NCPA - National Center for Policy Analysis

D.C. Discovers Tax Cuts

April 26, 1999

Even if Capitol Hill politicians are not in a mood to give federal taxpayers relief, City Council officials in downtown Washington, D.C., are revving up to cut taxes there, so as to spur economic growth and halt the exodus of jobs to the suburbs.

  • Nine of 13 city council members are backing a sweeping plan to reduce the city's three biggest job-killing taxes.
  • Individual income tax rates, which now impose a 9.5 percent top rate, would be cut by 32 percent for the highest income earners and 50 percent for those earning the lowest incomes.
  • Business income taxes would be slashed by one-third.
  • Commercial property taxes would fall by 14 percent, while residential property owners would experience a 37 percent cut.

In 1960, when the city's top tax rate was only 5 percent, the D.C. population stood at more than 760,000. Today, the city has only 550,000 residents. Indeed, 50,000 have left just since 1990.

Members of Congress are said to be wildly supportive of the cuts, in part because they are tired of escalating federal payments to the cities. Observers wonder why they don't apply the same economic reasoning to the rest of the country.

Source: Editorial, "Cities Discover Tax Cuts," Wall Street Journal, April 26, 1999.

 

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