Statement of Jack Evans on
Anthony Williams’ Gross Receipts Tax Proposal

Good afternoon. I want to, first, thank everyone for coming.

I called this press conference to discuss the Gross Receipts Tax Proposal that was advanced by Anthony Williams at the time he was the District's Chief Financial Officer. As some of you may know, this is not the first time that I have mentioned the gross receipts tax.

On Wednesday, July 1st, when I unveiled my position paper on “Fiscal Responsibility arid Management Reforms”, I stated that “In our zeal to bring the District government to financial solvency, we must be mindful that we are here to serve the residents and not to place unbearable financial burdens on their backs. Fiscal stability is the key to creating and maintaining a system where city government is truly the servant of the people.”

Financial solvency and fiscal stability can not be achieved by imposing additional tax burdens on the businesses located here in the District.

In order for us to regain the Home Rule powers that were transferred to the Control Board, we have to control D.C. government spending or we will find ourselves in the same position that prompted the establishment of the Control Board. Controlling spending is the key. Raising existing taxes or establishing new taxes like the Gross Receipts Tax is akin to rearranging the chairs on the deck of the Titantic.

I use the analogy of the Titantic because that is the example that Mr. Williams uses when he denigrates my seven years record of attempting to bring fiscal accountability to the District government. He likens me and my colleagues on the Council to the crew of the Titantic as it drifted towards the iceberg and a watery grave.

The Gross Receipts Tax is a bad idea, a bad proposal, and it would be a bad tax for the District. It would cause an exodus of businesses from the District into Maryland and Virginia. It not only would drive businesses from our city, it would be a negative consideration for new businesses as they decide whether to move into the District. Maryland has never had this kind of tax on gross receipts and Virginia is currently in the process of eliminating a similar tax.

General mismanagement in the D.C. government and specific mismanagement in the Department of Consumer and Regulatory Affairs, have gained the District a reputation of being un-friendly to business. We don’t, at such a critical point in our financial recovery, need to do anything that would jeopardize the resurgence of business in the city.

Other cities and counties across the country have gone through the type of fiscal difficulties that we have seen here in the District. The recovery of those cities and towns was done in partnership with business.

That is what we have to do here in the District, establish a partnership with business to speed up the recovery — not construct barriers to slow our recovery down.

We chose to come to this location because it is in the heart of a once vibrant business community. Theaters, night clubs, hotels, banks, restaurants and all the services that the community needed was located close by. U Street between 7th Street and 15th Street was the soul of African-American life in Washington, D.C., home to small businesses and professional services. The very businesses that would not be able to survive the imposition of a Gross Receipts Tax.

These businesses, mostly local small disadvantaged business enterprises, will not be able to survive if Mr. Williams tax proposal is implemented. Such businesses operate on very short profit margins and the tax would have to be paid whether the business made a profit or suffered a loss. Many local small disadvantaged business enterprises are Realtors, independent insurance agents, accountants, lawyers, doctors, consultants, and other professional services providers.

That is why I am so concerned about this tax proposal. This week I will be sending a letter to all of the people who will be affected by the tax. In addition, we will be reminding voters that Anthony Williams was the one who proposed the Gross Receipts Tax and that we want people to say no to the tax and no to Mr. Williams.

With me today are three owners of local small disadvantaged business enterprises: York Van Nixon, Jr., a Real Estate Broker who will be adversely affected by the tax; his son, York Van Nixon III, who is a Mortgage Banker, and Nathaniel Williams, who is the owner of WMS Enterprises, Inc., a janitorial and maintenance company.

I want to ask York if he would like to say a few words and we will then take questions. Thank you.

JACK EVANS

Dear Friend:

You and I know that the District of Columbia has suffered from a hostile business climate that has driven away jobs, reduced potential tax revenue and hurt all of our citizens.

Now, one of the leading candidates for mayor, Anthony Williams, has called for the imposition of a gross receipts tax that would, in effect, impose a sales tax on lobbyists, lawyers, accountants, doctors, consultants, and other professional service providers.

In addition, Williams has joined other candidates in opposing my proposal to adjust workmen’s compensation and other business taxes to be competitive with Maryland and other surrounding jurisdictions.

