Friday Question of the Day – Thoughts on DC’s Proposed 2015 Budget?

NBC Washington reported:

“A 24 percent middle class income tax cut for those earning $40,000-to-$60,000 per year. To help fund the tax breaks, an $800 million, multi-year streetcar budget was cut back to $400 million with no immediate impact on construction.”

And a reader specifically asks – “Yoga Tax Is Back?”

Just wondering what your readers think about the tax on health clubs. Specifically, this quote from the article from the Washington Post:

“The following would be newly subject to the city’s 5.75 percent sales tax under the draft budget legislation:

Health clubs: the services of a health club or a tanning studio … mean[ing] a fitness club, fitness center, or gym the purpose of which is physical exercise, including fitness and recreational sports facilities featuring exercise and other active physical fitness conditioning or recreational sports activities, including swimming, skating, or racquet sports, except not health resorts and spas where recreational facilities are combined with sleeping accommodations … [or] a business the purpose of which is to provide individuals a manmade tan, including sun tanning salons and spray tanning salons”.

Why is DC punishing people for trying to be healthy?

Do you guys support this proposed budget approved by the Council? What if anything do you think can/will be changed before the final Council vote June 11th?

Council Members contact information after the jump.

Chairman Phil Mendelson:
(202) 724-8032
[email protected]

Jack Evans:
(202) 724-8058
[email protected]

David Cantania
(202) 724-7772
[email protected]

Kenyan McDuffie:
(202) 724-8028
[email protected]

Anita Bonds:
(202) 724-8064
[email protected]

Jim Graham:
(202) 724-8181
[email protected]

Mary Cheh:
(202) 724-8062
[email protected]

Muriel Bowser:
[email protected]
(202) 724-8052

David Grosso:
(202) 724-8105
[email protected]

Tommy Wells:
(202) 724-8072
[email protected]

Yvette Alexander:
(202) 724-8068
[email protected]

Marion Barry:
(202) 724-8045
[email protected]

Vincent Orange
(202) 724-8174
[email protected]

78 Comment

  • These budget cuts and tax breaks for the rich would make a Republican proud. While the streetcar funding has gotten most of the attention, they also cut welfare benefits. There is no need for the rich people and businesses in this city to get a tax cut. That is the part of this that infuriates me. Far better to maintain some semblance of a social safety net, especially at a time when the poor are getting poorer, and to improve our city’s infrastructure.

    • Since when was making 40K to 60K in DC considered rich?

    • The posting didn’t make this clear, but while the initial tax cuts are for lower income residents other tax cuts for the wealthy and for businesses will be phased in over four years.

    • Some semblance of a safety net?

      Are you serious?

      DC has a massive social services budget.

      And apparently so many social services resources that we can afford to have a massive homeless shelter on the out expensive land in town…. The Mitch Snyder Venter, two blocks from the Capitol, where the land alone is worth more than a quarter billion dollars.

      If we can afford luxuries like that then our safety net is more than adequately funded.

      Also we are the only place in the US that refused to set a five year limit ok n TANF. The only one.

      Suggesting that we don’t spend on the safety net is absurd.

      • Hear, hear!!!

      • +1
        To those who think the city needs more social programs, what specifically would you like to see more of? It seems to me the city has a pretty aggressive setup for social services. Transportation is free on public transit, there are stipulations on business to hire local residents, the tax setup of having low property taxes and high income tax favors the poor, etc.
        In my neighborhood there are a lot of people who loiter on the street all day hanging out with their buddies. These guys are obviously not working a day job and I can’t help but guess they are on some kind of social assistance program whether it is unemployment or disability or whatnot- or maybe they have a great moonlighting career, who knows. But I also watch these same guys come in and line up to buy scratch of lottery tickets day in and day out. There is so much demand for lottery tickets that they have a separate cashier in most of the local shops. While I really hope and believe the vast majority of the social program funding goes to families in need and is put to good use- when I see guys stumble in half drunk buying lotto tickets to go loiter at the bus stop, it chaps my ass.
        I just opened myself up so go ahead and light me up and call me names- but just don’t forget to buy your pick 3 ticket for tonight- I hear it will be a doozie…

