What’s more ridiculous than lawmakers dressing up in capes to demonstrate support for higher income taxes? The fact that they do not understand who will be affected by their actions.
As DC City Council works to finish up a budget before the May 27 deadline, one of the many tax increases being pushed by Council members (in this case Graham, Brown, Wells, and Thomas) is the creation of two new top individual income tax rates of 9% for those earning between $200,000 and $1 million per year and 9.4% for income earned beyond that.
Sold as a tax hike on the rich only, raising taxes on high earners is politically expedient for lawmakers. This soak the rich approach is nothing new. It has been quite popular at the state level over the past two years, during which eight states raised taxes on upper-income individuals and families. However, this misses the devastating toll that such a rate hike would have on small businesses, many of which file under the individual income tax system.
Based on analysis of IRS data, approval of the two new top rates that City Council members are calling for would raise taxes on 5,114 small businesses in the District that file under the individual income tax system. This does not even include the many small business owners of S-corporations and partnerships who earn this amount of income.
For the sake of DC small businesses and the jobs they create, let’s hope this proposal suffers the same fate as Council member Cheh’s soda tax.
For a pdf of ATR's press release on the matter, Click Here