty, DC Statehood Green Party media coordinator,
202-518-5624, cell 202-904-7614, mclarty@greens.org
David Schwartzman, DC Statehood Green Party Tax and Budget
coordinator, 202-829-9063, dschwartzman@gmail.com

DC Statehood Greens promote “Fair Tax & Revenue Plan” to provide tax
relief for DC families and working people, solve fiscal shortfalls,
and save DC’s social safety net

• The plan stresses the need for DC statehood to stop Congress from
meddling with DC tax laws and cuts handouts for big developers and
other corporate interests

WASHINGTON, DC — DC Statehood Green Party leaders are urging public
support for “A Fair Tax and Revenue Plan for the District,” which
provides significant tax relief for families and working people in the
District of Columbia, allows District government to maintain sorely
needed social services, covers projected fiscal shortfalls, and
reorganizes the District’s budget priorities.

The plan requires the wealthiest residents of the District of Columbia
to pay their fair share in taxes, shifting the burden away from
middle- and low-income residents, and emphasizes the need for DC
statehood to stop Congress from meddling with the District’s tax laws.
It was developed by Matt Gardner (Institute on Taxation and Economic
Policy economist) and David Schwartzman (DC Statehood Green Party’s
Tax and Budget coordinator) in December, 2009.

An edited version of the text of the plan follows below. To read the
complete text, visit:
(HTML) http://www.redandgreen.org/Documents/David/DCGreen/DC_Tax_Plan/DC_Tax_Plan.htm
(PDF) http://www.redandgreen.org/Documents/David/DCGreen/DC_Tax_Plan/DC_Tax_Plan.pdf

A Fair Tax and Revenue Plan for the District

The time is long overdue for Tax Justice for the Majority, and for
wealthy DC residents paying their fair share of DC taxes, so essential
programs are better funded in our Budget. In our plan, most DC
families would have more disposable income after paying their taxes.
Examples of the benefit:

Families With:
$12,400: (annual income) would have $372 more income than now
$26,300: $815 more income
$45,400: $1,090 more income
$75,500: $302 more income

Only the top 5%, with average annual income of $443,700 and above
would pay more taxes.

Introduction

After spending District residents’ tax money on wasteful projects such
as a baseball stadium for the multimillionaire owners of the city’s
baseball team and handing out tax abatements and “sweetheart deals” to
corporations like they were so much trick or treat candy, the District
now faces a huge projected shortfall in revenue, estimated to over
$500 million for the coming fiscal year. Like the Control Board era,
there is a real danger that our budget will once again be balanced on
the backs of low and middle-income residents. And this prospect comes
on top of a $50 million cut in essential programs such as child care,
disability support and job training that the Council and Mayor imposed
on our present budget.

The crisis of everyday living is now a reality for a majority of our
residents whose incomes fall below self-sufficiency, meaning that many
families go into debt just to survive the current recession, really a
depression for low-income folk. Many residents must now choose where
their inadequate income must go; will it be to meet the increasing
cost of food, rent, utilities and/or medicine this month?

But there is an alternative to more hurtful budget cuts and the
inadequate income support for many of our residents. The Council can
and should pass new legislation in this session that would provide
substantial tax relief to the bottom 60% income bracket of DC’s
families (with average incomes below $57K) while generating additional
revenue that will help protect essential programs in our budget that
serve our low income and working/middle class families and
individuals. This plan will couple a hike in the top 5%, with tax
relief for the majority of taxpayers and go far in meeting the
challenge of the projected shortfall in revenue. Further it would
create a long needed progressive structure for DC’s individual/family
taxes, contributing to a future sustainable revenue base for the
future.

Moreover, our plan simultaneously addresses the ongoing hemorrhaging
of our revenue to big developers and other corporate interests in the
form of unjustified tax exemptions, abatements and subsidies. These
giveaways include over $100 million in rent going to private
facilities for municipal business instead of using renovated public
space and $50 million for renovating seating for the VIPs at the
Verizon Center.

The tax system and budget must be made fully transparent and
accountable, making possible a detailed review of tax exemptions and
abatements for commercial and non-profit properties. Taxpayers and
elected officials must be able to evaluate the community benefits (if
any) from these tax giveaways to big developers and other corporate
interests.

Finally, according to the DC Fiscal Policy Institute, “while 26 states
have tapped their rainy day funds to close budget gaps during the
current economic downturn — including Maryland and Virginia — the
District has not used its $284 million in reserves to address the
recession, ”because of Congressional restrictions on its use. DC’s
rainy day fund should be used to address this and potential budget
deficits in coming years! Since Congress makes these rules, our
Delegate to the House Eleanor Holmes Norton should vigorously lobby to
make this happen, and lead our community to make this demand on
Congress now.

