Commission Deliberations

Final Recommendations
 

Dec. 18, 2013

 

On this date, the D.C. Tax Revision Commission (“the Commission”) unanimously approved tax reform measures to increase fairness, broaden D.C.’s tax base, promote competitiveness, encourage business growth and simplify the tax code.

 

Download the Recommendations Announcement Memo*

 

 

*Please Note: The February 2014 Recommendations Report of the D.C. Tax Revision, prepared for the Commission's Feb. 12 testimony before the D.C. Council, is available on the homepage.

 

 

 
Draft Chairman's Mark

 

 

Dec. 3, 2013

 

After 24 public meetings and over a year of deliberations, the D.C. Tax Revision Commission will submit its recommendations to Mayor Vincent Gray and the D.C. Council in December 2013. 
 
To advance the Commission's efforts, Mayor Anthony A. Williams, Chairman of the Commission, prepared two sets of recommendations, which are based on the Commission's collective deliberations and the revenue estimates prepared by D.C.’s Office of Revenue Analysis. The first set of recommendations requires an investment of future revenues, which Mayor Williams believes would be worthwhile. The second set is close to revenue neutral, including the $18 million allocated for tax changes by the D.C. Council. Mayor Williams believes that either of these approaches would achieve the Commission’s stated goals of fairness, broadening the tax base, making D.C. more competitive, encouraging business growth and simplifying the tax code.

 

This set of recommendations is not final. This set of options was compiled to focus discussions as the full Commission continues to deliberate and craft a final package.  

 

The Draft Chairman's Mark, and the accompanying letter to commissoiners, was distributed to commissioners before the Commission's Dec. 3 meeting.

 

 

Download the Draft Chairman's Mark
 

 

Dec. 9, 2013

 

A second draft of recommendations was presented to the commissioners for the Commission's Dec. 9 public deliberations.

 

 

Download the Second Draft Chairman's Mark

 

 

 

Dec. 18, 2013

 

A third draft of recommendations was presented to the commissioners for the Commission's Dec. 18 public deliberations.

 

 

Download the Final Draft Chairman's Mark

 

 

Memo: Description of the Final Chairman’s Mark

 

 

 

The Commission also addressed tax administration at the Dec. 18 public meeting. 

 

Download the memo to be sent to incoming CFO Jeff DeWitt

 

Download all tax administration policy proposals sent to incoming CFO Jeff DeWitt

 

 

For the full list of tax policy options considered by the Commission during its deliberations, as well as policy memos explaining each option in detail, please see below.

 

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Tax Policy Options for Consideration

 

Sept. 26, 2013

 

After receiving numerous presentations and research papers from tax policy experts, testimony and letters from the Mayor and members of the D.C. Council, soliciting the thoughts and ideas of the public and our commissioners, the staff of the Commission has assembled a list of policy options for the commissioners to consider. All materials submitted to the Commission have been posted on our website's Commission Resources page and are available to the public.
 
The Commission’s deliberations will take place during a set of meetings in September, October and November. These meetings will be open to the public. Please see our Commission Schedule page for a complete and detailed schedule.
 
The full policy option list is presented below and has been made available to the public to promote transparency. Please note:

 

  • The policy option list is not final. The policy options below are not the recommendations of the Commission. They are options for consideration by the Commission. The staff attempted to reflect the full range of policy options that have been presented to the Commission—whether by a policy expert, elected official, commissioner or member of the public—without endorsing any of them.
     

  • “Policy  Option” descriptions are purposefully brief. This list was created to succinctly present the range of options available to the Commission. Many ideas are not flushed out in full so that the list can remain on three pages. Several options—such as lowering individual income tax burdens—contain numerous policy changes than cannot be represented on one line of text. For the Commission’s deliberations, the staff will assemble policy option memos (please see below) that will describe each option in more detail. These memos will also be made available to the public and posted on this page prior to the meetings.
     

  • “Goals” align each policy option with one or more of the five stated objectives of the Commission. In several cases, the goal is an indirect impact of the policy option. 
     

  • “Revenue” indicates the direction of the revenue impact of a policy change taken in isolation, based on various assumptions. A more precise revenue estimate for each proposal will be provided by the Office of Revenue Analysis for the policy option memos and may be updated during deliberations. Any revenue estimate for a policy options does not reflect other changes that may make the change net revenue neutral.
     

  • “Origin” only describes the source of the policy option. It is not an endorsement of the proposal by the attributed person. 

At this stage, he Commission is not soliciting additional policy options. The public is strongly encouraged, however, to submit any thoughts or reactions on the options presented here or discussed at the deliberations. Please use our Contact Us page to reach a member of the staff.

 

Download the D.C. Tax Revision Commission Policy Options List
 
 
 
Staff Review of Commission Sentiment on Policy Options (Nov. 18 Update)

 

Nov. 18, 2013

 

On Sept. 26, 2013, the staff of the D.C. Tax Revision Commission posted a list of policy options to be considered during the Commission’s public deliberations. During four public meetings in September and October, as well as a public hearing in November, the Commission deliberated on the 60 options to reform D.C.’s tax system. The staff prepared a policy memo for each option, describing the change in detail, to help guide these discussions. All policy memos provided to commissioners are posted below.

 

The policy option list has been updated to reflect the staff’s assessment of the Commission’s sentiment. Each policy option discussed during deliberations has been classified by one of the following colors:

 

  • Green: There is a general consensus to pursue the policy option.

  • Red: There is a general consensus to not pursue the policy option.

