Every day at the TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.
Foundation, our state tax policy experts hit the ground across the country to help legislators and governors work toward concrete and lasting victories for taxpayers. As a D.C. taxpayer, I am excited to share a personal story about one of those victories that demonstrates just how valuable our work here can be.
In 2014, D.C. passed a tax reform package that was universally lauded for its bipartisanship. The strange-bedfellows coalition that the Tax Foundation formed to promote policies in the plan included experts on the left, right, and center. When the package passed, The Daily Caller headlined it by saying hell had frozen over and ended with a “hats off” for getting it done.
The package reduced income taxes on middle-earners, increased the EITC on low-earners, and boosted the standard deductionThe standard deduction reduces a taxpayer’s taxable income by a set amount determined by the government. It was nearly doubled for all classes of filers by the 2017 Tax Cuts and Jobs Act (TCJA) as an incentive for taxpayers not to itemize deductions when filing their federal income taxes.
and personal exemption for all taxpayers.
D.C. has prospered since, with a strong economy and climbing revenues. However, early this year, we got word that an effort was forming to delay the remaining tax relief scheduled for 2018. Eventually, that turned into an effort to cancel outright pieces of the compromise: specifically, the business tax cuts and estate taxAn estate tax is imposed on the net value of an individual’s taxable estate, after any exclusions or credits, at the time of death. The tax is paid by the estate itself before assets are distributed to heirs.
recoupling.
Opponents mischaracterized the tax reform package as tax cuts for big business and millionaires at the expense of needed services. We responded with the facts: 88 percent of new revenue since 2014 has gone to increased spending and nearly all the tax cuts have benefited low- and middle-income residents.
Over the last month, my team and I worked around the clock with councilmembers and their staffs. We rolled out a number of insightful research pieces on the estate tax, business taxes, and tax reform generally.
As a result, many councilmembers came fully prepared to present our points at public hearings, speaking to the importance of improving D.C.’s business tax climate and delivering the relief they promised taxpayers.
In the end, the estate tax re-coupling vote failed 4 to 9 and the business tax cut cancellation vote failed 3 to 10. That means these two tax changes will take effect as scheduled on January 1, 2018, delivering relief to D.C. taxpayers.
Outcomes like this motivate myself and my team to get on the road every week and educate lawmakers and taxpayers across the country about the benefits of smart, pro-growth tax policy. Our five-person team already has made presentations and met with concerned officials and citizens in 24 states this year—and what I see makes me hopeful.