David Schwartzman
Letter written to The Washington Post
August 20, 1998

August 20, 1998

To the editor:

James Lardner’s article “Deadly Disparities” (WP 8/16/98) presented the growing evidence that income inequality is causually linked to shorter lifespans. This correlation apparently occurs comparing nations, as well U.S. states, cities and counties. While there is still debate with respect to the determining factors, the causation appears robust. After reading this article I recalled another, “Death in the City” by Doug Struck and Hamil R. Harris (WP 6/29/98), which documented the shocking fact that life expectancy for DC men is 10 years below the national average, for women 5 years. While life expectancy has been increasing nationally in the last 15 years, it has declined in the District. Guess what?

Comparing DC to other states reveals that DC has the highest income inequality in the nation. DC’s ratio of the top fifth to bottom fifth of average income of families with children is 28.2 to 1, compared to the U.S. ratio of 12.7 to 1 (New York Times 12/17/97). Parallel to the decline in DC’s life expectancy is the increase in economic inequality. The bottom fifth of families with children lost 27% of their income from 1978-80 to 1994-96, while the top fifth gained 56% ("What's in it for Kids?, DC Action for Children, 4/15/98).

As Struck and Harris pointed out, drastic budget and staff cuts have occurred in public health in DC in the last few years. Since 1994, over $100 million/year in hurtful budget cuts have been forced by DC government and Control Board and more cuts are included in the 1999 “consensus” budget now being considered in Congress. Cuts in AFDC (now TANF) benefits began in the fall of 1994 with the Council's 10 to 1 rejection of a cost of living increase in spite of the fact that the benefit level at the time was below the poverty limit. Maximum welfare benefits had by 1996 declined 46% from 1970, adjusted for inflation (P.T. Kilborn, New York Times, 12/8/96). The benefit level was cut further (three times in 7 months). This drop in income security for the poor, and the institution of workfare will likely pull down the wages of low and middle income workers. According to the Economic Policy Institute, the new welfare rules will drive down wages for lowest paid workers by 12% nationally.

Other cuts have resulted in reduction of subsidized child care slots, drug treatment, closure of public health clinics and recreation centers, the elimination of shelter space for homeless families and the chore aide program for seniors and disabled and termination of the Tenants Assistance Program. The list of hurtful budget cuts goes on and on. One of the cruelest was the elimination of emergency assistance for rent, mortgage, utility and furniture payments for families at the edge of eviction. Cuts in the budget for the University of the District of Columbia have resulted in loss of faculty, staff and decline in quality of academic programs. An example of misplaced priorities: The Control Board commissioned the anti-rent control Holland Knight report for $800,000 while the chore aid program for seniors and disabled, costing $500,000 was cut out the budget.

The DC budget for this fiscal year now has an estimated $231 million surplus (WP 7/22/98) as a result of the recent economic “boom” and hurtful budget cuts. Should not a good part of this surplus be used to restore the safety net eroded by past budget cuts? Should not future surpluses, now projected to be hundreds of millions of dollars yearly (Washington Post, 3/8/98), be used to restore and increase the safety net, providing income and health security for low income people, not giving tax breaks to the wealthy? Why not reduce economic inequality instead of increasing it?

We now have a regressive local/state tax structure. Local taxes are worse than “flat”. The lowest fifth and middle income families paid 9.5 to10.5% of their income, while the richest (average $1.8 million family income) paid 6.4% in 1995, taking into account the federal offset of DC income taxes (Citizens for Tax Justice study). The same pattern is evident in 1998 data (Institute on Taxation and Economic Policy, cited in "Taxing Simply, Taxing Fairly", DC Tax Revision Commission). In 1996, those filling federal tax returns with adjusted gross incomes over $100,000 had a taxable income of $3.66 billion (a $620 million increase over 1995), those over $200,000, $2.04 billion. For these high income brackets, both the number of returns and taxable income/return increased significantly from 1995 to 1996, while for those under $50,000, the number of returns remained nearly constant, with the taxable income/return actually declining some 3% for the same years (Source: IRS, Statistics of Income). Instead of "trickle down" economics, we have witnessed an "artesian well" to the top.

If those with adjusted gross incomes over $100,000 were taxed an extra 4%, $150 million a year in revenue would roll in. Rather than the so-called “tough love” for the poor (equals callous indifference) we arguably need “tough love for the rich”, sharing the wealth to meet human needs in the District, reducing economic inequality. Luxury spending is booming in the Metro DC area. Is another European vacation or Lexus this year really worth children going hungry, the poor not receiving health care, our youth not getting the higher education they deserve? It is no accident that the United States has the greatest gap between rich and poor families and the highest child poverty rate of practically all industralized countries (Washington Post, 3/29/97). The "dirty little secret" of economics is that concentration of wealth at the top leads to poverty and misery at the bottom.

But wouldn't raising taxes on the wealthy drive them out of the District and erode our tax base? On the contrary, the benefits of living in the District (shorter commuting, cultural opportunities etc.) attracted these residents in the first place. Commuting time and costs will increase in the next decade (Washington Post, 3/27/97). The more affluent have been moving into the District for the last decade, buying houses, while low income renters have been moving out (Washington Post, 3/3/97). And if some wealthy residents do choose to move out, let's revise our zoning laws to allow subdivision of their properties into apartments for low and middle income families.

Under the Home Rule Charter, we are still able to revise our own tax code. I propose consideration of the following tax restructuring plan for the District:

1. Tax relief for low and middle income brackets, small business (e.g., repeal the Convention and Arena taxes).
2. Higher DC income tax rates for the wealthy.
3. Lower sales taxes for non luxury goods (sales taxes are profoundly regressive). This measure would surely stimulate small business in the District, boosting sales from Maryland and Virginia residents.

Reducing the "misery index" in the District would of course benefit the wealthy as well as the rest of the community by reducing crime, stimulating consumer spending and reducing class and racial polarization. And if the wealthy don't like the idea of paying higher taxes, they should join in and lobby for the long-term solutions to our budgetary crisis, our crisis in meeting basic human needs, requiring Acts of Congress, which include the following:

1. a fair federal payment for nontaxable property and services provided by the District, roughly 3 times the payment of $660 million per year made prior to the passage of the Economic and Tax Incentive Package
2. a reciprocal income tax with surrounding jurisdictions (a 2% tax on non-resident income would bring in $470 million per year). A reciprocal income tax should be structured to be progressive, without penalizing low and moderate income workers living in Maryland and Virginia, who would then pay their state income taxes to DC only.
3. Payments in Lieu of Taxes ("PILOTS") from federally-chartered tax exempts (Sallie Mae, National Geographic etc.) would bring in some $150 million per year
4. Making Fannie Mae pay income tax ($300 million per year)
5. Statehood, democracy, not continued dictatorship by the Control Board colonial regime.

David Schwartzman
Candidate for Delegate to the House of Representatives
DC Statehood Party