Higher Tax for D.C.'s Highest Earners

Tuesday, Sep 20, 2011  |  Updated 7:33 PM EDT
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The D.C. Council approved an income tax hike Tuesday for those making over $350,000 a year -- despite a budget surplus. It comes as council members face growing ethics questions.

Tom Sherwood

The D.C. Council approved an income tax hike Tuesday for those making over $350,000 a year -- despite a budget surplus. It comes as council members face growing ethics questions.

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The D.C. Council voted Tuesday to raise income tax on the District's highest-earning residents.

Individuals who make $350,000 or more will get placed into a higher tax bracket of 8.95 percent.  The new tax rate will go into effect at start of the new fiscal year, which begins in October.

The current rate for the top bracket is at 8.5 percent for people making $40,000 or more. An estimated 6,000 will be affected by the change.

The Council chose not to impose a retroactive tax on out-of-state bonds, a move which critics said would have unfairly impacted seniors on fixed incomes.

The tax raise, which will help to balance the District's budget for the next year, came after bitter debate. After a session in which personal barbs were exchanged, the measure was approved by a 7-6 vote.

The higher income tax is expected to bring in $106 million over four years, at which it would expire.

Councilman Phil Mendelson, who introduced the hike, said it's sound policy to make the income tax rate more progressive rather than making the bond tax retroactive.

The Council also saw several bills relating to ethics Tuesday. Measures to limit political fundraising, to restrict the size of constituent service funds and to place tighter control over legal defense funds were introduced.

The Council did not take up votes for any of those ethics bills.

Council Member-at-Large Vincent Orange introduced a measure that would have given council members a $45,000 raise but required them to give up any other jobs and be limited to two terms in office. Orange withdrew his bid for the pay raise, but kept the other measures in his proposed law.

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