Almost four years have passed since the District’s Tax Revision Commission came out with a proposal that suggested relief for both businesses and moderate-income residents. The D.C. Council adopted many of the proposals, with a staggered schedule for implementation.
Now, assuming that Congress approves the drastic federal tax changes that seem likely, we think it’s time for Mayor Muriel Bowser and the D.C. Council to reconstitute the commission to conduct a review of where the District stands now — and what looms ahead.
With congressional negotiators working to iron out differences between the bills approved by the House and Senate, it remains unclear what might end up on the president’s desk for his signature. There’s even the possibility that the measure could hit a roadblock on the way.
But if a bill is signed with provisions that the mayor and other local leaders have lambasted — such as elimination of the federal deduction for state income taxes, or strict limits on deductions for local property taxes and mortgages — the District will need to re-examine its policies.
The D.C. Policy Center notes that elimination of the State and Local Tax deduction, particularly given the disparate tax rates in Virginia and D.C., could jeopardize projected population growth, harming the city’s economy. That requires study. The District should also consider whether local measures could help offset any loss of provisions that help developers build affordable housing for seniors and low-income residents.