Good afternoon, Chairperson McDuffie and members and staff of the Committee on Business and Economic Development. My name is Joanna Blotner and I serve as the Director of Government Affairs at DC Action. DC Action uses research, data, and a racial equity lens to break down barriers that stand in the way of all kids reaching their full potential. One of those barriers to equity and opportunity for DC kids is our tax code and the ways in which it perpetuates intergenerational racial wealth gaps and fails to generate sufficient local revenue for our budget, revenue that is necessary for all children to thrive. That is why DC Action is proud to be a member of the All in for DC Coalition advocating for a tax system for justice.
Across the District, thousands of families are struggling to afford their basic needs like groceries, child care, and housing. They want good jobs with good benefits to support their families and give their children a chance to pursue their dreams. Due to systemic racism and years of disinvestment, we know these economic hardships have long fallen disproportionately on Black families and their children. Now, as the federal government is scheming to gut education, health care, and other programs that help DC residents make ends meet, lower-income Black families – as well as immigrant families – face new financial threats. The District must rise to the occasion to protect vulnerable children, youth, and families. This will require modernizing our tax code to ensure every household and business is paying their fair share.
DC gives preferential treatment to inherited wealth, capital gains, dividends, corporate and non-corporate business income, and property ownership, among other things. It does this by under-taxing these assets, or applying flat tax rates, rather than progressive ones. These tax advantages have the effect of privileging white residents and business owners at the top and exacerbating racial wealth disparities in the District. The Tax Revision Commission should have
voted on a slate of recommendations last year to help the Council take aim at our racialized wealth gap and close loopholes to create a more resilient tax base. However, corporate self-interest was allowed to prevail over smart, equitable tax policy and popular support for raising taxes on wealth and high incomes. The Council must now take back the reins of tax policy to ensure racial equity, progressivity, and budgetary sufficiency are prioritized to meet the needs of the District. The All in for DC Coalition can help in this work. It has identified five tax reforms the Council can approve to advance a more equitable tax code:
⦁ Raise the capital gains tax rate for wealthiest top 20% of tax filers
⦁ Raise tax rates on income above $500,000 and especially incomes over $1M
⦁ Create more progressivity in property taxes for homes valued over $1.5M
⦁ Institute a Business Activity Tax so that all corporations and firms operating in the District contribute to our shared resources
⦁ Expand greater income and property tax relief to families with the lowest incomes through tax credits like Schedule H, the Child Tax Credit, EITC, and others
Many of these tax and revenue proposals were expertly researched by analysts from the Office of the Chief Financial Officer, who supported the Tax Revision Commission. DC Action is grateful for the service of these OCFO employees for supporting the necessary work of modernizing our tax code. That said, the fiscally conservative policies of the Chief Financial Officer too often holds the District back from creating a more just tax system. Similarly, the overreach of the Chief Financial Officer last year jeopardized the stability of our child care system when the OCFO required the Mayor to replenish the District’s reserves by depleting the Early Childhood Educator Pay Equity Fund. Prioritizing rainy day funding over fair pay and healthcare for Black and brown early educators is morally (and legally) wrong. And it is wrong for our city’s economic recovery, which is dependent on working parents’ access to reliable, safe, high-quality, and affordable child care. If the Council allows its hands to be tied by the agenda of the OCFO, or the Mayor, it will be unable to make meaningful strides toward equity and opportunity for the District children.
We hope the Council’s oversight hearing with government witnesses will reinforce the advisory and analytical roles of the Office of the Chief Financial Officer in relation to the Council’s legislative and appropriation authority so that we do not see a repeat of last year’s attacks on the Pay Equity Fund, or any program that supports critical infrastructure or human services. We also implore the Council to take bold action to raise revenue to meet the growing needs in the District, even if that is at odds with the ideologies of OCFO. Our kids are depending on your leadership.
Thank you and I would be happy to answer any questions.
