Washington DC Council approves “convertible” tax-hike budget for the affluent

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Grassroots organizers in Washington, DC, celebrated late Tuesday after local lawmakers voted for a tax increase for the city’s richest residents to fund housing and childcare programs designed to help cut thousands of homeless and low-income people out of the city Pull poverty.

The DC council voted 8-5 in favor of increasing the income tax for those earning at least $ 250,000 a year, which proponents say will bring in $ 100 million in revenue in the next fiscal year.

“Today’s budget could really make a difference overall.”
—Erik Salmi, Director of Communications for Councilor Charles Allen

The vote was the first step towards adopting the measure as part of the 2022 city budget; the final vote on the budget proposal will take place in August.

The tax hike proposal was written by Councilors Brianne K. Nadeau, Janeese Lewis George and Charles Allen, who used the proceeds to provide subsidies to raise wages for childcare workers, more than 1,200 permanent home vouchers to support homeless people or housing insecurity, and monthly tax credits for low-income households .

“Homelessness is a choice, displacement is a choice and poverty is a choice”, said Lewis George. “We have the wealth and the resources in our city to solve these problems.”
The plan will also increase the city’s tax credit for low-income families from 40% of the credits they receive on their federal taxes to 55% of the federal credit, paid in monthly installments instead of a lump sum. A “monthly basic income” is paid out for the poorest in the city, said Erik Salmi, Allen’s communications director.
“Overall, today’s budget could be really transformative,” Salmi said said.

The tax increase only applies to 5% of DC residents. Single people who earn between $ 250,000 and $ 500,000 a year pay a marginal tax rate of 9.25% versus 8.5%. Individuals earning between $ 500,000 and $ 1 million will increase their tax rate to 9.75%, and those earning more than $ 1 million per year will pay a marginal tax rate of 10.75%.

Allen, Lewis George, and Nadeau say the city’s richest people pay between $ 375 and $ 6,500 more in taxes a year.

Stuart Karaffa, chairman of Metro DC’s Democratic Socialists in America, said Tuesday’s vote represented “upheaval” in the city and among local policymakers.

Some council members who opposed the tax hike claimed that a tax hike for the rich would make the city less “attractive” to high earners and that a tax hike after an infusion of $ 2.3 billion in federal pandemic relief was inappropriate .
The authors and supporters of the measure, who fought for the tax hike, countered that long-term funding – not a one-off federal grant – was required to lift the city’s low-income residents out of poverty.

Councilor Mary Cheh said the city’s tax law changes may be “tolerable” for some of the affected residents but “a hardship” for others.

“Are you kidding Mary Cheh?” asked Sunrise Movement DC before the vote. “A tax on high earners is no hardship – they already make more money than anyone else in DC!”

Amber Gruner, organizer of the DC Fiscal Policy Institute, condemned opponents of the tax hike for promoting “a capitalist shortage narrative”.

“There is enough for everyone,” tweeted Gruner. “Tax the rich.”

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