        • Transportation is not free for low-income people. Some TANF recipients do get a stipend for going to job training, and elderly and disabled people get discounts. If someone is getting disability benefits, they would have had to give Social Security a lot of proof of their illnesses. Most people who apply get denied, and it’s not funded by DC in any way. If they are getting unemployment, it would run out after a certain point. They might also be getting retirement benefits–you can claim Social Security as early as 62, and some government jobs give pensions even before that.

          But you asked what additional social services people would actually like to see. Here are mine:

          * redevelop the area by Stadium-Armory so there’s a mix of market-rate and subsidized housing…not just studios but actual 3 and 4 bedroom places where families can live. Create a smaller family shelter there (with good case management and working utilities, not like DC General) and also put one in upper NW and one east of the river, so homeless families aren’t clustered in one place.

          * have a fund for people who’d like to fix up basement apartments, with the condition that they rent to Rapid Rehousing recipients. Your ceiling is 1 inch too low? DC will pay to dig it out if you then get a C of O and a BBL and let a person or family leaving a shelter live there for 3 years. The District would still supplement the rent and provide a case worker to the family for when rapid rehousing ran out. The homeowner could still evict people who violated the lease, but they’d have to take in a new subsidized tenant or pay back the District with interest for the work they got done.

          * DC could fund diaper vouchers for families receiving WIC. That would make it easier for kids to go to day care (if you don’t send diapers, they send your kid home) and can cut down on medical needs and child abuse

          * Higher reimbursement rates for child care vouchers so more day cares would accept them and more centers would open. Bonuses for centers that stayed open past normal hours, served both kids on vouchers and those paying market rates, and that became NAEYC accredited.

          * Cognitive behavioral therapy for kids as risk of dropping out of school or committing crimes, like

          * longer school days and school years (with time not just for reading and math but art, music, phys ed, cooking, science, etc.). In-school suspension and special behavioral programs for kids who aren’t functioning well in regular classes, so they don’t distract others and can get the help they need.

          * High-quality summer school options with tracks for remediation and enrichment, including lots of fun time and field trips, and priced on a sliding scale.

          * Enough CFSA staff to really investigate and work with families whose kids are chronically late from or absent from school. Whether parents start sending kids to school because they’re worried about being investigated, or if the families “just” end up getting services they need, it would be good for kids.

          * Work readiness services for all TANF recipients, seizing and renovating vacant properties for sale or for affordable housing (would also raise property values nearby those houses), more ambulances and EMTs, and teacher aides in high-poverty schools as I mentioned in my comment earlier.

          DC can do better and it would make DC better not just for poor families but for everyone.

          • taxpayers pay to dig out basement apartments? is this trolling?

          • Did you even read the text? This would provide affordable housing for families in need, and is MUCH cheaper than creating new housing from scratch. Don’t be so dense bud.

      • There has always been a shleter at that location, long before the land was worth that much. I don’t see any problem with a homeless shelter.

        It is like the woman who moved to Columbia Heights and groused there were homeless men waiting for food at Sacred Heart Church. That program was there for ages, before she was born.

        If gentrification means toss out any preexisitng support for the poor, I can’t support it. It’s not realistic.

    • Small businesses need a tax break. But they’re not getting any.

    • dumplingdreams

      Who are these “rich” you speak of?? Do you assume we’re all “rich” because we belong to fitness centers? I work as a nanny and the cost of my monthly fitness bill is a huge sacrifice that I make for my health and mental well-being. I have to shave off a lot from my monthly budget to afford belonging to a good fitness center. It is appalling that the DC government feels justified in punishing hard-working Americans for taking care of ourselves so that we don’t become broken-down drains on society.

