Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Saturday, July 11, 2020

D.C. Council raises gas and other taxes, rejects tax increase on wealthy, during first budget vote

ImagesOn Tuesday, the D.C. Council raised the gas tax and eliminated some tax breaks for businesses, but rejected an income tax hike for the wealthy, during a contentious debate over how to winnow the budget as the coronavirus crisis continues to decimate the economy. 

The Council also reduced the estate tax threshold from $5.6 million to $4 million. The Council claims the revenue from this increase will be about $1.8 million.

The council addressed the tax issues before unanimously approving a spending plan for the fiscal year that starts OCt. 1, in the first of two budget votes scheduled this month.

Mayor Muriel E. Bowser (D) did not include tax increases in her budget proposal. However, she said she would plug an $800 million hole largely by freezing pay and hiring, and tapping reserves. In a letter to lawmakers, Bowser said it would be "foolhardy to raise taxes this year."

However, lawmakers raised an extra $63 million by increasing some business and other taxes and dedicated the funding to social services including housing vouchers, assistance to undocumented immigrants and mental health assistance in schools. 

Meeting virtually via zoom, the hearing turned chaotic as lawmakers had a hard time following the details of complex tax proposals. 

Council Chairman Phil Mendelson (D) sought to delay some of the tax increases for the time being. Mendelson noted that revenue projections are likely to shrink again when forecasters revise their estimates in late summer, which will force the council to revisit the budget. 

After passing the budget, the council approved legislation needed for the Bowser administration to move forward on a deal to build a new hospital to replace the public United Medical Center in Southeast Washington. 

The council also voted to grant Bowser the power to keep restricting businesses and social activities to limit the spread of coronavirus. 

Under law, the mayor can declare a state of emergency for 135 days — meaning the current emergency would end July 24. 

See Fenit Nirappil & Julie Zauzmer, D.C. Council raises gas and other taxes, rejects tax increase on wealthy, during first budget vote, Washington Post, July 7, 2020.

Special thanks to Lewis Saret (Attorney, Washington, D.C.) for bringing this article to my attention.  


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