Pandering on Taxes

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Though it is nothing new, I am still amazed at the pandering politicians do when it comes to taxes.

On Monday the District announced its best audit results in years. It was confirmation that we once again have an administration that is focused on bringing long-term financial stability to the City. This is the kind of financial oversight that people say they want and that we haven’t had since Mayor Tony Williams’ administration.

So instead of discussing the importance of this audit result to the District, what do the Council chair and the chair of the Council’s Finance Committee do?

They immediately begin talking about potential new tax cuts and lamenting recent tax increases. They do this without any real review of where the potential future problems will be within the city’s budget based on the impact of a continuing slow economy and the real danger of less federal funding coming into the District.

What is interesting is that this pandering seems unnecessary. There hasn’t been any great outcry from District residents about D.C. income taxes. Many of the approximately 6,000 people that were impacted by the .4% rate increase in their income taxes, from 8.5% to 8.9%, most likely didn’t notice any difference in their lives. In addition, the impact of the increase was actually less than the .4% as they could take that small increase and deduct it from their federally taxed income.

One of the biggest benefits of the District once again being able to rebuild its reserve fund is that it will put us in good stead with the bond rating agencies, keeping our credit ratings high and thereby potentially lowering our long-term debt costs.

Instead of talking about lowering taxes it would be better for the Council to focus first on continuing to comb the budget for more cost savings. Then it would serve all residents well if they reviewed all the programs where additional spending could make a real difference in the long term for all the people of the District. Among those programs could be infrastructure, public safety, education, and job training.

Another area that could use some increase in funding in the District is the arts. We often forget that a strong and vibrant arts community often brings much more revenue into the District than the contribution that we make from public funds.

In the coming years there will most likely be cuts in various programs that we count on from the federal government. These include healthcare, public transportation, education and housing programs to name a few. We should begin planning for that eventuality, not just cut taxes today and find we have to raise them again a year from now. When government is efficient and watches our money carefully, the public is generally much more accepting of paying taxes.

I suggest all of our politicians have a conversation about efficiency, productivity and producing the best possible services for the people of the District instead of immediately making the easy call and suggesting lowering taxes because they think it makes them more popular.

By Peter D. Rosenstein 

0 Comments For This Article

Anonymous

There are many of use -- those who earn income, rather than capital gains -- who were very much upset by the tax increases and who, yes, do "notice" them (of course, that should not be the test for increasing tax burdens anyway). There is also a little noticed tax increase in effect for 2013 that cuts 5% off of one's itemized deductions -- that will have a major impact. How can you say, Mr. Rosenstein, that a time when city officials are under federal investigation for embezzling our taxpayer funds we should not worry about possible future increases or try to rein the current rate of taxes? The District may be in the black, and that is a good thing, but it's because it is increasingly distributing the vast proportion of the tax burden to a discrete minority -- who will eventually leave her for more reasonable tax jurisdictions like VA -- and officials are pocketing the funds. There is surely a better way.

Anonymous

I find this comment ill-conceived if not downright absurd. DC remains one of the highest taxed jurisdictions in the nation. With waste, fraud, malfeasance, mismanagement, cronyism and nepotism in the DC government still rampant, the last thing we need is higher taxes. People and businesses have a choice in where they locate. If DC were to lower its taxes, it would arguably attract more businesses and residents, thereby generating increased income and employment and enlarging its tax base. This approach would be smart politics and economics in contrast to the writer's short-sighted proposal to squeeze more revenue out of existing taxpayers.

Anonymous

Ditto last two comments. "Pandering??" This is our money, paid to the DC Government and still utterly wasted in so many ways. It is the job of our elected officials to make sure we all pay no more than is absolutely necessary. If Mr. Rosenstein is fine with a .4% rate increase, perhaps he'd be ok paying an even higher rate. It's certainly not fine with me and won't be until we are closer to Virginia's rate (5.75% top marginal rate.)

Anonymous

Yes, Mr. Rosenstein can pay our share of the tax increases. Perhaps he won't "notice" or, apparently, care. But we do! And seriously, when councilmembers are steaking hundreds of thousands of dollars a year, and now the scandal is widening?

As often has been noted, he is also free to make a voluntary contribution to the DC treasury if he likes -- but I wish he and others would stop spending my money on the theory that I don't really "need" it. I am saving for retirement and would spend more money in the community and employ more people if I had more money left after tax day.

Peter Rosenstein

I always find the comments on my columns interesting and often worth discussing and debating. What is difficult is debating with anonymous. I would urge the Dish to stop accepting anonymous comments. If a comment is worthwhile the writer should be willing to attach their name.

That being said, to Anonymous #1. City officials being under investigation for embezzling funds- and there is only one elected official that I know of that did that and he has been indicted and convicted- and this unfortunately happens in every city and every state, has nothing whatever to do with your tax rate or what it should be. I am all in favor of throwing the book at any guilty person who would use their position to steal funds.

To Anonymous #2. Your argument that if taxes were lower more people would move into the District is hard to justify based on the fact that in the last 12 months more people have moved into the District percentage wise than into any other state in the nation. It appears that the tax rate isn't an issue. Another thing that people tend to forget is that DC is under a tremendous burden in that we can't tax commuters. So we are only able to collect taxes on approximately 64% of the money earned in DC. As to small businesses it would be interesting to do a study on how much the owners of small businesses in the District pay themselves and to employees who may not live here and that cost to the District since we cannot then collect taxes on their income.

I am not for increasing taxes at this time but just look at the Bush tax cuts and the trillions of dollars that has cost the federal government and the historic record that tax cuts to the rich don't relate to increasing jobs. What those tax cuts will mean to the District in the future if they aren't sunset is a reduction in federal funds coming to the District and a bigger burden placed on our taxpayers. Again I am not suggesting higher taxes rather suggesting that the first response to a healthy audit shouldn't be to reduce taxes.