  • I was rather appalled by how Fox 5 covered this story last night, presenting it completely backwards. You expect a little of the usual Fox spin but they took it to a new level last night, opening with, “Lawmakers are looking for new sources of revenue and are considering a tax on gym memberships!!” At the very end of the piece was a throwaway line about how it would “allow them to lower taxes in other areas.”

  • Oh my do I have feeling on the tax issues.

    1) Regarding the “fitness tax,” this is a perfect example of broadening the tax base and reducing the tax rate. Taxing personal services is an evolving area but DC was already lagging well behind other jurisdictions. This just allows the tax base to align more with other jurisdictions while lowering the overall sales tax rate. This is what we want in taxes and is a win for everyone.

    2) I can’t believe DC is keeping the ridiculous system of married filing separately on the same return instead of just adding married tax brackets.

    3) the most egregious part of the reforms are exempting long-term older residents from paying property taxes. DC already has the lowest property tax rate in the region. It has generous year-to-year rate caps (10% for all, 5% for low income). I can’t believe this passed without any dissent from our council members. Pure pander.

    • I believe the intent of the long term senior exemption is to answer the calls of combating gentrification by allowing old folks in newly hot neighborhoods to not by prices out by big increases in taxes. I’d support a reduced rate or freeze or cap for them vs a complete exemption.

      • Even if property values shoot up by hundreds of thousands of dollars, there is already a 10% cap per year on taxable value if you are filing under the Homestead Deduction. If these people bought their houses 20-40 years ago, they are already paying WELL under market value and never have a huge spike in their taxes. I agree with the OP here- useless pandering.

        • I’m no expert, but I would think that the income of someone living on a fixed income would be much less than 10%, or even 5%, so they would eventually get priced out of their home. Last year’s Social Security COLA was 1.5%.

          • Woops, realizing that first sentence makes no sense (need more coffee). I meant to say the income of an older person is unlikely to increase that much from year to year, so even if modest increases in property taxes could be sustained for some time, they would eventually get priced out of their homes.

          • This always seems to confuse people: it is not a 10% cap in the amount of the TAX increase, it is a 10% (or 5%) cap on the amount of the APPRAISAL increase. Residential property tax in DC is still 0.85%. So, let’s say your 2014 appraisal was $500K and you qualify for the senior discounted cap of %5, they would only be able to raise the APPRAISED value $25K for a yearly tax increase of $212. Granted that year-over-year that money adds up, but it’s not the sudden, massive financial hardship that opponents try to make it out to be.

          • Anon @ 10:19 – are you talking about something specific to senior citizens? Because what you’ve described is exactly the opposite of how my property taxes work. My appraisal went up by more than 10% but my total taxes only went up by 10 percent.

          • And next year, your appraisal might also go up buy more than 10% but the taxable increase will be limited to 10% of your current limited appraisal. For example:

            Year 1: Appraised 100,000:taxable100,000
            Year 2: Appraised 120,000:taxable 110,000
            Year 3: Appraised 140,000:taxable 121,000
            Year 4: Appraised 160,000:taxable 133,100

            That’s how it’s limited to 10% per year.

          • Anonymous 10:19: Don’t mean to split hairs, but I don’t think there is any confusion in the TAX versus APPRAISAL. A 5% increase in the base appraisal amount results in a 5% increase in the taxes. In the example you provided, taxes would increase $212 per year, i.e., increase from $4,250 to $4463 – a 5% increase in the tax amount.

  • I dont understand why they would cut the streetcar budget when its already so far behind schedule. I find it hard to believe that money wont be needed to complete all the planned lines. I think Mendelson is trying to kill the streetcar.

    • The streetcar is 4 years behind not because of funding (it’s already 40 million over budget), but because of atrocious management. And if anyone bothered to read the detail, the streetcar fund still has nearly 300 million sitting in it, committed but unspent. This only cut a minimal amount of fat from a horrifically bloated program and made it less “bloated”

      The other parts…c’mon, who can argue cutting taxes 20% for those making 40-60k by creating a new tax bracket, reducing franchise taxs from the most expensive in the region, to only the second most expensive is a bad idea?

