DC Fiscal Policy Institute: Raising Revenue by Creating a New Tax Bracket for Top Earners: A Progressive Approach to Addressing DC’s Budget Shortfall
ITEP Work in ActionA DC Councilmember has proposed raising the income tax rate on the District’s wealthiest residents as a way to generate money for next year’s budget. The idea has been met with some skepticism, including the belief that this will push the well-off to leave the city.
Yet for several reasons, this bill should be taken seriously. A number of states have recently raised taxes on high earners, and about 10 states are now considering such a measure. In fact, the proposed new rate in DC would remain below the top rate in the Maryland suburbs. The increase would not only generate needed revenue, but also shift the District in the direction of a more progressive tax system. A progressive tax system, much like President Obama’s plans to undo some of the 2001 tax cuts given to the wealthy, is considered more equitable because those who make more pay more as a share of their income and those who make less pay less.