The District is handing out “Get Out of Jail Free Cards” to tax evaders.
D.C. is offering amnesty to the 42,000 or so individuals and businesses that owe the city about $130 million. The amnesty legislation also permits the city to increase withholding from employees who owe the city taxes, according to the Washington Post. District Office of Tax and Revenue Director Stephen Cordi said, “Successful tax amnesties offer incentives, and they offer consequences. The consequences are, if you don't pay, we'll come get it.”
But is that really true? The city expects to recoup only about $20 million -- similar to what was collected in 1987 ($24.3 million) and 2001 ($19.5 million) amnesties. That’s only 15 percent of the total. When will the city “come get” the other 85 percent?
Those seeking amnesty must pay in full by the end of September, and they will have to pay any interest due. But this basically makes the interest little more than a small fine for breaking the law -- akin to giving a murderer no prison time for the actual murder, but sentencing him for skipping bail.
Those who owe the city money will be sent tax bills and letters explaining the amnesty. The city government knows who they are, and knows where they live. They broke the law. Instead of sending form letters, the city should be sending uniformed officers.
But the tax amnesty is not about justice, or about making residents pay their fair share for city services. It’s about the District’s immediate financial needs.
Councilmember Jack Evanstold the Washington Business Journal last month, “Frankly, you’re just trying to get the money. … Nobody likes these things, but it saves the government in a way because you don’t have to pursue these people.”
The Post quotes Jim Eads of the Federation of Tax Administrators, who says tax amnesties in 16 states over the past two years have met expectations or exceeded them. A Pennsylvania amnesty beat expectations by nearly 40 percent.
The District government can’t be faulted for doing all it can to conquer a half billion dollar budget deficit. It’s just a shame it has to do it by cutting deals with scofflaws.