      The “rich” get 30% of the benefit if this tax break, the rest goes to the masses.

      Lastly, this kind if tax rebalancing is long past due. DC has run a budget surplus 9kf the past 12 years, totaling more than 4 billion in budget surpluses during that period and yet, the DC taxpayer is the most taxed in the region. There is no excuse for it.

      Well done Mendo.

  • Mendelson is trying to kill the streetcar period.

    • The streetcar killed the streetcar. I live half a block from a streetcar stop, and never think I’ll be able to ride it anywhere useful in my life here. Get a running line first, then work on additional funding.

  • While I hate creating any kind of disincentive to folks getting/staying fit, I don’t think that the proposed tax would be that much of a burden on most. I also don’t think that an extra $500 in yearly take home pay would make too much of a difference for those in the 40-60k bracket either. This reeks of a self-serving political move that aims to kill two birds with one stone: pacify the poor with a “yuppie” tax and rally the lower middle class with an extra couple hundred dollars. I would much rather see increased spending on social services for the poor.

    • clevelanddave

      500 bucks for someone making 40K a year is HUGE. I’d like to see the city put money into building parking garages in AM, 14th Street, West End, and more money into filling potholes. The parking garages would be supported by the BID in these areas and would be money makers (or at least not losers like the soccer facility). It used to be a tremendous complement to a politician who was able to fill potholes and keep the streets clean, as well as safe. I guess that doesn’t count for much anymore…

      • Take money from mass transit and put it into city-sponsored parking garages, whihc woudl encourage more driving? Uh, no. A thousand times no.

      • Parking garages benefit no DC resident. They benefit out-of-staters who pay no taxes to maintain the roads they use to commute into the district. Let me guess: you live in Maryland or Virginia.

  • Making the City’s tax structure more progressive makes all the sense in the world, and is long overdue. As is conforming the tax structure, wherever possible, to the federal income tax system.
    Exempting older residents from property taxes is absurd. I would support defering taxes on owner-occupied property owned by the seniors identified in the legislation (75+, lived in DC for at least 15 years, makes less than $60,000) until property ownership is transferred. But at the time of transfer, whether it be by sale or through an estate, the taxes should be paid. If, as has been said, the intent is to allow long-time residents to stay in gentrifying “hot” neighborhoods, then the properties will have increased in value significantly. Upon transfer, some of that appreciation should be used to pay the (already low) property taxes. An outright ban crosses the line from housing assistance to taxpayer supported wealth-preservation for a small subset of people (and more accurately, their heirs).
    As others have said, anyone complaining about DC’s safety net has no understanding of how incredibly generous DC is compared to virtually every other jurisdiction in the country.
    If your most vehement opinion on this plan is about the health club tax, well, I would suggest that Courtland Milloy’s famous comments apply squarely to you.

  • “Why is DC punishing people for trying to be healthy?” They tax food too. So I guess the logic is “Why is DC punishing people for trying to eat?”

    • Actually, most food isn’t taxed in DC. Only prepared food. In VA, you pay tax at the supermarkets, which I think is kind of absurd.

    • I keep seeing this. Groceries are NOT taxed.

  • In reply to the readers Why is DC punishing people for trying to be healthy?

    I ask why is the city (and most all cities) punishing people for eating by taking food? Some may even punish people for for being sick by taxing medicine. People buy clothes and even those are taxed. I am sure all those people buying trucks that that ship goods all over the country are taxed for the vehicle, the tires, and the gas.

    Snarky people are calling it a yoga tax to belittle it. It seems more like a tax on services that were lucky enough to not be taxed already.

