District of Columbia residents earning more than $350,000 annually will have to dig a little deeper in their pockets around tax time.
The D.C. Council approved the tax hike on the wealthy by a vote of 7-6 to generate more money for the city. The good news is that the increase will be removed by 2015.
Supporters of the tax increase feel it is a long overdue step toward financial stability.
“This is about good tax policy by creating a new top bracket,” said Council member Phil Mendelson, according to the Washington Post. Mendelson is a Democrat and a sponsor of the tax increase.
“People who earn $350,000, $400,000, $1 million, should not be paying the same rate as someone earning $40,000,” he added, echoing a similar sentiment by President Barack Obama about federal tax rates.
Mayor Vincent Gray is expected to sign the measure. This bill is the second attempt during his time in office to get a tax increase on the rich. Earlier this year, Gray proposed a hike for those making $200,000 or more annually. That measure failed to gain traction.
The debate over the city’s tax hike mirrors the back-and-forth also taking place at the federal level. President Obama recently introduced a $450 billion jobs package to Congress this month, which he kicked off by a major speech to the American people. In an effort to pay for his ideas and attempt to cut the deficit, the president suggested raising tax rates on nation’s most well-heeled citizens.
The arguments are the same on both the local and federal level. Legislators representing middle and working class families argue that those making $50,000, for example, should be taxed at a lower rate than millionaires. On the reverse, critics on the council note that city spending has increased along with the projected revenue from the tax increase. They argue the increase is bad business for the Council.
“This is lazy government, this is ideologically driven, this is agenda driven,” said David Catania, an Independent member of the Council who argued against the increase.
Catania noted that Washington, D.C., is not in a financial hardship. The city is running an $89 million surplus in the 2011 fiscal year, something atypical for cash-strapped governments in recent years.
Overall, the D.C. tax increase is projected to bring $106 million into city coffers over the next four years, according to the Washington Post.