I don’t need to tell you that this mayors race is important. After years of the worst imaginable government, the District is taking the first steps toward improving city services, finding realistic strategies to grow our economy, and improving the quality of life for our citizens.

If we have a mayor who will truly fight for change and bring competence and vision to this job, our city can become the great city it ought to be. But if we elect a mayor with more half-baked ideas, unrealistic proposals and political inexperience, we are likely to see more of the same tragedy we have witnessed for the last two decades.

That is why I am asking for your help in my campaign for Mayor. Whether or not you live in the District, you have a stake in our City’s success.

I am an attorney, a finance graduate of the Wharton School of Economics, a two-time Chairman of the Metro Board, and a seven-year veteran of the City Council.

As Mayor, I am committed to breaking the culture of non-performance that permeates many city departments. I will set clear goals for this city and make managers and employees accountable for achieving results for our citizens.

Obviously, my message has attracted opponents; many of whom have a stake in preserving the status quo. Without the help of concerned individuals like you, I cannot succeed.

Recent polls have shown that this race for mayor is a long way from over. Right now, my campaign has established a firm base of support in all parts of the city. If voters who want real change support my candidacy, we will win.

We can make our Washington a safe place to live and work. We can have respectable public schools and effective government. Our city can be the object of envy rather than the subject of ridicule.

But these changes won t happen unless leaders like you take a stand.

Please help me win this election for Mayor by sending the most generous contribution you can afford today.

Sincerely,
Jack Evans

P.S. In addition to contributing, I need supporters who are willing to host fundraisers or who will set up meetings where I can make my case for change in this city. Any way you can help will be greatly appreciated. Please contact my office by calling 202-347-5555 or e-mail me at Jack@evansformayor.com , and don't forget to visit my website — www.evansformayor.com .

JACK EVANS
POSITION PAPER ON RECOMMENDATIONS OF THE DC TAX REVISION COMMISSION

The D.C. Tax Revision Commission has made two broad sets of proposals on tax reform — one dealing with businesses and the other with the real estate taxes paid by property owners.

Taxes on Businesses

The first set of proposals would substitute one set of four taxes on businesses with a flat 1.5 percent tax on salaries, dividends, and interest payments for businesses. The current four taxes are the (1) corporate income tax, (2) unincorporated business tax, (3) tangible personal property tax, and (4) professional licensing tax. The Commission says that its new tax would be revenue neutral in that it would raise the same amount of revenue as the taxes it replaces.

I am opposed to this new business activities tax recommendation because it redistributes the tax burden on professional service oriented businesses. I believe this new tax burden will only result in the flight of existing business from the District and the creation of serious reason for new business to decide against moving into the District. A value-added tax may also be subject to legal challenge — an opinion expressed by Corporation Counsel John Ferren. Maryland has never had this kind of value-added tax. Virginia is currently considering the elimination of a similar tax.

In this Council session and last, I introduced legislation to reduce the 9.75 percent corporate franchise tax to 6 percent to achieve tax parity with Maryland for incorporated and unincorporated businesses. This tax reduction should be phased in over a few years. I also support the elimination of the professional licensing tax. What I do not support is the imposition of the value-added business activities tax recommended by the Tax Revision Commission.

Taxes on Homeowners

The second set of the Commission's recommendations would consolidate the residential property tax rates into one category of .96 per $100. Although I support this proposal, it would create a revenue shortfall of $41 million. This amount has not been identified by the Commission.

The Commission’s proposals would also eliminate the homestead exemption received by all homeowners who reside at their property, the senior citizen exemption, and three “circuit breakers” which are tax reductions for those in need, including the elderly and disabled. These exemptions would be replaced with a new circuit breaker based solely on need.

While there may be justification for simplifying the need-based exemptions, I do not support the elimination of either of the exemptions for homeowners or senior citizens. These exemptions promote homeownership in the District of Columbia. Homeownership is a public policy whose goal is to stabilize communities. People who own their homes have a greater stake in their neighborhood and are more likely to care about its success.

Taxes on Commercial Property

The Commission has a proposal for eliminating the three commercial property tax rates and replacing them with a single 1.92 percent tax rate, or no more than double the residential tax rate. I support this proposal, it would reduce the property taxes paid by businesses by $48 million. Again although, the Commission has not identified a way to make up this revenue shortfall.