    • I agree, the tax cuts are a great idea (and I won’t be receiving one, so this is not self-interest). The health club people have pulled this stuff in Maryland and Virginia, avoiding sales taxes in both states. No wonder that yoga place started selling “Who is John Galt” tote bags. On the other hand, fitness is a great way to injure yourself, as too many people find out. Are we, as taxpayers, supposed to pay for rehabilitative services for would-be jocks disabled by weightlifting? Maybe they should pay back into the system.

  • sweet i make 54,0000 getting that tax cut!!!

  • The tax should be on fast food. Any item that delivers an excess amount of unhealthiness.

    McDonald’s Big Breakfast
    Calories: 1150
    Fat: 60
    Sodium: 2260
    Carbs: 116
    Sugar: 17

  • DC doesn’t need a tax cut. DC needs more/better services. Given the capacity problems on our transit system, we need to invest more rather than less. (Cutting the streetcar budget won’t fix management issues – that’s something where the Council just needs to use its oversight powers.) Applying the sales tax to gyms makes sense, but only if we get MORE GYMS. Please put a full service gym in Shaw/Bloomingdale so I can contribute to the city’s well-being by paying this new tax!

  • Specifically with respect to the “fitness” tax, Washington D.C. is one of the most fitness obsessed cities in the country. People who really want to go to gyms will continue to pay for them, and I don’t really see this tax being a problem.

  • justinbc

    I take more issue with people who view taxes as punishment than I do with the tax itself. Taxes are how we pay for things. If you want to keep having nice things, accept the fact you have to pay for them.

    • Don’t tread on me, Nobama!!

    • The comment above suggests a sumptuary tax on fast food, which is definitely a punishment designed to steer public behavior away from obesity.

      • justinbc

        If you pay 50 cents tax for item A and 75 cents tax for item B, then I could understand the argument that you’re being “punished” for buying item B. I still disagree with the word choice, but I get the point. However, if gyms are currently not being taxed at all, then there is no basis for comparison. It’s not a punishment, it’s being added to the tax pool just like everything else.

    • Paying for the gym membership itself is how we pay for the “thing” (being the gym), not through taxes. Additionally, if we don’t get taxed for raw foods (i.e., fruits and vegetables) on the premise that they are better for you, then why should there by a tax on gyms? I’m all for paying my fair share in property and income taxes but this is getting absurd.

      • The lack of tax on raw foods isn’t on the premise that they’re better for us. There’s no tax on ANY food unless it’s considered “prepared” food — i.e., food at a restaurant, packaged sandwiches/sushi at your grocery store, etc.
        So, sugary cereals/snacks/etc. aren’t taxed. It has nothing to do with presumed healthiness — only with whether the item is considered “prepared.”

    • I generally agree with this. However, funding for one of the nice things is being slashed, which is troubling.

  • The fitness tax is FAR outweighed by the income tax cut (a household earning $75-100k could spend at least $10k on taxed services and still come out ahead; even someone earning $25-50k could spend more than $6k at the gym before it replaced their income tax savings). So it’s really in some sense a commuter tax on folks who live elsewhere but join gyms in DC. Congress won’t let us do a real commuter tax, so I’m fine with higher hotel taxes, speed/red light cameras on common commuter routes (run them inbound in the morning and outbound in the afternoon!), service taxes offset by income tax reductions, etc. DC bears the brunt of the suburbs’ most challenging social service, public safety, and transportation needs, and we’ve got to pay for that somehow.

    Not a huge streetcar fan and would be fine with cutting funding for that and putting more into Circulators, dedicated bus lanes, signal priority for buses, etc.

    With any money left over from streetcar savings (and perhaps a smaller tax cut–I don’t mind saving a few hundred dollars but a little less also would have been ok) I would like to see
    * teacher aides in every classroom in the District’s 40 lowest-performing schools, so kids get more individual attention and classes don’t get as distracted with behavioral problems.

