A newly seated edition of the D.C. Tax Revision Commission began wading through layers of the city’s Byzantine tax structure on Monday and brainstorming ways to keep the city’s finances in step with its flourishing population.
D.C. Mayor Vincent C. Gray praised commission Chairman Anthony A. Williams, who served as the city’s mayor from 1999 to 2007, as the most qualified person to lead the commission’s work as it unties what one commissioner termed the “Gordian knot” of D.C. tax policy. The 11-member body is scheduled to meet at least once a week and to issue its recommendations by next summer.
Relaxed yet organized, Mr. Williams said the body is poised to effect real change in the nation’s capital in a transparent, fair and equitable manner.
“We don’t want to be one of these commissions where our work sits up on the shelf for the rest of time,” Mr. Williams said.
A similar body helped the District’s fiscal house transition from its darkest days under the thumb of a federal control board. The first commission formed in 1996 — when Congress kept a close eye on the city’s coffers through a financial control board —and finished its work in 1998. D.C. Council member Jack Evans, Ward 2 Democrat, said the commission’s results helped him and council member David A. Catania, at-large independent, push the Tax Parity Act of 1999 to slash income and business taxes in the city.
More than a decade later, the commission will take a comprehensive look at taxation in a city that is thriving yet still vulnerable to deep federal spending cuts and highly competitive markets just outside its borders.
Mr. Evans, chairman of the council’s Committee on Finance and Revenue, said the District has to hone its competitive edge in the face of business-friendly tax rates and incentives in neighboring states, especially Virginia.
Mr. Gray sent a letter to Mr. Williams on Friday with a list of priorities that ranged from growth in the city’s technology sector to potential tax breaks for businesses and elderly residents who choose to stay in, or relocate to, the District.
“The underlying task of this commission is not a complete overhaul that will address a fiscal imbalance, but rather a review to ensure that the District of Columbia tax code is suited to the needs of the city early in the 21st century,” Mr. Gray wrote to Mr. Williams.
Many of the mayor’s proposals ask the commission to weigh the loss of direct revenue from lower tax rates or abatements against the added revenue gained by retaining or attracting residents and businesses to the District.
His successor, Phil Mendelson, said the board should look at whether everyone is paying his or her fair share under the tax code of the city. He also asked the commission to look at whether the city’s tax system actually drives people away from the District, since that long-standing belief seems to be “more anecdotal than evidence-based.”
But the council has taken steps to effect some of the mayor’s goals, including more than $30 million in eventual tax breaks for daily-deals company Living Social in a bill structured to ensure that the firm would stay in the District and hire its residents.
The mayor also asked the commission to take a look at the city’s tax on out-of-state bonds, a controversial measure that dominated budget talks in mid-2011 until lawmakers decided to make the law prospective to newly purchased bonds in 2012. The issue still has bondholders — many of them senior citizens — scratching their heads because “pooled bond funds made it almost impossible for residents to track which bonds were purchased before Jan. 1, 2012.”