Some well-to-do Washingtonians say that the tax code needs to be more progressive, and they're willing to pay a little more to make it so.
We all know there are only two certainties in this life — death and taxes. This is a story about the latter. Now, none of us love taxes, that’s for sure. But some people don’t mind them. And some people, like Louis Perwien, are even willing to pay a little more of them.
“Everyone pays taxes. Why should I pay more? Because I feel like I’m the most able to pay for it,” Perwien says. “Also, beyond that, I gain from living in a society that I feel is more equal.“
It might seem odd, but Perwien is saying he should pay more in taxes. Because he can afford it. Perwien is a market analyst at Freddie Mac, so he makes a good living. He also inherited money from his wealthy grandparents. He has a trust fund, a sleek condo in downtown D.C. and a wife who makes a good living as well.
As such, Perwien says he has an obligation to do his part.
Perwien is one of a number of high-income D.C. residents who have advocated for higher taxes for themselves. Not drastically higher. Just enough so that the responsibility for paying for things like roads, emergency services and homeless shelters is more fairly distributed.
“Social services need to be provided. And someone needs to pay for them. Those who should pay for it I believe are people who are the most able to pay for it,” he says.
In 2011, after serious budget shortfalls, the D.C. Council established the D.C. Tax Revision Commission. Its mandate was simple — find a way to make the city’s tax structure more equitable and less complicated while also broadening the tax base, encouraging business growth and making the city more competitive. Former D.C. mayor Anthony Williams chaired the commission, which met for more than a year to draft recommendations. Those came out just before Christmas.
During the commission’s deliberations, it heard from many high-income earners like Perwien asking for a more progressive tax code. So that we know exactly what that means, here’s Janelle Treibitz of the D.C. Fair Budget Coalition.
“The idea is as you make more money, you pay incrementally more in taxes,” Treibitz says. “It’s a way for everyone to pay their fair share.”
But currently in the District, the tax code doesn’t seem all that progressive. Here’s what is looks like currently: If you make less than $10,000, four percent of your income goes to taxes. $10,000 to $40,000 and you’re paying six percent to the tax man.
And this is where it gets weird. If you make between $40,000 and $350,000, you’re looking at an 8.5 percent tax rate. That’s a huge spread and it means that if you make $45,000 at your job as a bank teller, you’re paying the same percentage in taxes as your doctor who’s making $300,000 a year.
Treibitz sees a problem with this, especially in light of the fact that when budget shortfalls happen, the first things to get ditched are often services for the city’s most vulnerable residents.
“We found that if our tax code was more progressive, we could weather these kinds of storms more elegantly. And in general, we don’t have enough money for our programs,” she says. “So if we’re going to have a city where both the haves and the have-nots can live, then we have to have a little more equitable input.“
To make income taxes more fair, Treibitz and fellow activists are advocating for a slightly higher tax for the highest-income earners. Think D.C.’s millionaires, who account for about one in every 16 households here. And they want the city to institute more tax brackets so that people making solidly middle-class wages are paying a smaller percentage of their income to taxes than their neighbors earning six figures.
In other words, they’re asking wealthy people to pay a little more. And perhaps surprisingly, at least some of those wealthy people want the same thing, says Jacob Feinspan, executive director of Jews United for Justice, a local social justice nonprofit.
“We believe those of us that have been lucky during this recession and more broadly who are earning good wages and have good jobs are in a position where we should be paying more in taxes for the services we benefit from and that benefit everyone in the city,” Feinspan says.
Back in 2011, Jews United for Justice organized “Raise My Taxes” house parties to help members learn about progressive tax reform. Most recently they rallied members to testify before the D.C. Tax Revision Commission in support of higher taxes.
“There’s a story in Judaism where there’s an old man who’s planting trees and someone sees him doing it and says, 'Why are you planting these trees? You’ll never see them grow.' And he says, 'It’s not for me to complete the work, neither can I walk away from it,'” Feinspan says.
“And none of us are products only of our own success. Everything in our lives has been built on the work of our parents and their parents and our neighbors and our teachers. And wanting to invest in a stronger community is about what’s best for us, but also what’s best for our children. “
The tax revision commission recommended a number of changes to the city’s tax code. Namely, they suggested that an 8.75 percent tax rate for the wealthiest Washingtonians be made permanent in 2016. And they recommended two additional tax brackets to spread the responsibility more equitably.
Activists like Treibitz are generally pleased with the progressive direction of the suggestions. Now it’s up to the D.C. Council to take up the proposal and decide whether it wants rich residents to pony up a bit more for the city’s coffers.
[Music: "One" by Brent Truitt from Pickin' On U2: A Bluegrass Tribute]