Washington Examiner: Mayor, Council May Clash Over Tax Proposals

Gray on collision course with Brown over tax on wealthy

Andrew Harnik/Examiner

D.C. Mayor Vince Gray’s push to tax wealthy residents has put him on a collision course with council Chairman Kwame Brown who said he won’t support the proposal.

When Gray rolled out his budget he surprised many inside and outside of city hall with a proposal to raise taxes on those who earn $200,000 or more. The move would raise $35 million, a substantial chunk of the $127 million Gray proposed to raise through tax and fee increases that would go toward filling a $322 million budget gap. The proposal calls for $187 million in cuts with human services programs taking the biggest.

Proposed revenue hikes (total $127 million):
Income tax: Proposal raises $35 million by creating $200,000 (+) 8.9% income tax bracket; Current tax is $40,000 (+) 8.5 percent
Parking garage tax: Proposal raises $18.2 million by raising tax to 18% from 12%
Corporate tax: By closing a loophole for multi state companies Gray would raise $22 million
Circulator fare: Raise $1.1 million by increases fares from $1 to $2
Add tax on live theater: $2.3 million
Fee hikes and tax adjustments on businesses make up the balance
Proposed cuts (total $187 million):
Human services: $113 million, includes $5 million cut to family welfare assistance, $12 million in unemployment claims due to expected decrease
Public safety: $18 million, holds police spending at 2011 level creating savings through inflation
Education: $18 million, includes closing MLK library on Sundays and reduces book purchases at all libraries
Other agencies are cut a net $38 million

The tax increase on the wealthy placated some council members who have been pushing for similar initiatives for years. For others, though, it’s a "deal breaker," as Ward 2 Councilman Jack Evans put it.

Brown didn’t hesitate either. When asked if he would support the income tax increase as Gray proposed it, the chairman game an unequivocal "no." Would he support some other tax increase? "Very, very, very unlikely."

Brown and Gray refused to spar over the issue on Friday when Gray formally sent the $9.3 billion budget to the council. They both said separately they’d find a way to work it out.

"There’s almost always changes in the budget," Gray said. He later added, "if someone wants to take out the tax increase, they’ll have to find $35 million."

That’s a heavy burden on the shoulders of those who oppose the income tax increase. Gray’s proposal creates a new bracket for those who earn $200,000 or more each year, and taxes them at 8.9 percent. The current system taxes income earned beyond $40,000 a year at 8.5 percent.

"To find $35 million more in cuts on top of what’s already been cut would be challenging for the council to do," said Ed Lazere, executive director of the D.C. Fiscal Policy Institute.

At-large Councilman Michael Brown and Ward 1 Councilman Jim Graham have often been the most vocal supporters of tax increases.

Michael Brown said he’ll be looking for a sunset clause to Gray’s proposal. "It also shouldn’t last forever," he said.

Graham, however, said "it’s yet to be seen" if he will push for a higher tax on the wealthy.

fklopott

Kevin Wrege, Esq.

Founder & President

Pulse Issues & Advocacy LLC

Office: 202-625-1787

Mobile: 202-253-4929

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

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