  • Yellow: More deliberation is needed.

 

 

Download the Staff Review of Commission Sentiment on Policy Options

 

 
 
 
Tax Policy Option Memos

 

For the Commission’s deliberations, the D.C. Tax Revision staff will assemble policy option memos that describe each option in detail. These memos are available to the public and posted below prior to each meeting. Every memo corresponds with a policy option on the D.C. Tax Revision Commission Policy Option List. 

 

 

Sales Tax: Sept. 30, 2013

 

1. Expand sales tax to additional services (construction, storage, etc.)

 

2. Expand the sales tax base on goods: food, snacks or non-prescription drugs

 

3. Expand the definition of nexus to require online retailers with D.C.-based affiliates to collect the D.C. sales tax

 

4. Add a use tax line to the personal income tax return

 

5. Broaden and harmonize the definition non-cigarette tobacco products and tax all tobacco products at the same rate

 

6. Increase the sales tax rate on commercial Parking, hotels, rental cars and restaurant meals

 

 

 

Individual Income Tax: Oct. 7, 2013

 

7. Mitigate the tax burden on middle-income residents 

 

8. Add more high-income tax brackets 

 

9. Decrease the tax rates on high levels of income

 

10. Increase D.C.’s standard deduction and personal exemption to the federal levels

 

11. Increase the D.C. Earned Income Tax Credit (EITC) for all low- and moderate-income workers 

 

12. Increase the D.C. Earned Income Tax Credit (EITC) for childless workers

 

13. Eliminate D.C.’s non-custodial parent Earned Income Tax Credit (EITC)

 

14. Conform D.C.’s limitation of itemized deductions to the federal limitation

 

15. Phase out the D.C.’s personal exemption for high-income taxpayers

 

16. Conform status choices on D.C.’s income tax filing with the federal choices (i.e., reduce from eight to five categories)

 

17. Eliminate the low income credit

 

18. Eliminate the survivor’s benefit exclusions for D.C. and federal government workers

 

19. Eliminate the D.C. government employee first-time homebuyer credit

 

20. Eliminate the $500 deduction for long-term care insurance

 

21. Eliminate the $3,000 exclusion for D.C. and federal government pensions

 

22. Eliminate the homeowner/renter property tax credit (Schedule H)

 

23. Eliminate the exemption for out-of-state municipal bonds

 

 

 

Estate Tax: Oct. 7, 2013

 

24. Eliminate the estate tax 

 

25. Increase the D.C. estate tax threshold from $1 million to $2 million or $5.25 million 

 

26. Exempt the first $1 million of property in an estate 

 

27. Defer estate taxes until the death of the surviving spouse

 

 

 

Business Taxes: Oct. 21, 2013

 

28. Eliminate the business and unincorporated business franchise taxes or reduce the tax rate

 

29. Eliminate the unincorporated business franchise tax 

 

30. Create a de minimis threshold for the business franchise tax

 

31. Replace business taxes with a gross receipts tax

 

32. Expand the definition of nexus from physical to economic presence

 

33. Only use sales to apportion business income to D.C. for tax purposes

 

34. Reduce capital gains tax rate to 3% for investors in high-technology firms

 

35. Provide certified business enterprises (CBEs) a property tax credit 

 

36. Levy a local services tax on all D.C. employers 

 

37. Replace the D.C. Water PILOT fee with a utility tax on water and wastewater treatment

 

 

 

Property Taxes: Oct. 30, 2013

 

38. Lower the property tax rates on commercial property and raise the rate on residential 

 

39. Lower the tax rate on commercial property

 

40. Apply one tax rate ($1.85 per $100) for all commercial property and assist small businesses with a tax credit

 

41. Eliminate the classifications for vacant (Class 3) and for blighted (Class 4) property or combine these two classes into one classification

 

42. Deliver "circuit breaker" tax relief via the property tax instead of the individual income tax

 

43. Eliminate the senior tax credit

 

44. Eliminate or reduce the homestead deduction

 

45. Introduce "equal yield budgeting" for commercial property

 

46. Tax land and buildings at different rates

 

47. Eliminate the assessment limitation on residential property

 

48. Reduce the assessment limitation from 10% to 5%

 

49. Increase the minimum taxable assessment from 40% to 50% of current assessed value

 

50. Elimination “miscellaneous” property tax exemptions

 

51. Create a payment in lieu of taxes (PILOT) program for tax exempt properties

 

52. Establish criteria for granting property tax exemptions

 

53. Regularly review legislated tax expenditures and sunset some

 

54. Improve the criteria necessary to grant a property tax abatement

 

 

Deed Recordation & Deed Transfer Taxes: Oct. 30, 2013

 

55. Increase commercial property deed tax rate from 2.9% to 4.9%

 

56. Eliminate deed taxes or reduce the combined rate to 0.433% (Virginia’s rate)

 

57. Eliminate “notch” in deed tax rate by using marginal rates

 

58. Create more progressive tax brackets with marginal rates

 

59. Raise exemption from 120% of HUD low-income standard to 200%

 

60. Waive deed taxes for first-time homebuyers

 

 

Catch All Meeting: Nov. 18, 2013

 

Memo: Expand the Sales Tax to Additional Services (UPDATE) and Attachment (FTA List)

 

Memo: Exempt Investment Funds from the Unincorporated Business Franchise Tax (UPDATE)

 

 

 

Discussion of Consensus Recommendations: Dec. 3, 2013

 

Subcommittee Memo: Comprehensive package addressing several individual income tax policy options