DC Council Approves Budget Slashing Middle Income Taxes

Budget includes personal services sales tax

By Tom Sherwood
|  Thursday, May 29, 2014  |  Updated 6:31 PM EDT
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The D.C. Council approved a new budget with all sorts of tax cuts -- including slashing middle income taxes by about 24 percent -- and there could be changes to how you fight parking tickets. News4's Tom Sherwood reports.

Tom Sherwood

The D.C. Council approved a new budget with all sorts of tax cuts -- including slashing middle income taxes by about 24 percent -- and there could be changes to how you fight parking tickets. News4's Tom Sherwood reports.

The D.C. Council approved a new budget with all sorts of tax cuts, including slashing middle income taxes by about 24 percent.

The cuts -- some of the biggest since the late 1990s, when the District was emerging from near bankruptcy -- were proposed by the 18-month D.C. Tax Revision Commission led by former Mayor Anthony Williams.

The city is booming financially, and the Council's people-oriented budget for 2015 includes tax cuts recommended by a tax revision commission. They include:

  • A 24 percent middle class income tax cut for those earning $40,000-to-$60,000 per year.
  • A plan to steadily raise estate death-tax exemptions from $1 million to $5 million.
  • Higher tax exemptions for lower-income workers.

“I think the message of this budget reflects the very healthy state that the district is in," Council Chairman Phil Mendelson said.

The commission's proposals ease taxes on lower and upper income residents, too, and cut some business taxes to be more competitive with the suburbs.

To help fund the tax breaks, an $800 million, multi-year streetcar budget was cut back to $400 million with no immediate impact on construction.

The Council also voted to impose an almost 6 percent sales tax personal services never taxed before, including yoga studios and gyms, but it did not raise fees for sidewalk cafes.

The budget also creates an ombudsman's post to hear parking ticket disputes.

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