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Council hearing to air details of $419 million tax cut plan

(Published April 19, 1999)

A $419 million comprehensive personal and business tax cut package introduced April 15 by Councilmen Jack Evans, D-Ward 2, and David Catania, R-At-large, will be the subject of a public hearing April 26 at 10 a.m. in the council chamber at One Judiciary Square, 441 4th St. NW.

The legislation is intended to bring D.C. tax levels into alignment with surrounding jurisdictions and attract new businesses and residents, Catania said.

The legislation, endorsed by nine of the 13 council members, calls for cutting personal income tax by one percentage point each year for the next three years for all income levels. Commercial property taxes also would be reduced, including a 37 percent reduction over three years for tax on residential rental property and a 14 percent reduction over three years on commercial property tax. Corporate and unincorporated business taxes would be reduced by 35 percent.

Congressional leaders applauded the tax cut proposal.

"Tax cuts may be the most important part of economic development," said Rep. Ernest Istook, R-Kan., chairman of the House appropriations subcommittee on the District.

Rep. James Moran, D-Va., agreed, saying unequal tax levels made it "too easy" to lure business from the District to the Northern Virginia district he represents.

But other city leaders, including Mayor Anthony Williams and control board chairwoman Alice Rivlin, were cool to the idea of sweeping tax cuts.

Williamsí own, more narrow proposal focuses on about $66.7 million in tax cuts for small businesses.

Everyone would like an individual income tax cut, Rivlin said, but "we have to ask, are people leaving the District because the income tax is too high or because we have schools that are ineffective and streets that are unsafe?"

Four members of city council declared their opposition to the plan.

"The middle-class taxpayer is still lumped in with the millionaires and the top bracket still begins at $20,000," said Councilman Phil Mendelson, D-At-large, of the income tax cut plan proposed by his council colleagues. "Simply reducing the rates but leaving the structure in place doesnít make the taxes simpler or fairer."

Another problem, Mendelson said, is how to make up the lost revenue. The bill does not specify where the city would reduce its spending or increase other revenues to pay for the tax cuts.

"If it is funded from the surplus, there wonít be the ongoing means to pay for it," Mendelson said. "Their (Catania and Evans) charts donít go beyond next year."

Mendelson also voiced concern that there would not be enough time for public debate on the bill before the council votes on the budget in early May.

Council Chairman Linda Cropp, Ward 4 Councilwoman Charlene Drew Jarvis and Ward 1 Councilman Jim Graham also oppose the Catania-Evans tax cut plan.

Copyright 1999, The Common Denominator