It’s Best to Invest!
The economic recession has dealt us a big blow: Unemployment skyrocketed, assets such as homes and retirement plans shrunk in value, and all of a sudden it seemed a lot tougher to make ends meet. That’s true for you and me, and it’s true for the District as well, due to a sharp drop in tax revenue over the last three years. So now, when residents look to our city government for help and support due to the downturn, we don’t even have enough resources to meet our basic needs.
This is not the time, however, to cut back on investments that have improved DC’s quality of life. In order to get through to better times ahead, we need to preserve the foundation that will get us there: affordable housing, public education, healthcare, and a safe and reliable transportation system.
It’s a tough challenge to put together a budget in this climate. It calls for a balanced approach that looks at ways to add resources to keep these critical investments in place. That’s why a coalition of DC taxpayers is asking the city council to support and approve a package of revenue proposals as part of the Fiscal Year 2011 budget.
Invest in DC is a group of DC labor leaders, religious organizations, social service advocates and plain ol’ District residents who are concerned about the wide array of cuts that have been made to emergency housing, job training, libraries, childcare and other critical services. DC’s latest budget proposal fails to make adequate investments in Metro, the circulatory system that keeps our city’s heart pumping.
These cuts hurt families struggling to stay afloat. And skimping on infrastructure jeopardizes DC’s ability to make the most of prosperity when it returns.
It is time to look to the future, and invest through new sources of revenue. DC should join a majority of states that are taking a balanced approach to the recession — using reserve funds and strategically raising taxes— because they realize there is no single way to solve a problem this big.
Invest in DC supports a package of revenue enhancements that will:
- Increase the income tax for the wealthiest. Right now, DC residents making $40,000 a year and those who make $1 million pay the same income tax rate. Increasing the rate on those making more than $200,000 a year would raise $40 million and impact less than 5 percent of households.
- End DC’s tax exemption for interest paid on out-of-state bonds. Only DC and Indiana provide income tax breaks for residents that invest in other states’ infrastructure. Eliminating this exemption would raise $10 million and help give District residents an incentive to invest in DC’s roads and bridges.
- Update the sales tax to include more services. DC’s sales tax was created at a time when people spent more on goods than services. Today it’s the other way around. Adding more services to DC’s general sales tax — like pet grooming, health club memberships, and theater tickets — would raise more than $14 million.
- Increase the minimum tax on businesses. Nearly two-thirds of DC businesses pay only $100 a year in taxes. Increasing the minimum tax to $250 would raise $3 million or more.
- Bring parity to the alcohol tax. Alcohol consumed at a restaurant is taxed at 10 percent. Bought at a store, it’s taxed at 9 percent. Setting both rates at 10 percent would raise $3 million.
- Tap into DC’s “Rainy Day Fund.” The city has set aside almost $300 million in reserve funds for tough times, but overly restrictive federal rules keep that money off limits. City leaders should work with Congress to ease these onerous rules.
We encourage you to sign on to the Invest in DC campaign at www.fairbudget.org, and call your council members to voice your support.
This budget season, tell them: “It’s best to invest!”