    * more funding for TANF job training and supportive services–DC finally just assessed its whole TANF caseload, at huge expense, and figured out who needs literacy or GED classes, who needs mental health or substance abuse treatment, who is halfway through college and just needs a boost in finishing, and who simply needs help polishing up a resume and applying for a bunch of jobs. Then they realized they didn’t have enough money to actually PROVIDE those services, and people are on waitlists while the 5-year clock for TANF benefits ticks. In addition, DC could seize the 100 residential buildings with the biggest tax liens each year, train TANF recipients in construction, and fix the homes up to sell or give to nonprofits for permanent affordable housing.

    * buy more ambulances and hire more EMTs

    • Maybe you should run for council 🙂

    • “In addition, DC could seize the 100 residential buildings with the biggest tax liens each year, train TANF recipients in construction, and fix the homes up to sell or give to nonprofits for permanent affordable housing.”

      One of the best ideas I’ve seen yet, though I wouldn’t limit it to residential properties. If I see someone with the initial sbc running for counsel, I’m voting for her/him.

    • I will vote for you!

    • You down with SBC? Yea you know me!

  • Have not read details, but when I heard on the radio the streetcar is ill-starred, I imagined a collective groan from people who live in the H Street corridor. Seems the streetcar was put before the horse.

  • What need background music to this debate.
    Here is Judy Garland’s The Trolley Song. Have a good weekend.

  • I’ll take that sweet, sweet tax cut. Thanks DC!

  • I think it’s great. The city needs to lower taxes to compete with neighboring jurisdictions. At the end of the day, the city has been running surpluses. Instead of enticing our “trustworthy” politicians to come up with useful ways to spend the boom in tax revenue on things like street cars, trash cans, and soccer stadiums, we should return it to the taxpayer. I also think that broadening the tax base makes a lot of sense.

  • Well, speaking on a completely biased level, I think this sucks. I make only $500 over the income limit for the tax cut, yet still go to a gym. So I won’t be getting a tax cut AND I will have to pay more taxes on the gym. Arggh

    • You will be getting the tax cut on your income within that bracket:

      “Here’s an example of how income is taxed: Say you are single and report $80,000 in taxable income for the 2012 tax year (filing in 2013). In accordance with the income ranges defining federal tax brackets for single filers in 2012, the first $8,700 of your income is taxed at 10%; dollars $8,701 through $35,350 are taxed at 15%; dollars $35,351 through $85,650 are taxed at 25%”

    • Google marginal tax rate to see how you will still benefit from this.

    • That’s not how taxes work. You’ll still get the cut up to that value, and then pay a higher bracket on the marginal $500.

  • I think the middle class tax cuts would create a more stable population in DC. Lots of people come here for work right out of college, and once they get their foot in the door they leave for a place where they aren’t spending 70% of their income on housing or living with roommates. I think this has gotten better as DC has become a more desirable place to live, but there’s still a lot of transients we could entice to stay. This would also discourage people living in the suburbs instead.

  • Higher DC income taxes didn’t deter me from moving in from the suburbs because property taxes are lower in the city and my commuting cost is now next to nothing. Having said that, I’ll take the extra cash.

    Any one suggesting that the city is lagging in social services is simply off base. The opposite is clearly true.

    I’m all in favor of reducing or eliminating property taxes for old folks on fixed incomes. While DC property taxes are low, values are high, with the average home valued at close to half a million. Having to pay several thousand dollars a year in property taxes is a lot to ask from these folks, especially since they’re largely not making use of city services — schools, etc.

    • That may be true for some, but not for many. If I were to move to Virginia, my state tax burden goes down by around $20,000. (Montgomery County is a different matter entirely.) Property taxes would about double, and even assuming my commuting costs go up $5000 (which they wouldn’t), I’m still positive about $10,000. That’s not chump change. There are a lot of other considerations, of course, but if it’s just a numbers game, the burbs are cheaper (for me, at least, for others it may differ).

  • I don’t like either of the changes … Keep money for streetcar and don’t tax health clubs. I already e-mailed my councilmember about the streetcars.

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