It’s budget season and Mayor Bowser has been foreshadowing austerity politics despite the fact that she has packed her ReOpenDC Advisory Group with former recipients of huge corporate giveaways. Many of these advisors belong to the DC2021 group which is lobbying for $1B in tax cuts for DC’s wealthiest businesses and developers, indicating that DC officials are once again looking to balance the budget on the backs of working class residents like the Control Board did twenty years ago. In this moment of overlapping health and housing crises, we cannot afford to continue DC’s long standing policy of welfare for corporations and strict austerity for everyone else. Now is the time to do more, not less, for the people of DC.
The DC government has projected a $1.25B budgetary shortfall for FY2020 and FY2021. Others have proposed closing this gap by tapping into DC’s reserves, spending down our FY2019 budget surplus, and closing a corporate tax loophole for tech companies. While these are good and necessary steps, they do not go far enough. Surplus and reserve spending is not sustainable, and simply returning to breakeven will not fix the underlying problems that made DC’s Black and Brown residents disproportionately vulnerable to COVID-19 or pay for rent cancellation, provide housing to clear the shelters, or fund desperately needed capital infusions to small businesses.
We need a fundamentally different approach to spending if we are going to recover from this crisis, which is why my team and I are running on a Green New Deal for DC. We can generate renewable revenue on par with reserve & surplus spending through marginal tax increases on DC’s wealthiest residents and the elimination of developer giveaways. Wealthy residents have benefited more from tax breaks included in the Trump-GOP tax law of 2017 and the CARES Act than anyone else: we must ensure that money is used to provide relief for those who need it. We will use this revenue to fund a WPA-style jobs program building thousands of units of permanently affordable, regenerative Social Housing. This way, we will recover and be stronger than before.
Here’s how we’ll pay for it:
- Recover the Trump Tax Cuts for Wealthy Residents: Recover the big Trump tax cut for wealthy residents, amounting to $400M in 2020 for those making more than $350K a year. By increasing local taxes to replace Federal ones, we can generate sustainable revenue simply by returning to the taxation structure that was in place for the very wealthy until recently.
Source: ITEP. This graph show 2019 data. Percentages have not changed significantly in 2020.
- Raise Taxes on the Richest: Pass a 3% surcharge for households making half a million dollars a year or more which, based on projected 2017 taxable income from the IRS, amounts to $300M in revenue for next year. These households pay a lower percentage of their income in local taxes than families making one tenth their income. This marginal increase on DC’s top tax brackets would bring DC in line with California at 12.5%.
Source: ITEP. This graph shows the latest local tax data for the District, which is from 2018.
- Close the Carried Interest Loophole: Immediately close the Carried Interest Loophole for hedge fund and private equity managers, amounting to $152M annually. It was inexcusable that billionaires were paying lower taxes than working-class residents before the pandemic, and now it’s unconscionable.
- Recover the CARES Tax Cut for DC’s Wealthiest Business Owners: Recover the CARES tax cut for millionaire business owners, amounting to $1.6M per owner. Provisions that change the rules on how businesses can account for “losses” overwhelmingly make the rich richer and have limited benefit for the businesses that are actually struggling. We should recapture this money locally – again, returning to the previous tax structure – and use these funds to make direct cash infusions to small businesses.
- End Developer Giveaways & Clawback Subsidies: How we spend revenue is just as important as how we raise it. This campaign opposes all future public subsidies, tax breaks, and land giveaways for private development, which amounts to hundreds of millions of dollars a year. Private development can continue as it should – with private money. Public dollars must be invested into sustainable public institutions, like Social Housing, that recycle wealth back into the community. Additionally, we continue to support clawing back subsidies from developers who fail to meet public benefit requirements, as they often do.
Taken together, these proposals constitute a seed investment in DC’s future, generating roughly a billion dollars annually. Social Housing and the jobs to build it are regenerative investments that will provide immediate relief and pay dividends down the road. Permanently affordable rent will put extra money in people’s pockets to spend in their communities, reinvigorating the local economy. Affordable first floor retail spaces will house small businesses, giving them a chance to recover and thrive. This is a real plan for a just recovery. This is the path forward.