The Emperor with no clothes and our phony budgetary crisis

Part of DC in Violation


While our Mayor and Council squabble about our budget, they, the Chairman of the Control Board Rivlin and of course the Washington Post (4/18/00, A28) continue to assert that we lack the tax base to improve funding for schools, simultaneously pass a District Earned Income Tax Credit and expand our gutted safety net. Rivlin said that the District will face a budget shortfall in coming years (WP, 3/9/00). "Only a substantial near-term expansion in the tax base or a halt in the multi-year tax reductions approved last spring can boost that modest trend" in revenue increase projected. She later said "If new program initiatives are added, existing programs must be reduced". Meanwhile Tony Williams said that the proposed District EITC has merit but that the city can't afford it (WP, 3/10/00); apparently we can afford paying off the tax cut to the wealthy. Linda Cropp, Chairman of the City Council asserted that new programs would be considered only when there is a consistent pot of money available for funding (WP, 4/23/00). Hence this is a zero-sum game according to our political leadership, while the Emperor with no clothes, the multi-billion dollar taxable income of District wealthy residents, remains invisible. Isn't time we make him visible? This potential source of revenue would  be sustainable. It is absurd to argue that wealthy DC residents will leave the District if they are required to pay slightly higher rates, given the advantages of living here, namely lower commuting costs and time, and cultural opportunities. Wealthy residents of Manhattan are not moving to New Jersey, despite the lower tax rate west of the Hudson River. DC taxpayers in the greater than $100,000 bracket increased from 12,000 to 20,000 in a decade (IRS statistics), despite the lower tax rates of suburban Maryland and especially Virginia (WP 3/3/97, 3/27/97). Of course a deserved federal payment and revenue from a reciprocal commuter tax would be more than welcome. Eleanor Holmes Nortonís bill * is worthy of vigorous support but should not be an excuse to refuse to tap our own tax base to meet essential needs. If Congress approves such measures then we can adjust our tax structure accordingly.

(* Norton proposes that 2 percent of the federal taxes paid by Maryland and Virginia commuters who work in the District go back to the District. The plan has little chance of being passed in this Congress (see WP, 4/24/00). The plan would raise about $400 million/year, compared to an estimated federal payment owed but not paid to the District of $1.8 billion.)

Past multi-million dollar surpluses have come in large part from what our Mayor has acknowledged were hefty budget cuts in the social services network for children, seniors and the poor (WP, 2/9/99). Yet in spite of the lack of affordable housing and pending evictions, the Mayor's proposed budget has done nothing to restore programs such as Tenants Assistance, Emergency Assistance, Chore Aid for Seniors and Disabled while proposing still more cuts in homeless services. Budgeting for Interim Disability Assistance, a loan on SSI, is still lacking for FY 2001. Proposed expansion of health insurance coverage and substance abuse is token. We can and must do better for our most vulnerable residents!

A proposal for a progressive restructuring of DCís taxes has now emerged. Besides the DC Statehood Green Party, the proposal has been endorsed by the Center for Community Change, Gray Panthers of Metropolitan Washington, Metro DC Committee of Correspondence, Project South, Stand for Our Neighbors, the Washington Legal Clinic for the Homeless and many  local activists. This proposal addresses the fact that the DC's wealthiest have a multi-billion dollar taxable income while paying lower individual local tax rates than low and middle income residents. Projected taxable income for this year for the $100,000 and above bracket is $7 billion (IRS statistics).

It includes the following key provisions:

For more details and documentation, see my testimony before the Finance & Revenue Committee, DC City Council, on pending tax legislation, at

David Schwartzman
Tax and Budget Coordinator
DC Statehood Green Party
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