DCSGP Testimony
Public Oversight Roundtable on Poverty Issues, COMMITTEE ON HOUSING AND URBAN AFFAIRS, January 16, 2008
Testimony given by David Schwartzman
Given to Public Oversight Roundtable on Poverty Issues, COMMITTEE ON HOUSING AND URBAN AFFAIRS, January 16, 2
Given on Wednesday, January 16, 2008
Thank you Councilmember Barry for convening this extremely important hearing.
We have already heard and will hear more shocking statistics and real life stories that document the realities of living in poverty in our nation?s capital. The Universal Declaration of Human Rights (Articles 23, 25 and 26), and the U.N. Convention on the Rights of the Child outline each person's right to housing, food, education, health care and a job at a living wage and the right of each child to health and education respectively. These rights have been systematically violated in the nation?s capital.The continued denial of our political rights has of course facilitated a longstanding denial of these economic and social rights, while the residents of the District of Columbia continue to be subjected to corporate-driven IMF style Structural Adjustment Programs (SAP) which entail brutal and racist attacks on poor and working class residents. SAP has included the erosion of democracy, privatization of municipal services and property, cuts and inadequate funding of basic social services including education, gentrification and lack of affordable housing for our working class majority, toleration of persistent poverty of a large fraction of our children, shockingly low life expectancy and an infant mortality rate that is significantly higher than the national average for our African-American residents, destruction of our only public hospital, the continued denial of quality medical care to a large fraction of our residents, inadequate income security, the nation's widest income gap between rich and poor, and the heavy weight of corporate financing of our established political leaders corroding our democratic process (go to the Petition for DC Statehood and Human Rights for more information: https://www.dcstatehoodgreen.org).
We are not only under the boot of Congress, we are also under the boot of the regional corporate elite, and its political instruments that hide behind the smokescreen of Congressional power to pretend they cannot better meet essential needs of DC residents.
I will now focus on one critical area where our elected District government can have a major impact towards sharply reducing poverty in our nation?s capital, even within the constraints of our neocolonial Home Rule Act. Simply said, we now have a DC tax structure which favors the very wealthy at the expense of everyone else, especially the bottom 60% of our families who earn less than $53,000 a year. The Council can act to make this regressive tax structure progressive, and much better able to generate the necessary revenue to meet essential needs, a stated goal of the Fair Budget Coalition of which the DC Statehood Green Party is a longstanding member. Increased revenues should go to raising the TANF benefit to above poverty, expanding child care, job training and of course in improving public education. This would go far in drastically reducing poverty and contributing to greater economic and social justice in our community, translating into a better life for all residents.
Our present local tax structure for individuals/families is regressive, which means that higher income brackets pay a lower rate than low/middle income. In 2002, the top 1% of taxpayers, averaging $2 million paid 6% of their income in DC taxes, while those making $15-42K paid about 11-12%. The top 1% averaging $2 million income paid a lower rate than the bottom 20%, averaging $10,500 (ITEP study, January 2003; DC Fiscal Policy Institute; see attached for graph; this can be downloaded at: http://www.itepnet.org/wp2kst.htm, go to District of Columbia link). A soon to be released updated ITEP (Institute on Taxation and Economic Policy) study will show that low and middle income residents now have even higher local tax rates, while the top 1% has even lower rates than in 2002. This new ITEP report will show even greater regressivity for the top 80% for 2006, with the top 1% paying a lower rate than the bottom 20%, even without including the additional regressive effort of the federal deduction offset of District income and property taxes. To allow this disparity to continue in the future will be a crime against the great majority of DC?s residents. Even the federal income tax structure, with Bush?s tax cuts for the wealthy, is progressive compared to the District?s tax burden (the sum of sales & excise, property and income taxes). And the District does have a tax base that could much better meet essential needs of its residents. DC millionaires had a taxable income of $2 billion in 2001 (source: IRS), now even greater. The wealthy in our community should pay their fair share to insure that low income folk do not continue to suffer. Lets set an example for surrounding jurisdictions.
Our alternative: reduce taxes on the bottom 80%, raise them on the top 5% (over $155,000 family income in 2002, now even higher). A rough calculation shows that if the top 5% paid the same effective rate (including the benefit they get from the federal deduction offset of their local taxes) as the bottom 60% DC would get more than $300
million/year in additional revenue to better meet essential needs (the top 5% had a taxable income of roughly $7 billion in 2004, now even more, data taken from IRS reports [Tax Year 2004, latest available data]).
Given the increasing likelihood for an upcoming recession and who will bear the brunt of its effects, the challenge of progressive restructuring of DC's taxes is now even more imperative to insure a revenue base to meet the needs of the poor. According to Ed Lazere (DC Fiscal Policy Insitute) in the last recession, in 2002, DC passed the budget in May and discovered a $300 million revenue hole two months later. Lets not get into a recession and hear that the "surplus" is gone, we don't have the money in our budget.
The DC Statehood Green Party has long urged a fundamental restructuring of our local taxes. Fair Taxes for DC called for repeal of Tax Parity which has favored wealthy individuals and corporations, lowering sales/excise taxes on essentials and making our DC income tax payment as a flat percentage of the federal (even with the Bush tax cuts for the wealthy the federal structure is still more progressive than DC's income tax). In addition, our real property tax rates should made progressive.
Other steps the Council and Mayor should do asap include:
1) Pass the Accrued Sick and Safe Leave Act.
2) Implement Initiative 51 which would provide sunshine (open hearings) for real property tax assessment of commercial and vacant property. Initiative 51 was passed by 80% of DC voters in 1996 but never implemented by the Council as a result of Control Board and corporate pressure. Rescind Council approval of the Small Business Commercial Property Tax Relief Act of 2007 which heavily favors big business.
3) Create a reserve fund targeted for those who will be most impacted by a recession.
Finally, fire Gandhi and reorganize the Office of Tax and Revenue so it truly serves the interests of D.C. residents, instead of the most affluent and the corrupt.
[Later after the Panel finished testifying, Councilmember Alexander questioned other speakers, including Jonathan Smith (Executive Director, Legal Aid Society of the District of Columbia and Tom Howarth (Director, Father McKenna Center). I posed the following question to Ms. Alexander and to Mr. Barry:
"Would you be willing to pay a comparable DC tax rate as the bottom 60% of residents to insure essential needs were better met, given you are probably in the top 5% income bracket? And more importantly, would you and the Council be willing to pass legislation to make our DC tax structure both progressive and much better able to meet these essential needs? Ms. Alexander asked me what kind of response I expected. I said an honest one. She then said she would have to look into the issue further. Mr. Barry said he has always supported fair taxes, or something to that effect. They were the only Councilmembers on the dais at that point].
Relevant quotes from the Bible
?to whom much is given, much more is required?
The Parable of the Faithful Servant, Gospel of Luke 12:35-48
?It is easier for a camel to go through the eye of a needle, than for a rich man to enter the kingdom of God? Mark 10:25 A progressive DC tax structure, ?tough love for the rich?, would surely grease the eye of the needle for DC millionaires.
And commentary:
?The Bible commands that the law promote justice because human beings are not good enough to promote justice individually on their own,? she said. ?To assume that voluntary charity will raise enough revenues to meet this standard is to deny the sin of greed.? Susan Pace Hamill, Professor, University of Alabama Law School. (NYT, December 25, 2007. See her books: ?As Certain As Death, A Fifty-State Survey of State and Local Tax Laws? and ?An Argument for Tax Reform Based on Judeo-Christian Ethics?