Further our Delegate should immediately submit a bill for DC
Statehood, the only way we get two voting Senators plus one voting
member of the House, and a permanent end to the potential veto by
Congress of legislation and budgets passed by our local government. In
other words, we would get the same rights as citizens of the 50 states
by becoming the 51st state in the Union. And only DC Statehood will
give us the opportunity to implement a tax on income earned by two
thirds of the DC’s workforce that live outside our jurisdiction by a
fair and progressive reciprocal taxation approach.

Summary of Principal Objectives

1) Make the District’s tax structure for individuals and families
fair, that is, progressive, with tax rates increasing with income
level for a given family size, so that the tax burden falls on those
most able to bear it.

Note: The federal income tax structure is already progressive, but the
District’s overall tax burden is regressive for most families; for
incomes above $33K the tax rate steadily declines as incomes rise.
District millionaires now pay a lower rate than all but the poorest
families, averaging $12,400 a year (the federal poverty level in 2009
was $21,800 for a family of four, with the self sufficiency income
being more than twice this level. A fairer tax structure will require
giving needed tax relief to the low to middle income 80% of DC
individuals and families while getting the best-off District residents
paying their fair share of city taxes. Once the tax structure is made
progressive, tax rates for all residents can be lowered once the
District government is forced to stop the hemorrhaging of our revenue
to big developers and other corporate interests.

2) Make the city’s tax system sustainable, that is, insuring it can
generate badly needed revenue targeted to funding essential programs,
such as affordable housing and childcare, in the District budget for
the next year and for the next decade.

3) Make the tax system and budget more transparent and accountable, by
engaging in a detailed review of tax exemptions and abatements for
commercial and non-profit properties. Taxpayers and elected officials
must be able to evaluate the community benefits (if any) from these
tax giveaways to big developers and other corporate interests.

The Specifics

1) Tax reform for DC’s families: Package includes the following provisions:

a) Base the DC income tax structure on a flat percentage of the
federal income tax payment using the pre-Bush federal tax structure,
that is with the Bush tax cuts targeted for the wealthy removed,
thereby simplifying the payment process and increasing fairness. Keep
the DC Earned Income Tax Credit.

b) Expand the Schedule H low-income property tax credit in the DC
income tax schedule to make it available to middle-income families and
individuals, by:

• Raising the income limit for eligibility from $20,000 to $70,000,

• Raising the maximum credit from $750 to $3,000.

c) Include a built-in deduction for sales/excise taxes (the most
regressive part of the tax burden, which is having the most impact on
low-income residents) directly into the DC income tax form, insuring
an overall progressive structure for DC residents. Sales tax revenue
from non-residents such as commuters and tourists would not be
reduced, since they do not pay DC income tax.

Once implemented, the proposed DC Tax Structure would reduce income
tax payments for most DC families and individuals.

d) Rather than going into the General Fund, revenue enhancements shall
be targeted to underfunded essential programs in the DC Budget in
consultation with Empower DC, Fair Budget Coalition, DC Jobs with
Justice and other groups that truly serve the interests of the
majority of our residents. This package is estimated to increase DC
tax revenues by at least $116 million annually.

Note: once implemented, the top 1% would receive an effective overall
rate increase of 1.9% (after federal deduction offset only 1.3%) and
the next 4% bracket a rate increase of 1.7% (after federal deduction
offset only 1.4%). If the tax relief for the bottom 60% were reduced
then of course the revenue generation would be greater.

2) Achieving transparency in tax abatements: Revise B18-0400
“Exemptions and Abatements Information Requirements Act of 2009” by
strengthening the requirements for compliance with penalties.

3) Reform rainy-day-fund rules: The rainy day fund must be used to
address potential future budget deficits! Since Congress makes these
rules, our Delegate to the House Eleanor Holmes Norton should
vigorously lobby to make this happen.

We also urge our residents to contact our Delegate urging her to
immediately submit a bill for DC Statehood, which is the only way we
get two voting Senators plus one voting Representative to the House,
plus a permanent end to the potential veto by Congress of legislation
and budgets passed by our local government. In other words, we would
get the same rights as citizens of the 50 states by becoming the 51st
state in the Union. Only DC Statehood will give us the opportunity to
implement reciprocal taxation of income earned by two thirds of the
DC’s workforce that lives outside our jurisdiction.

MORE INFORMATION

DC Statehood Green Party http://www.dcstatehoodgreen.org

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