DC Commission Considering Business Tax on All Employers
As the District reviews its tax code and seeks higher revenue, a new tax on nongovernmental employers is being considered. It could affect the bottom lines of all DC-based associations.
A “local services tax” on nongovernmental employers is among 63 tax policy options being considered by the District of Columbia Tax Revision Commission, according to a letter posted last month on the commission’s website [PDF].
Policy Option #36, as it’s formally known, would create a services tax on all city employers based on the number of workers they employ. The tax, which would range from $50 to $100 per employee, is seen as a way to charge employers for the city services used by workers who may not be District residents. In other cities with similar tax policies, the cost is typically passed on to the employee as a payroll deduction.
In a weekly public policy e-newsletter to members, ASAE stated that it was concerned that the commission was not aware of some local taxes that associations and nonprofits already pay and that such a tax specifically targeting nonprofits would affect many associations’ finances.
“Associations in the District of Columbia contribute to the city not only through the taxes they do pay, but through the meetings, education sessions, and volunteering projects they do every day,” said Robert Hay Jr., associate director of public policy at ASAE. “It’s disappointing that such everyday occurrences are not recognized in these debates, but ASAE is going to work with the District government to realize that a needless tax does not reflect the contributions associations make to our city.”
Washington, DC, like many cities, is hurting for cash. In 2011, the local government authorized the creation of the Tax Revision Commission, an independent body assigned the task of providing DC’s city council and Mayor Vincent Gray with recommendations to update the city’s tax code.
The 11-member group deliberated the proposed business taxes, including option #36, in a meeting last week that was open to the public. In a memo regarding the services tax [PDF], the commission said the measure would make DC taxes fairer and help increase revenue, but it also acknowledged that businesses could attempt to avoid the tax by hiring fewer workers and that it could hurt some businesses’ bottom lines.
The commission noted that the policy option list is not final and that meetings to discuss the options will continue through December. A final report is expected to be handed over to the DC Council by the end of the year.
While no further policy options are being accepted, the commission has encouraged the public to submit comments or questions on the proposed options through its Contact Us page.