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DC’s Economy Is Thriving, Report Finds Business Tax Cuts Aren’t Needed to Make DC Competitive

CONTACT: Ilana Boivie, Senior Policy Analyst / 202-325-8812 /

The District of Columbia’s economy is strong, increasingly diverse, and outperforming the rest of the region, according to a new report from the DC Fiscal Policy Institute. These findings suggest that the current plan to cut business taxes by $28 million is not needed to make the city more competitive. Business tax cuts would sap revenues that could help keep the District strong, such as investments in schools and housing.

The report, Economic Powerhouse: DC is Growing Faster
r than the Region
, also found that job growth has been strong in DC’s retail and food service sectors, industries affected by the minimum wage increase and other policies to improve working conditions for lower-wage workers. This suggests that the DC economy has been strong enough to absorb the additional labor standards.

The DC economy is strong on several indicators:

  1. Employment in the District grew 14 percent over the past decade, outpacing the rest of the region, where employment grew 6 percent.[1]
  2. DC’s job growth has been driven by the private sector, which accounted for 93 percent of DC’s total increase in employment since 2006.”
  3. DC’s population has grown every year over the past decade and now outpaces growth in nearby counties. In 2016, more people moved from the suburbs into DC than the reverse.

“The District has become a powerful driver of the regional economy,” said co-author Chaz Rotenberg. “A growing population and expanding job base mean that DC is an increasingly attractive place to live and do business.”

These findings call into question the need for the $28 million business income tax cut set to go into effect in 2018. The DC Fiscal Policy Institute supports stopping the business income tax cut, or limiting it to just small businesses.

Stopping the tax cut would free up funds that could be invested to support DC’s growing population and address key budget shortfalls.[2]

“Investing in schools and housing is the key to keeping families here and keeping DC’s economy strong,” said Ilana Boivie, a Senior Policy Analyst at DCFPI and report co-author. “That’s a smarter choice than a tax cut for Walmart and Home Depot.”

[1] Rest of the region refers to the Washington Metropolitan Statistical Area (MSA) minus DC. In Virginia, that’s Arlington, Fairfax, and Loudoun Counties; Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park Cities. In Maryland, that’s Calvert, Prince William, Charles, Stafford, Frederick, Montgomery, and Prince George’s counties.

[2] DCFPI. “Council Boosted Important Services During Mark-Ups, But Substantial Gaps Remain.” May 24, 2017.