Washington DC Council Approves ‘Transformational’ Budget Including Tax Increase on Wealthy

Grassroots organizers in Washington, D.C. celebrated late Tuesday after local lawmakers voted in favor of raising taxes on the city's wealthiest residents in order to fund housing and childcare programs aimed at helping to pull thousands of homeless and low-income people out of poverty.

The D.C. Council voted 8-5 to raise income taxes for people who earn at least $250,000 per year, which proponents say will raise $100 million in revenue in the next fiscal year.

"Today's budget could truly be transformational in total."
—Erik Salmi, communications director for Councilmember Charles Allen

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

The tax increase proposal was authored by Councilmembers Brianne K. Nadeau, Janeese Lewis George, and Charles Allen, who want to use the revenue to fund subsidies to raise wages for child care workers, more than 1,200 permanent housing vouchers to help residents facing homelessness or housing insecurity, and monthly tax credits for low-income households.

"Homelessness is a choice, and 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 issues."

The plan will also raise 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, which will be paid out in monthly installments instead of a lump sum, amounting to a "monthly basic income" for the city's poorest residents, said Erik Salmi, communications director for Allen.

"Today's budget could truly be transformational in total," Salmi said.

The tax increase will apply to just 5% of D.C. residents. Single people who earn between $250,000 and $500,000 per year will pay a marginal tax rate of 9.25%, up from 8.5%. People who make between $500,000 and $1 million will see their tax rate increase to 9.75% and those earning more than $1 million per year will pay a marginal rate of 10.75%.

According to Allen, Lewis George, and Nadeau, the wealthiest people in the city will have to pay between $375 and $6,500 more per year in taxes.

Stuart Karaffa, chair of the Metro D.C. Democratic Socialists of America, said Tuesday's vote represented a "sea change" in the city and among local policymakers.

Some members of the council who opposed the tax increase claimed that raising taxes for the rich would make the city less "attractive" to high earners and that a tax increase was inappropriate following an infusion of $2.3 billion in federal pandemic relief.

The measure's authors and advocates who fought for the tax increase countered that long-term funding—not a one-time federal grant—is needed to help lift the city's low-income residents out of poverty.

Councilmember Mary Cheh said that while the changes to the city's tax code might be "bearable" to some of the residents affected, it may cause "a hardship for another."

"Are you joking, Mary Cheh?" asked Sunrise Movement D.C. ahead of the vote. "A tax on high earners is not a hardship—they're already making more money than everyone else in D.C.!"

Amber Gruner, an organizer with the D.C. Fiscal Policy Institute, denounced opponents of the tax increase for pushing "a capitalist scarcity narrative."

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

This content originally appeared on Common Dreams - Breaking News & Views for the Progressive Community and was authored by Julia Conley.

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