Jack Evans Report

It is with great disappointment that I report to you that the D.C. Council voted last week to raise our income tax for the first time in 30 years. Last week, at our first meeting after the summer recess, Phil Mendelson and Mary Cheh led an effort to raise the income tax rate from 8.5 percent to 8.95 percent on incomes over $350,000. Cheh and Mendelson were joined by Councilmembers Jim Graham, Harry Thomas, Tommy Wells, Yvette Alexander and Michael Brown in passing the measure, giving the District the fifth highest income tax rate in the country. I have been opposed to the idea to increase the income tax rate ever since it was first proposed by Mayor Vincent Gray earlier this year. It was simply not necessary in light of the hundreds of millions of dollars in new revenue already identified by the District’s chief financial officer this year.

Notwithstanding the facts, proponents argued that the income tax increase was necessary to undo the ill-advised municipal bond tax – in fact, this was a false choice – an amendment I offered would have obviated the need for both new tax proposals due to the most recent $89 million in projected new revenue. My amendment failed, 7-6, however, after the seventh and deciding vote was cast by Mary Cheh to raise the income tax.

Another justification presented by those who want to gratuitously raise income taxes is that it will make the income tax more progressive. In response to that point, I asked that we consider lowering the income tax rate for lower income taxpayers, which would make the income tax rate structure more progressive without stifling economic growth.

In the same way the recent irresponsible brinksmanship in Congress undermined the confidence of voters around the country, not to mention the bond rating agencies, the disingenuous debate over the District’s finances will shake the confidence of District taxpayers who see their bills increase without justification. The District has also suffered an adverse action on its bond credit rating – while this was due to issues relating to federal government spending cuts, it could possibly have been avoided if the District had more money in its savings account.

I am very concerned as we go forward about the attitude of the Mayor and the majority of the Council with respect to our finances. The city must live with the revenue we have, and we need to bring the exponential growth in government spending back under control.

As fall approaches, there is much to do, and I look forward to facing the many challenges before us.